Namdeb Defends Oshipe Fund

IN response to the letter that appeared in The Namibian edition of September 7 2007, kindly allow me the opportunity to address the concerns raised by “Concerned Prospective Entrepreneur”.

Oshipe Development Fund is a subsidiary of Namdeb which complements the company’s existing Corporate Social Responsibility Initiatives, namely the Namdeb Social Fund (NSF) and the Namdeb Employees Social Responsibility Fund (NESRF), as well as other ad hoc funds administered by various departments within Namdeb and its subsidiaries. To my knowledge, Namdeb is one of very few companies in Namibia that has three dedicated funds involved in corporate social investment outside the scope of their normal core business activities.As for the objective of Oshipe allow me to correct the statement of the writer that “This Fund is modelled along the lines of venture capitalism”.In fact, Oshipe provides financial assistance in the form of business loans and or equity.In the case of close corporations, from whom we receive the majority of applications, only loans are considered.With regard to private companies, the owners have a choice of opting for funding through a loan, or a financial structure that consists of a combination of a business loan and equity investment (for shareholding).Furthermore, Oshipe is not a bank and has a much higher risk tolerance than that found at commercial financial institutions.With criteria such as a 10 per cent own contribution requirement and no prerequisite collateral to be offered, we have to ensure that proper due diligence is done before decisions are taken on potential investments.It seems that the main concern of the anonymous writer revolves around the turn-around time of applications in process at Oshipe.The standard business process is that an acknowledgement letter is issued within 14 days of any application submitted.This is the accepted norm in the industry.Applications are then arranged according to pre-determined qualification criteria.They are either rejected if not meeting the criteria, or referred for further investigation.It is not only the Business Development Manager who assesses business plans.First time rejections usually occur within 21 days of the initial submission and the reasons for the rejection are communicated to the entrepreneur – once again a common industry norm.In respect of the applications referred for further investigation, a meeting is arranged with the entrepreneur to discuss certain shortcomings and/or outstanding information in the business plan.In instances where a face-to-face meeting is difficult for the entrepreneur (due to location, for instance), a detailed letter outlining all the outstanding aspects is despatched in order to speed up the finalisation of the investigation process.Modern technology like e-mail to which the writer refers, is only used in the event that the applicant has indicated that as the preferred means of communication.However, the majority of letters are faxed, followed by the original letter through the post.After the first meeting or discussion with the applicant, the application is put on hold until such time that additional information is submitted.In some cases, this part of the due diligence process does take up to three months, but this is mainly because Oshipe has to wait for the entrepreneur’s response to the first due diligence exercise and has little to do with Oshipe’s internal business processes.It needs to be clarified that Oshipe does not only consider financial assistance, but also provides professional business support.The latter is often an extremely time consuming but nevertheless a very useful exercise since the intention is to assist the entrepreneur to better illustrate the commercial viability of the business.This gives the entrepreneur a better chance of success not only in terms of becoming self-sustainable, but also in order to seek assistance from other financial institutions.In addition, when there are some good prospects in the business concept but it is not well illustrated within the business plan, we work with the entrepreneur in order to improve his/her business plan.The main difference here is that, applications in progress do at times take longer than with other financial institutions, but that is mainly because Oshipe does not give a YES/NO answer immediately (although it would be easier to do so) but try to work with the entrepreneur in order to assist in setting up a feasible framework for his/her new business.In a country as vast as ours, proximity inevitably also plays a role.Setting up a meeting with an entrepreneur in remote areas usually takes longer than with businesses that are geographically closer to Windhoek.However, Oshipe personnel often travel vast distances to physically conduct site visits on businesses that have the potential to be considered for funding.Consequently, there is sometimes a delay in terms of verifying information in the business plan and or waiting for outstanding information.All these elements are clearly outlined in Oshipe’s documents outlining criteria for applications.It is not uncommon for applicants to feel upset when Oshipe rejects their business plans.In our experience, some of the reasons for past rejections were: Many SMEs apply to Oshipe for donations – Oshipe is not a charity business.Because of our association with Namdeb (our mother company), many applicants often expect a direct hand-out approach because they assume that Namdeb is “giving money away” or believe they are somehow entitled to receive donations from Namdeb.Many owners do not want to go through the exercise of improving their business plans and take constructive critique very personal.Some business owners do not understand the contents of their own business plans (drawn up by a consultant) and when questioned about some aspects of the business, they refer it to the consultant.Oshipe cannot invest in a business where the owner does not understand or knows the contents of his business plan.With reference to “Concerned Prospective Entrepreneur’s” letter, Oshipe welcomes positive criticism and intends to incorporate suggestions in the growth and changes of the Fund as we proceed.It is however a pity that individuals like these do not verify their facts before they go public with their opinion and consequently damage not only the image and intentions of Oshipe, but also that of our mother company, Namdeb.Despite the extremely sensitive nature