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DBN to leverage for capital on the market

Mon, 23 June 2014 01:10
by Timoteus Shihepo
Business

 

The Development Bank of Namibia will use its improving balance sheet to leverage for funding on the market to sustain its operation if Government decides to cut down on funding Writes Timoteus Shihepo.
This was revealed by the DBN’s Communications Manager Jerome Mutumba this week in response to recent revelations that the Ministry of Finance is looking at possibly cutting down on Development Finance Institution (DFI).
Mutumba told The Villager that DBN has sound governance framework in place and a relatively healthy balance sheet built over the years and it could leverage on these to unlock financial resources on the domestic or internal markets to finance its lending activities.
He said that DBN has opted for a strategy of measured growth to sustain operations, rather than place itself under unrealistic pressure which may have a damaging impact on operations.
“DBN could consider private equity sources, in the form of either a bond or wholesale deposits to augment its operations.
It is however important to appreciate that the Bank is a government owned development finance institution, expected to play a particular role when it comes to availing finance in the economy, and for that reasons some form of government support will always be required,” he said.
Mutumba said DBN’s 5 year business plan envisages specific focuses, over and above its current activities.
“There is a strategic shift to focus mainly on larger national projects which fall within the special focal sectors identified by National Development Plan 4 (NDP 4) - manufacturing, tourism and transport and logistics.
“A need to finance the development of infrastructure and rural enterprise, as well as transformational emphasis on finance for women and youth entrepreneurs is also highlighted,” he said.
On the partnerships with other international financial institutions Mutumba said DBN has sound relationships with a number of regional and international financial institutions, and these partnerships have resulted in the financing of some economic projects in Namibia.
“DBN is currently busy working together with a group of DFIs on an infrastructure project in Namibia.  Partnerships in our environment are usually aimed at capacity building opening lines of credit and co-financing of projects, which we do have in place.
DBN partnered with a number of international institutions, particularly with regard to transfer of knowledge. These include GIZ and IDC in particular. DBN also held shares in Norsad, transfers from which are noted in past annual reports. DBN is also a member of the SADC DFI Network,” he said.
 “This is our main risk mitigating strategy. Secondly, DBN monitors and walks hand in hand with entrepreneurs as they implement their business ideas and give support where we can.
DBN encourages sound business administration, and monitors payment schedules for deviation from terms. Where payments are delayed borrowers are given the opportunity to catch up on repayments.
Where the enterprise is of sufficient developmental importance, DBN may offer to assist with turnaround strategies. Although DBN has a relatively high risk appetite compared to commercial banks, for example, its impairments are well within the guideline boundaries for DFIs,” he said.
DBN earlier this year celebrated their 10th anniversary and Mutumba said looking back DBN invested broadly in all sectors of the economy that fall within its mandate either directly, or indirectly in enterprises which have backward and forward linkages in the economy.
“There is no economic sector that DBN is not exposed to, except agriculture, however DBN does support the processing and value addition to agricultural produce to the sector. Sectors included agri-industry (food processing), but not agriculture as this is the mandate of the Agriculture Bank,” he said.
He added that, “DBN has approved finance with impact on 49,045 jobs of which 13,977 are new jobs, 17,053 are temporary jobs and 18,015 are existing (retained) jobs. Existing jobs are included as finance makes these employment opportunities more sustainable with enhancement of competitiveness and growth of organisations”.