SMEs get financial boost

The Development Bank of Namibia (DBN) formalised an agreement to place N$50 million under management of The Namibia Procurement Fund (NPF) at a signing ceremony held last week in Windhoek. The amount will be allocated to finance Small and Medium Enterprises (SMEs) who have signed contracts with larger, reputable corporates, Ministries and parastatals. The capital will be used for various bridging finance purposes, particularly working capital and asset finance. The Development Bank of Namibia, Chief Executive Officer, Martin Inkumbi said, the Bank has a policy of providing apex finance to organisations that can disburse and administer loans in terms of the DBN mandate. Inkumbi pointed out that DBN apex finance is available to microlenders who adhere to the Bank’s apex microfinance policy, and that the N$50 million capital tranche should be seen in the same light. He said the bank’s ability to fulfil its mandate was expanded by cooperation with reputable partners. “With this agreement,we join forces with The Namibia Procurement Fund, to grow our ability to reach SMEs,” he said. “Our capacity is growing at a sustainable pace, so we engaged with NPF expecting to provide yet more loans. The fact that NPF uses a similar model to DBN contract-based finance to SMEs makes the Fund a natural choice.”

Talking about the Bank’s confidence in the Fund to deliver on the DBN mandate, Inkumbi said that NPF’s governance paralleled that of DBN operationally and in the form of two oversight sub-committees, an Audit, Risk and Compliance Sub-Committee, and an Investment Sub-Committee. He also pointed out that a Conflict Resolutions Sub-Committee was also in place to deal with and manage disputes. “This gives us confidence in the sustainability of NPF, as well as our ability to sustain medium-tem cooperation with the Fund,” Inkumbi said. Asked about the need for medium-term cooperation, Inkumbi said the nature of finance should be matched to the duration of contracts, which would entail short to medium-term delivery on the part of SMEs, so the capital amount to NPF is provided on a medium-term basis. He said that NPF had been identified as a potential agency in the past, and that the Bank had previous experience with key individuals involved in operating the fund. This, he said, was a further basis for the bank’s confidence in fund. The Namibia Procurement Fund was established with initial funding of N$160 million from GIPF. It’s capitalisation has subsequently grown to N$300 million, and it has provided N$400 million in facilities to SMEs.