The Development Bank of Namibia has taken up the responsibility of opening up new financial channels and taking on the risk of cutting-edge forms of financing for infrastructure and business.
The bank said as the economy evolves, new needs become apparent and it is vital that enterprise and infrastructure finance evolves as well.
“If not for this evolution, the economy will begin to lag, in terms of providing an enabling environment for economic activity, solving issues, and in terms of national competitiveness on the regional and global stages. The ability of finance to adapt to the changing Namibian economy and enterprise ecosystem is hampered by two factors. Firstly, commercial sources of finance are risk avoidant. Secondly, although the funds subsector is developing,” said the bank.
DBN’s Spokesperson Di-Anna Grobbler says they have since adopted the role of pioneering avenues of finance and absorbing risk on innovative forms of finance for enterprise and infrastructure.
“The Bank accepts that its models will be replicated in terms of its mandate, to foster economic and social wellbeing in Namibia. Through its models, the bank effectively mitigates the risk of finance within the sector or financing space and leads by example,” Grobbler added.
According to her, notable examples of that include finance for privately owned renewable energy facilities as well as contract or tender-based finance, the latter in terms of which contracts are financed on the basis of revenue streams from the contract.
She however said the Bank takes a cooperative approach from time to time and has in the past provided stimulus for SME finance in the form tranches of capital to two commercial banks to foster on- lending to SMEs.
Additionally, the financial institution also administers the Credit Guarantee Scheme (CGS) which is offered by First National Bank and Standard Bank where the CGS reduces the collateral requirement by 60% for qualifying SMEs.
“In terms of addressing current economic issues, the Bank has pioneered land servicing in PPP models, skills-based finance for young artisans and professionals and is actively promoting agri-industry to support primary agriculture and food security. The latter takes the form of manufacturing inputs and services for agriculture, agricultural infrastructure and processing of agricultural produce,” Grobbler noted.
She further stressed that DBN’s track record in the field of ICT and transformation includes finance for Nampost’s biometric system that substantially expanded access to Banking, finance for Namibia’s second mobile provider, Cell One, as well as finance for internet service providers and ICT companies.
She additionally said they are actively researching a financial product to promote access to finance and inclusive economic participation for women and youths.
“The Bank’s success in innovating finance is rooted in its deep understanding of the sectors and enterprises that form its ecosystems. Aside from its own substantial body of experience, this is also embodied in its Project Preparation Fund. Taken together, the track record of DBN in innovating, as well as its experience and its role as a brains trust indicates that the future of the Namibian economy and the financing sector is in good hands,” Grobbler maintained.