By Mbatjiua Ngavirue
WINDHOEK The Namdeb Diamond Corporation (Pty) Ltd recently officially launched its Oshipe Development Fund aimed at promoting entrepreneurship and SME Development through investment in commercially viable businesses. There is already a number of SME support programmes on the market, including the Development Bank of Namibia/Bank Windhoek scheme and Nedbank’s SME programme. In addition, the Ministry of Trade and Industry offers a variety of assistance to SMEs, and the Namibia Chamber of Commerce and Industry recently introduced its new SME Business Toolkit. In an already crowded market, Namdeb clearly went out of its way to differentiate between its product and others when it conceived Oshipe Development Fund (Pty) Ltd to prevent overlap and duplication. Announcing the new scheme recently, Namdeb’s Group: Business Services Manager, Paulo Shipoke, said the idea for Oshipe was born a number of years ago, with final approval by the company’s board in 2005. Shipoke explained that Namdeb’s desire to increase the amount it spent on local procurement was a strong driving force behind the decision to start the project. The Oshipe Development Fund will give preference to businesses that could potentially become part of Namdeb’s supply chain. He said the company went out of its way to create a concept that would not compete with initiatives by government and other institutions. One way in which Oshipe will differentiate itself, he said, is that the fund will not necessarily throw away a business plan, even if it is poorly written. Instead, the fund will work with the entrepreneur until they come up with a “bankable” proposal. He also indicated that Oshipe will be less stringent on collateral, funding some ventures that ordinary commercial banks normally would not touch. The fund will also allow longer grace periods for loan repayments of between one and two years. “We will only expect repayment to start when a business is properly established and the business has started generating returns,” Shipoke noted. Another value proposition from Oshipe would be through a hand-holding approach in which the fund would constantly be available for advice, guidance and monitoring of the business. “A common problem with start-up businesses is that often the owner will go out and buy a brand new BMW with the first profits instead of ploughing money back into the business,” he remarked. The monitoring will ensure that there are no nasty surprises, and Oshipe will know about potential problems long before a business collapses. A positive aspect about the Oshipe Fund is that it does not beat around the bush about what type of projects it is prepared to fund, and those that it will not support – thereby leaving no one in any doubt. The fund has a long list of the type of projects it will not fund, which any prospective applicant should consult. The most unique feature of Oshipe is perhaps that the fund takes an equity stake in the businesses it funds, making it more of a venture capital fund than your standard SME support programme.
The funds will make its investments through customized funding structures, consisting of a combination of equity investment and a loan. Oshipe’s shareholding in a company will be between 26 and 49 percent, as mutually agreed upon by the fund and the owners – or promoters – of the business. The aim of the minimum 26 percent shareholding is to ensure that the business can take no major decisions affecting its operations without consulting Oshipe. Oshipe Development Fund’s business development manager, Janita von Wielligh, emphasized that the fund did not exclude white-owned businesses. “But we would like to see active black participation, and not just people put there for window-dressing,” she added. She said the fund would be flexible on the N$500 000 to N$1-million target investment range, meaning it could be slightly less or slightly higher. The fund would, however, not consider investments in the N$150 000 to N$250 000 range, as it would not be viable for the fund due to the administrative costs involved. Since starting operations in February 2006, Oshipe has funded three start-up companies and three existing businesses to a total value of N$3 735‚ 000 and creating an estimated 120 employment opportunities. The start-ups include a vegetable production plant in Oranjemund, a garment manufacturer and a hair-braid manufacturer in Windhoek. Existing businesses funded by Oshipe include a slasto stone production plant and the manufacturing of slasto tiles and bricks at Uutapi, Ruacana. The other two are a radiator and refrigeration maintenance and repair business in Rundu and a manufacturer of school tables and school chairs at Arandis. Shipoke explained that Namdeb chose the name Oshipe after consultations with the company’s employees. The name is derived from a word that Oshiwambo language groups use to denote thanksgiving ceremonies to mark the harvest of the year’s new mahangu crop. “Diamonds are a finite resource, and we hope Oshipe will be the legacy of Namdeb long after the diamonds are gone,” said Shipoke.