DBN in N$392.7m SME loan headache

September 10, 2021
Jerome Mutumba Jerome Mutumba

The Development Bank of Namibia (DBN) says it is currently faced with an SME loan book where 58% of the loans advanced, valued at N$392.7 million are nonperforming.

The DBN, which has a Gross SME Loan Portfolio valued at N$675.7 million as at the end of July 2021, said of the 770 SME accounts with the bank’s SME portfolio, 523 are non-performing.

This comes as the funding institution has been at the receiving end of criticism for having stringent loan requirements when it comes to funding for startups and entrepreneurs.

“The Bank has been experiencing a high level of non-performing loans and defaults, specifically on its SME loan portfolio, which management of the Bank wants to contain. The current levels of SME loan defaults are not sustainable at all. Therefore, the call for the bank to advance loans to SMEs and start-ups with ease should equally go with a call to all borrowers to honor their loan repayment arrangements with the Bank.  If we do not manage our financial capital sustainably, there may be no capital to lend out in future. This financial capital is not limitless,” DBN Senior Manager for Corporate Communications Jerome Mutumba said.

He said the bank was aware of the criticism around its lending policy, “which can be viewed to be tedious in some cases given the number of documents and information that the Bank requires to support and enable a loan application.”

“Unfortunately, besides such information and documents being necessary for the Bank to make an informed lending decision, some of the information and documents are a prescript of the law.  However, the Bank continues to review the current practices to lessen the perceived impediments. The Bank is aware of sentiments expressed by some entrepreneurs and members of the public that the Bank asks too many questions and does not grant loans easily. The Bank aims to lend responsibly and also ensure its long-term sustainability whenever it takes business decisions,” Mutumba said.

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Last modified on Tuesday, 28 December 2021 08:56

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