The Development Bank of Namibia has received an excellent repayment rate of close to 100% from its clients in the Small and Medium Enterprises industry on loans administered in the last quarter of 2011.
The bank recorded a repayment rate of 95.7% while only 4.3% of its clients for the year under review.
DBN granted the bulk of its total loans of N$154.31m at N$79.01m to SMEs while the remainder was given to private and public sector institutions.
Martin Inkumbi, DBN Head of Lending maintains that the default repayment rate, which is a shade close to five percent, does not necessarily translate to poor performance by the SMEs but in most cases, the bulk of the SME sector fails to implement their business plans fully.
The percentage amount remains lower than the targeted ratio of five percent.
DBN has seen its loan book growing for the past five years from just N$500m to the current N$1.3b and projections by the bank are that the loan book could grow to around N$1.6b by the end of the year.
“Most of the money was mostly approved for road construction projects in the North, because there are more companies that benefited from the current road construction projects in that part of the country,” Inkumbi said.
Although most SMEs are benefiting from the Government-initiated Bridging Finance facility launched last year after DBN received a N$60m grant from treasury, the developmental bank says there has been very little interest in accessing the loans from the manufacturing sector.
“We are keen on supporting the transport and logistics sectors,” Inkumbi added.
Meanwhile, Post Fin; a NamPost-owned microfinance institution, which provides loan facilities to the public at very low rates as compared to financial banks, was the greatest benefactor from the DBN loans.
“DBN loan book has grown to 1.34b against the target of 1.3b for the period, which ended on 31 December 2011,” said Inkumbi.
The bank has also poured in a considerable amount of money into the education sector with the 51.2% of the allocated loans went to the SME sector.
The bulk of the loans given out by DBN went to the Khomas Region, which gulped about 32.2% while 19.6 % went to national projects.
On the other hand, Omusati Region received about 12.3% that was given for road construction projects; 6.5% to mixed (more than one) regions including Karas Region, which received 1.45%, Ohangwena Region received 1.5% and Otjozondjupa Region received about 1.3%.
Loans approved for businesses owned by previously disadvantaged Namibians are at an elevated 94% whilst businesses owned by previously disadvantaged female Namibians stand at 26%.
A total of 650 new and 846 temporary job opportunities were created in the country, according to DBN, in the fourth quarter of loan approvals alone.