SMEs plead for lower interest

DBN has stressed it is willing to fund projects, especially involving SMEs, which do not have anything to offer as collateral.

19 July 2019 | Business

SMEs and emerging entrepreneurs in Kavango East want the Development Bank of Namibian (DBN) to lower its lending interest rate, in order to facilitate more affordable repayment instalments.

This was one of the points raised by youth during a DBN information-sharing meeting that took place in Rundu on Wednesday.

They said they are discouraged from applying for loans, due to the high interest rate.

The bank makes use of the current prime lending rate of 10.5%.

DBN senior portfolio manager Hellen Amupolo explained it will not make economic sense for the bank to lower its lending interest rate to below prime. Amupolo said this is because DBN also borrows money from elsewhere and the bank's mark-up results in the 10.5% interest rate.

“We also borrow from somewhere else and just like any business we have to add a mark-up on our investment. We, as a bank, also do not want to under-price ourselves. What we get is what we give, with due diligence. That is why we cannot lower our lending rate,” Amupolo said.

She, however, stressed that DBN is willing to fund projects, especially involving SMEs, which do not have anything to offer as collateral.

Amupolo said the main factor when lending money and supporting entrepreneurs is their innovation and showcasing that the business will be viable. She encouraged those people sitting on viable business plans to approach DBN, and hopefully get the necessary funding, so they can subsequently contribute to the development of the country.

She also revealed that at 31 March, DBN's loan book stood at over N$8 billion. However, the collateral attached is less than 50% of this amount.

Other issues discussed included the funding of intellectual property and research. “The research and coming up with intellectual property is not funded by DBN; we only come in once it is being translated into a business,” said DBN CEO Martin Inkumbi. He also elaborated on the funding of rural projects, saying once a person has acquired a leasehold for land and their project is viable, DBN will be able to fund it.

Inkumbi also used the opportunity to market their new office in Rundu, which was officially opened in February. He called on potential clients to approach the bank.

During its 14-year existence, DBN has loaned out N$15 billion, with Kavango East benefitting to the tune of N$228 million to date.

“People, in the past, from the north-eastern areas used to complain that we are just in Windhoek, now we are here in Rundu, we have an office; make use of it,” he said.


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