Frequently Asked Questions

Why does a 'development bank' finance private sector start-ups and expansions?

At DBN, we recognise that private sector businesses play a very important role in economic development. Private sector businesses have shown the ability to:

• Create employment
• Improve the quality of the workforce
• Diversify the economy
• Diversify ownership of equity
• Assist in decentralisation
• Produce substitutes for products and services that are currently sourced across borders
• Develop infrastructure
• Strengthen the base of fixed assets in the country.

Organisations with feasible business plans that create employment and satisfy a combination of the above requirements should contact DBN.

Is a Black Economic Empowerment (BEE) component prerequisite?

BEE aims to redress the inequalities of the past by giving previously disadvantaged Namibian citizens economic opportunities previously not available to them. It includes measures such as equal employment opportunities, skills development, business ownership support, and preferential procurement.

BEE is not a prerequisite at DBN, as our portfolio of projects shows, but DBN considers diversification of ownership a critical factor in developing the economy.

DBN gives preference to loans which provide opportunities for formerly disadvantaged Namibian shareholders to participate in the day-to-day management of organisations, for instance management buy-outs.

Pure equity finance may be considered, subject to viable business plans and a contribution to development, but DBN prefers and encourages participation on the part of management.

Does the Bank finance infrastructure?

DBN provides financing for public sector projects and private public partnerships. Major infrastructure projects are judged on clear long term viability, capacity to generate income and long term benefit to the economy.

What collateral does DBN require?

DBN views its request for security or collateral as an accountability measure, which extends to the Bank’s own accountability to the public in view of it being capitalised from national resources.

Collateral as cash contributions is not necessarily a requirement to access funds.

However, the Bank requires commitment from clients in order to secure its own sustainability. Such commitments can take the form of third party collateral; cession of project income and insurance policies; fixed and movable assets; and assets acquired through DBN financing. Although the DBN is sensitive to difficulties in providing collateral on the part of certain economic segments, the Bank does require commitment from clients. The intent is to develop a partnership with clients and instill a sense of accountability to the Bank.

How does DBN consider environmental impact?

DBN considers low negative environmental impact of critical importance, and applicants may be asked to provide an environmental impact assessment.

Are applications treated confidentially?

Yes. In keeping with the values and ethics, as well as the position of trust which the DBN has earned, all information divulged by the applicant is strictly confidential and third party divulgence will be treated in a very serious light.

Why does DBN provide finance through commercial banks?

First National Bank of Namibia and Bank Windhoek have been selected as wholesale SME finance providers for the following reasons:

• Their nationwide branch network enables them to provide wide-ranging services across the country.
• These branch infrastructure alleviates the immediate need for DBN to establish infrastructure, thus releasing money for enterprise development.
• The support offered through these two banks' mentorship programme has led to an exceptional 95% loan repayment rate, which shows that the loan holders are able to honour their commitments to the banks.

Explain the Bank's due diligence process?

The due diligence process is designed to objectively identify the merits of each proposal, and is consistently and rigorously adhered to. The Bank evaluates all projects submitted for mandate and portfolio fit, sponsors' credibility and evidence of economic viability through a series of steps designed to ensure the institutions' credibility.

These considerations evaluate and highlight each project's financial and technical soundness as well as the environmental and social impacts, for further recommendation to the board.

The Bank's appraisal processes are geared to identify limitations at the outset and highlight appropriate risk mitigation measures to foster the success of projects.

The Bank's policies and practices are exercised in a transparent manner. Activities are conducted with due consideration for the requirements of public accountability, while taking into account sensitive aspects of projects.

How long does it take to process an application?

The length of the process is determined by the complexity of the application and the quality of the documentation of the proposal by the promoter. Typically, this process will be less than six weeks. Promoters can request feedback on the proposal's progress throughout the process as the management of applications takes place in a transparent manner.

Why does the DBN finance franchises?

Franchises have a higher success rate than Independent business start-ups and are good business models and avenues for job creation and entry for new entrepreneurs. DBN extends a minimum of N$ 250,000 to franchises.

• The franchise rights should be registered In Namibia.
• The franchisee should have acquired the franchise rights from the master franchisee or from the franchisor
• The franchisor should have successfully operated the business in the country where the franchise originated and where it was initially registered
• The franchisor should have the capacity and infrastructure to support the franchisee
• At least one of the franchise owners should be involved in the daily operations of the business.

What security is required?

DBN requires collateral. This can be financial instruments held by the applicant, assets not related to the project, assets acquired for the project or 3rd party guarantees. The level of collateral required is project-specific.