Innovation and competitiveness DBN’s priority

 

Windhoek ‑ The Development Bank of Namibia (DBN) has taken a different path with the prerequisite that enterprises and projects, which it finances be managed on sound business principles, and that skills or skills development be in place.

DBN Marketing Manager, Jerome Mutumba, has said one of the trademarks of DBN is to consider business projects that are innovative with a competitive element.

“As Bank Windhoek has limited resources, finance is approved for the enterprises that are most likely to fulfil its mandate to create employment, spread ownership to formally disadvantaged Namibians and stimulate enterprises in regions that need greater levels of economic activity, among others,” he said.

Mutumba was responding to criticism from the business community whose loan applications could not be considered by the bank.

He said the bank processes loans using set requirements and does so fairly and transparently in accordance with sound business principles.

“If the bank is to satisfy the enterprise, it must fulfil these requirements, it will consider the viability of the proposal, if the proposal is not viable, the application will be declined,” he said.

Mutumba said it makes sense for the bank to finance long-term enterprises than those with short lifespans.

The bank will also consider the financial security of the prospective shareholders and their dependents.

He said the bank assesses applications to avoid financing enterprises that might pose undue risk to applicants and shareholders.

“If an enterprise goes bankrupt, this will be disastrous not only for the applicants and their families but also for employees of the enterprises and of course, it will be a loss for the shareholders,” he said.

He, therefore, cautioned the business community to come up with business proposals that demonstrate that the applicant has considered a wide range of operational and managerial aspects, in addition to realistic cash flow projections.

Since the establishment of the Development Bank of Namibia, a lot of innovative projects have been considered. Omuriro Biomass Ecologs is one of the bank’s success stories. Omuriro Biomass began with a bright idea and finance from the Development Bank of Namibia (DBN) at the beginning of 2013. By the end of 2013, the firm was on the road to success.

Omuriro Biomass Ecologs is owned by Heiko Meyer, and an established businessman, Norbert Liebich and focusses on bush encroachment, which is a threat to many farmers in Namibia.

DBN Acting Head of Lending, John Mbango, said Omuriro Biomass Ecologs is a standout for the bank.

However, Mbango said the process of establishing production of the ecologs was not without its pitfalls, adding that the manufacturing process takes place in four phases. Firstly, the bush is harvested. Secondly, the bush is allowed to dry. Thirdly, the bush is turned into chips. Finally, the chips are formed into logs. Unfortunately, the machine required to turn the bush into chips was damaged during transportation, and the company had to delay the setup of the production chain while a new chipper was obtained.

“We realised that the delay in production was unavoidable, so we extended the grace period on repayment. We were glad that the client informed us, because we believe that unnecessary financial stress on the project would have placed a burden on an enterprise that leads the way for environmental sustainability,” he said.

He further said production began in September 2013, and the company has cleared 300 hectares of bush. Currently, the company is able to clear four hectares of bush per day. The company now employs 23 Namibians, eight of whom are women.

“Aside from the benefit of reducing bush encroachment, the bank believes that this product has the ability to relieve the burden on households that are dependent on wood for cooking and heating water. Many households spend hours every week collecting or buying wood, and a product such as this has the ability to free those hours for productivity and education,” Mbango continued. 

Bush encroachment is caused by overgrazing. When cattle overgraze on grass, they create perfect conditions for thorn bushes to shoot up. As more and more thorn bushes grow, the area available for grazing shrinks, creating difficult conditions for farmers. In addition, the thorn bushes are difficult and expensive to clear.

The company harvests the bush, clearing the land for farmers and provide a sustainable source of fuel for households while at the same time reducing the cutting down of protected trees such as the camelthorn.

Mbango urged Namibian entrepreneurs with ideas for consumer products to bring their business plans to DBN.

“We see many ideas for services, but Namibia needs to focus on reducing its reliance on imported consumer goods, and support local products. The bank has experience in assisting manufacturers, and we would like to see more products which we have financed on the shelves of Namibian shops,” he said.

January 2014
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