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Good times for SMEs as DBN launches investment centre

by Kelvin Chiringa

SMEs which often have low levels of collateral and high degrees of potential have been provided with a healing shot in the arm by the Development Bank of Namibia which opened an SMEs centre in the capital.

The development finance institution’s chief executive officer, Martin Inkumbi has however set the record straight that the financing model does not come anywhere near that of the now defunct SME Bank.

He further buttressed that contrary to speculation that the bank will be adopting the functions of the SME Bank, Contrary to speculation, the bank has no intention to operate in the retail banking field, and views itself as a pure development finance institution. 

Talking about the day-to-day operation of the SME Centre, Inkumbi says that although the output can superficially be seen as finance for SMEs, the operation will be underpinned by several layers of support, particularly in the pre-application phase.

In the pre-application phase, the Bank particularly seeks to draw attention to the process of business planning.

“Without a realistic and achievable business plan the applicant places herself / himself in a position of financial risk when borrowing. To this end, the Bank has developed a business plan content guide which will be freely available to potential borrowers.”

“The Bank’s support will also extend to advising on completion of applications, and documents and certification required for the application. We want our borrowers to have the best possible prospect of success, Inkumbi adds,” he said.

Once the complete application, business plan and set of documentation are received, due diligence will proceed, after which the bank will give a response to the application.

Once the loan agreement has been concluded, Inkumbi says, the bank will engage in rigorous monitoring to identify borrowers who run into difficulty, and provide corrective support if justified.

One of the bank’s socio-economic purposes is to nurture inclusive economic participation through finance for previously disadvantaged Namibians, including women entrepreneurs.

The bank is also using the vehicle of SME finance to foster the interests of younger entrepreneurs, which it sees as the basis for the future Namibian economy.

SMEs are also seen as a mechanism to further develop regions with lower levels of economic activity and provide stimulus in rural areas.