Micro-lenders get financial boost
The Development Bank of Namibia (DBN) is to provide a N$50 million line of credit to the Namibian Procurement Fund for on-lending to SMEs for working capital and asset finance.
The DBN Communication Manager Jerome Mutumba said, “In response to the growing needs of the majority of the citizens with no access to finance, the Development Bank of Namibia (DBN) deemed it appropriate to come up with an apex micro-finance product to bridge that financing gap in the economy.” “The product is designed for micro-lenders with clear intent for on-lending to clients with developmental needs, not those who simply require finance for consumption, that apex micro-finance can add significant developmental value to micro-loans,” he added.
Said Mutumba, “A walk through many of the rural settlements, towns and cities in Namibia shows that micro-finance has a bearing on the lives of the people and it is thriving. Micro-loans which are directed to productive activities in the economy are essential.”
The development of micro-lending as a sub-sector of the financial sector is to be expected as a natural step in the evolution of local finance and the DBN wants to play its pivotal role in that regard. “This is supported not only by demand, but also by the fact that the administrative barrier to access finance can be lifted. Micro-financing institutions that DBN will work with shall be registered and regulated by the authorized body, to ensure that clients’ interest and rights are not abused. This offers comfort to DBN, an institution that promotes responsible lending and borrowing in the economy,” he said. He said the loans to be extended should clearly be life changing, such as life-cycle needs, personal emergencies such as sickness, and recovery from emergencies such as drought and flooding, but in most instances they should be offered for enterprise start-ups and bridging finance. Meanwhile he said, “development is challenged by a multitude of needs which make the operational burden difficult, however with facilities such as an apex micro-finance facility, willing and excellent partners, and sound administration of the facility, the needs of many can be satisfied.
Since the creation of this facility, DBN has developed a track record of successfully providing micro-finance to developmentally beneficial micro-lenders, notably to support teacher development.