DBN Orients Financial Literacy to Empower Entrepreneurs in //Kharas

It is worrying that loans worth more than N$1 billion have been issued over the past 17 years to applicants residing in the llKharas region. This concern was expressed by the Executive of the Development Bank of Namibia: Marketing and Corporate Communications, Jerome Mutumba, during an interview with entrepreneurs in Keetmanshoop last week.

He was speaking at a public engagement session explaining the DBN’s mandate, the reasons for the rejection as well as various financial assistance programs available to the bank’s entrepreneurs.

“However, it should also be mentioned that many loan applications are sometimes rejected due to errors written on your respective business plans,” he explained.

Mutumba said unrealistic and inflated financial projections are among the most common mistakes. “We are aware that some ‘advisors’ encourage you to come up with profitable business ideas that will apparently break even or make a profit in the first few years, in order to increase your chances of getting loans, when the reality is that these companies must first grow before they reach any of these financial projections,” he noted.

The executive added that these unrealistic cash flow projections will prevent lenders from honoring their repayment commitments with DBN in the long term, which will have adverse consequences in the end. Applicants should further be careful not to purchase assets for their businesses that are not productive or can generate profits, such as expensive vehicles, as they will lose money in the long run. He also advised potential applicants not to apply for funds to open shebeens or game stores, to name a few, as the entity does not fund socially irresponsible businesses.

“Another challenge is that applicants are sometimes listed on credit bureaus (ITCs), so I advise you that the DBN supports responsible lending and a culture of applicants paying their accounts in accordance with agreed credit agreements,” a- he continued. Mutumba said that in some cases, the bank imposes a requirement that contractors who have received funding for government tenders can only be paid by the respective ministry or agency once the repayment installment is completed. agreed was paid directly by these government institutions to DBN.

Speaking on the same occasion, DBN’s investment manager, Heroldine Carstens, explained that the bank offers four models of financial assistance, namely agricultural business financing, skills-based financing, business recovery and the credit guarantee program.

“In terms of agricultural financing, the DBN will provide secondary financing to existing projects with the aim of expanding business activities such as setting up flour milling plants, cold freezing facilities and food processing equipment. meat,” she said.

Carstens said the business resumption model is more about financing businesses adversely affected by Covid˗19, economic recession and drought. “These funds are intended for operational expenses, expansion of the respective businesses, increased production volumes and purchase of machinery and equipment,” the investment manager said.

The skills-based financing scheme is tailor-made for young professionals, graduates and artisans who have completed their studies in higher education institutions and vocational training centres.

“The main objective of this initiative is to create jobs and address skills shortages for these candidates,” she said.

When developing the credit guarantee scheme, Carstens said the idea is that the DBN wants to reduce the guarantees required
from commercial banks for new credit facilities and in doing so enable potential entrepreneurs to access these loans. “We have so far negotiated with two commercial banks that DBN will provide a guarantee for 60% of these mandatory guarantees, while the borrower can now only provide the remaining 40%,” she confirmed. .

2022-08-19 Steven Klukowski

Geraldine L. Melton