Development Bank – a small office and a cellphone
In September 2003, I was focused on what I was doing at the Namibia Investment Centre and an advert for the position of the CEO of the Development Bank of Namibia was being run again. A friend suggested that I apply, which I did, and I was invited for an interview. I was appointed soon after by the board, after consultation with the Minister of Finance, because in terms of the DBN Act, the minister should appoint the first CEO of the bank. On the first of November, I started with the DBN. I did not apply my mind to what I was going to find. I went to the office of the Chairman of the Board, Sven Thieme, expecting to be told where the office was, but there was no office. I approached the Development Fund of Namibia and asked the general manager if I could make use of one of the empty offices, to which he agreed. I started with nothing and needed a PO Box, telephone, a fax number and a computer. Up until that point, I used my cellphone.
The development of policies is a prerequisite for any action. As there was a lot happening around corporate governance (or the lack thereof) in 2004, it influenced our behaviour. Among other things, we realised that we would have to be prudent from day one. We decided that we needed a clear corporate governance framework, dedicated charters for the board and its functions, and policies on management and procedures, on which basis we were to take our decisions. This helped us put together a credible institution.
We were lucky to have excellent relationships with a great number of partners who helped us craft the institution, such as our auditors, who also acted as advisors. During DBN’s formative stage, they allowed us to tap into their organisational infrastructure and network on a number of governance issues and the correct ways of doing things.
This taught me the importance of partnership, and we decided that ‘partnership’ would be a key pillar of the bank. In our formative years, we formed partnerships with the OPEC Fund and Nordic Investment Bank, and found that we had a lot of similarities. In the SADC Region, the first partner we formed a linkage with was South Africa’s Industrial Development Corporation (IDC). IDC provided support in the form of exchange of experts, and secondment programmes that saw our staff gain valuable industry experience and exposure to actual deal structuring in a development finance environment.
The second aspect that helped us greatly, was the conscious decision to recruit people on the basis of what we believed was the skill the bank needed, which is very important to me. Despite Namibia being so small, I met most of the bank’s staff for the first time during the interview. So the only reason I thought they needed to be employed at the DBN was because they had the right profile for the jobs at the bank, and, importantly the right attitude and passion for the work.
We started with seed capital of N$100 million and the initial challenge was how to make the bank function effectively, efficiently and be respected in the market with that level of capitalisation. As we were established as a development bank, and especially when considering the DBN’s mandate as per its Act, we knew we had to finance larger types of businesses. With N$100 million in the kitty, what do you do?
Our initial single obligor limit was N$20 million. This was the single biggest exposure we could have per project. With such a narrow capital base and no track record, nobody wanted to get involved with us at that stage. We couldn’t go to the market and say we would like to raise a certain amount, with no track record and the prevailing views on development finance institutions (DFIs).
The second challenge was that there seemed to have been very few good deals in the market, which the entire financial services sector competed for. When we sorted out our policies, getting good deals remained a challenge, but we managed to play our part within the limitations we faced at the time.
The third challenge, which is also a perennial for DFIs, is that there are many entrepreneurs out there with very limited resources to offer as own contribution or as security or collateral. It has always been a challenge to identify those that will succeed from that pool and where the bank could be exposed without sufficient security.
Firstly, the bank’s launch on 29 April 2004 and the unveiling by President Nujoma of our plaque, remains a personal highlight for me and a historical moment for the bank.
The second highlight was the first loan approvals made public on 14 July 2005. This was an important milestone for us as it was our first baby step through which we could show that we have arrived and that we were ready to do business.
The third is to see the businesses that have been established, to visit the projects, talk to the promoters, to see the employees working in those projects and to see the goods and services that these projects are making as a contribution to the development of this beautiful country. This is what actually inspired me throughout my time at DBN, because I believe that these are the building blocks of what ‘development’ constitutes.
Seeing our clients’ success, when they pay off their loans and having established standing businesses, whether private, public or SMEs. The Caprivi Interconnector Power Line, for example, is one of those projects that gives me the greatest amount of joy. When I see IUM, with its thousands of students and projects like Scooters Pizza with its three branches, I am very proud. In the south, there is the dairy farm, the tannery that exports its products, and houses that were built to replace the corrugated and rusted dwellings in Lüderitz. In the northern regions, when I look at Ongwediva Medipark, and Armstrong construction in Kapako, I am filled with a deep sense of satisfaction.
Always do the right thing, despite what may be convenient in the short term. Think long term. I also know that development work is not a bed of roses. It is filled with trials and errors. It requires sober-mindedness, and prudence, but action must be taken. We cannot afford to be passive. We must take calculated risks.