Development Bank financing helps local enterprises keep the lights on
Three new enterprises have utilised Development Bank’s (DBN) financing to strengthen their enterprises with solar energy. The three include a truck and tractor repair plant in Gobabis, a charcoal manufacturer, also near Gobabis, and a large retail outlet in Okahandja.
This was revealed by DBN Executive of Marketing and Corporate Communication, Jerome Mutumba, this week as he unpacked the potential of renewable energy.
“Although DBN is associated with photovoltaic parks, larger solar electricity generators that feed into the grid, the Bank also finances solar power installations for enterprises,” he said.
Mutumba pointed out that the spread of locations shows that solar installations can benefit businesses across Namibia.
In some cases, he said a new connection to the grid may be prohibitively expensive if the connection and the grid consumption costs are considered.
“In this case, the cost of renewable become economical in the medium to long term, with the initial cost written off against future savings and gains,” he said.
Mutumba said in the face of potential shortages in the Southern African Power Pool, and Namibia’s reliance on electricity imports, independent power generation for own consumption becomes an attractive form of security for business continuity whether the business is grid reliant or not.
“The trend towards own generation by the Namibian private sector, through solar power has become more prevalent, with widely reported capacity installed by large retail facilities and fuel outlets. This is also in line with new approaches in environmental and social governance (ESG),” he observed.
“In addition, own generation by businesses alleviates calls on the national grid, making electricity available for household consumption and enterprises that are not able to establish their own solar generation,” he added.
Developmentally, the net impact, Mutumba pointed out is beneficial, with the greater enterprise security directly linked to the preservation of employment.
The next frontier in the field of solar generation, he adds, is an installation in affordable housing developments, taking the form of solar water heating and/or generation for household use.
“Although the initial cost will be passed on to the owner of the new home, the increment in cost has the medium to the long-term effect of making home ownership more affordable on a monthly basis,” he said.
On the topic of how the Bank can finance solar generation, Mutumba said that the Bank provides finance under multiple sectoral facilities, including tourism, retail, wholesale, manufacturing and transport, and logistics. It can also be financed as an addition to affordable housing developments.
Furthermore, he said, the Bank’s KfW-supported recovery loan may also be a source of finance.
The loan, which has a duration of 32 months or less, has a fixed interest rate of 5,925% but no interest is levied for the first 12 months of the loan. Although the loan has a short duration, enterprises that have reserves and are in a position to repay faster should consider the opportunity.
“If businesses benefit from solar, we have a duty to support it and add it to our operational sustainability” he concluded.