WINDHOEK – Namibia’s SME Bank, which was founded by the government in 2012, has reported that 5 000 clients have made deposits and approximately 1 000 have applied for loans during its 16 months of operations.
The value of the bank is now estimated at N$40 million and the institution is set to soon receive N$630 million in non-reimbursable funding from government to expand its operations to all 14 regions of the country, with the intention of fueling growth among small and medium-sized enterprises.
It provides personal banking, corporate banking, and treasury and investment management services for small and medium-sized enterprises, rural communities, micro-enterprises and the previously disadvantaged.
Currently the SME Bank has only one office, in Windhoek, but it intends expanding to Katutura, Ongwediva and Rundu. This week New Era’s Senior Business Reporter, Edgar Brandt, had a one-on-one interview with the CEO of the bank Tawanda Mumvuma about the services offered by the bank and its expansion.
Q: What new services is SME Bank bringing to the local market?
TM: “SME Bank is a specialised bank whose mandate is to grow and develop small and medium enterprises. We are the first bank to offer clients no cash deposit fee on all cash deposits and we have amongst other new products flexible collateral requirements. We also introduced longer working hours (08h00 to 17h30 weekly and 08h00 to 14h00 on Saturdays) which is a first in the local banking sector.”
Q: But your bank has been described as too Zimbabwean … how do you respond to that? Is it a Namibian or Zimbabwean bank?
TM: “We are a Namibian bank which is owned 65 percent by the Government of the Republic of Namibia, and only 35 percent is owned by investors from Zimbabwe.”
Q: How do you describe your relationship with the Bank of Namibia (BoN), and other banks, being a new entrant in the market?
TM: “As a newcomer our relationship with BoN is exceptionally good – we go through regular inspections from BoN and our relationship will improve with every encounter with them. We have good relationships with other banks and the cooperation we receive from them is notable especially when we have to go through certain system tests on platforms like NamClear.”
Q: What is your advice to local entrepreneurs?
TM: “We invite all entrepreneurs, upcoming or established businesses, to make use of our products and services for them to invest and support the bank. By doing so they are contributing to realising Vision 2030 and jointly we will definitely grow our economy.”
Q: In what area of entrepreneurship is the bank receiving the most loan requests?
TM: “So far we have assisted more tender-based construction businesses.”
Q: When will the bank branch out to all the other regions as part of its expansion plan?
TM: “Currently the SME Bank is only accessed in the Khomas Region. Being a mass bank, we have taken note of the need to be easily reachable by our clientele, most of whom do not have enough resources to travel to and from the capital for loans and our other services.
“Following an allocation by Treasury in the current MTEF (Medium Term Expenditure Framework) where N$630 million has been set aside for the SME Bank by the majority shareholder, the Namibian Government, the board has approved plans to institute Phase 1 of the Expansion Process. Phase 1 includes opening up branches in the Oshana Region (Ongwediva), in Kavango East we have identified the regional capital Rundu, as well as another branch of the SME Bank to be opened in Katutura, the second in the Khomas Region.
“It is important to note that we are now waiting for a formalisation process by the regulator, the Bank of Namibia. Like any other regulator, checks and balances will be carried out to ensure that such a process is smooth. We are currently in talks and consultation with the regulator on the best practises and on how we can best serve the Namibian masses who need our services, once we branch out.”
Q: What will the benefit be for the bank and its clients to branch out, particularly for the youth?
TM: “Currently the bank has close to 5 000 clients who make deposits and normal transactions on a daily basis and has approximately 1000 loan clients who have received N$40 million worth of loans from the bank. That is proof that we have matured in just over one year of operation. The trust and faith we have received from our clients in such a short spell has inspired us to strive to provide more solutions for entrepreneurs in our country. Following consultative processes with stakeholders, entrepreneurs and businesses across the country, we have seen the need to expand. We have received numerous requests for our services from SMEs in northern Namibia and the east of the country following government’s recent move to create a new region in the Kavangos. We are positioning ourselves for the great potential those two Kavangos will unleash in their upcoming developments.
“The two Kavangos have so much potential to change the entrepreneurial landscape of eastern Namibia stretching as far as Katima, which has many investment opportunities, besides being the mainstay of the Trans-Zambezi Corridor.
SME Bank provides special attention to projects of SMEs, and those catering to rural communities, micro enterprises and previously disadvantaged individuals (PDIs). We have a full Commercial Banking License and also offer banking services to individuals and companies that are not necessarily SMEs, through personal banking (retail), corporate banking, treasury and investment management. So besides that, we are also bringing banking closer to the people. Ongwediva is central to most of our northern clients, most of whom make up our clientele.
Apart from that it has been part of the SME Bank plans to have representation in the long-term in all 14 regions of the country in order to enhance our services and limit the handling time of loan applications and approvals.”
Q: SME Bank received its NamClear certification, what does this mean for the bank and for its customers?
TM: “NamClear agency is originally a cooperative venture between all Namibian-based banks, namely: Bank of Namibia, Bank Windhoek, First National Bank, Nedbank and Standard Bank, a body tasked with the clearance of all bank guaranteed cheques from all commercial banks in the country, as well as other electronic services, such as online banking.
“For some time, our customer deposits and payments were made through another commercial bank. Our clearance on NamClear means we are now live on two of the three payment streams – that is, cheque payment system and the electronic funds transfer (EFT) system.
We are currently working on the card payment system, which will include both debit and credit cards. Our cards currently were only compatible with our ATMs, which are located at the head office/main branch, Maerua Mall, Evelyn Street and Monte Christo Shoprite complex. That will be a thing of the past.
“The acceptance of SME Bank by an establishment such as NamClear presents a unique opportunity for our acceptance in the market. We must admit that it has taken us a bit of time to structure appropriate instruments of funding for SMEs. We are happy to say that with the support of institutional and public depositors we are now able to support SMEs with medium term funding. We are currently working hard to mobilise resources for long-term funding and we are looking forward to the continued support from institutional and public depositors.”
Q: How else can Namibians benefit from the SME Bank?
TM: “The government of Namibia which is the majority shareholder in SME Bank has committed to investing in the bank’s newly created fund – “SME Revolving Fund”—a special fund that the SME Bank has created specifically to provide medium to long-term funding to SMEs that have projects of a developmental nature that need funding.
The challenge is that the project promoters lack the traditional collateral to support their borrowing.
It is difficult to use ordinary depositors’ funds for such projects but with a special purpose funding vehicle such as the Revolving Fund it will be much easier for SME Bank to support SMEs.
Entrepreneurs supported through the fund will also receive mentoring support for their businesses.
“In conclusion, now that we enter a new phase of SME banking, as we pass the teething phase of the bank, you can now imagine the potential to be unleashed by the bank, if we managed to achieve so much with so little. It is a new day for SMEs in the country.”