of the industry in which we operate, we continue to see many successful businesses arise with the assistance of Oshipe.These are apart from the ones that OSHIPE has funded, but others consist of businesses which have persistently gone through the painful road of continuously improving their businesses plans up to a point where other financial institutions are willing to assist them financially.To this effect, Oshipe has delivered and continues to deliver on its promise to promote entrepreneurial and SME development in Namibia.Given the amount of applications that Oshipe receives monthly, we believe that we do occupy a small and important niche market in the SME industry and although we are not very popular with those that do not agree with our processes or due diligence and investment criteria, we will remain available to many prospective entrepreneurs who wish to start their own businesses.Janita von Wielligh Executive Manager Oshipe Development FundTo my knowledge, Namdeb is one of very few companies in Namibia that has three dedicated funds involved in corporate social investment outside the scope of their normal core business activities.As for the objective of Oshipe allow me to correct the statement of the writer that “This Fund is modelled along the lines of venture capitalism”.In fact, Oshipe provides financial assistance in the form of business loans and or equity.In the case of close corporations, from whom we receive the majority of applications, only loans are considered.With regard to private companies, the owners have a choice of opting for funding through a loan, or a financial structure that consists of a combination of a business loan and equity investment (for shareholding).Furthermore, Oshipe is not a bank and has a much higher risk tolerance than that found at commercial financial institutions.With criteria such as a 10 per cent own contribution requirement and no prerequisite collateral to be offered, we have to ensure that proper due diligence is done before decisions are taken on potential investments.It seems that the main concern of the anonymous writer revolves around the turn-around time of applications in process at Oshipe.The standard business process is that an acknowledgement letter is issued within 14 days of any application submitted.This is the accepted norm in the industry.Applications are then arranged according to pre-determined qualification criteria.They are either rejected if not meeting the criteria, or referred for further investigation.It is not only the Business Development Manager who assesses business plans.First time rejections usually occur within 21 days of the initial submission and the reasons for the rejection are communicated to the entrepreneur – once again a common industry norm.In respect of the applications referred for further investigation, a meeting is arranged with the entrepreneur to discuss certain shortcomings and/or outstanding information in the business plan.In instances where a face-to-face meeting is difficult for the entrepreneur (due to location, for instance), a detailed letter outlining all the outstanding aspects is despatched in order to speed up the finalisation of the investigation process.Modern technology like e-mail to which the writer refers, is only used in the event that the applicant has indicated that as the preferred means of communication.However, the majority of letters are faxed, followed by the original letter through the post.After the first meeting or discussion with the applicant, the application is put on hold until such time that additional information is submitted.In some cases, this part of the due diligence process does take up to three months, but this is mainly because Oshipe has to wait for the entrepreneur’s response to the first due diligence exercise and has little to do with Oshipe’s internal business processes.It needs to be clarified that Oshipe does not only consider financial assistance, but also provides professional business support.The latter is often an extremely time consuming but nevertheless a very useful exercise since the intention is to assist the entrepreneur to better illustrate the commercial viability of the business.This gives the entrepreneur a better chance of success not only in terms of becoming self-sustainable, but also in order to seek assistance from other financial institutions.In addition, when there are some good prospects in the business concept but it is not well illustrated within the business plan, we work with the entrepreneur in order to improve his/her business plan.The main difference here is that, applications in progress do at times take longer than with other financial institutions, but that is mainly because Oshipe does not give a YES/NO answer immediately (although it would be easier to do so) but try to work with the entrepreneur in order to assist in setting up a feasible framework for his/her new business.In a country as vast as ours, proximity inevitably also plays a role.Setting up a meeting with an entrepreneur in remote areas usually takes longer than with businesses that are geographically closer to Windhoek.However, Oshipe personnel often travel vast distances to physically conduct site visits on businesses that have the potential to be considered for funding.Consequently, there is sometimes a delay in terms of verifying information in the business plan and or waiting for outstanding information.All these elements are clearly outlined in Oshipe’s documents outlining criteria for applications.It is not uncommon for applicants to feel upset when Oshipe rejects their business plans.In our experience, some of the reasons for past rejections were: Many SMEs apply to Oshipe for donations – Oshipe is not a charity business.Because of our association with Namdeb (our mother company), many applicants often expect a direct hand-out approach because they assume that Namdeb is “giving money away” or believe they are somehow entitled to receive donations from Namdeb.Many owners do not want to go through the exercise of improving their business plans and take constructive critique very personal.Some business owners do not understand the contents of their own business plans (drawn up by a consultant) and when questioned about some aspects of the business, they refer it to the consultant.Oshipe cannot invest in a business where the owner does not understand or knows the contents of his business plan.With reference to “Concerned Prospective Entrepreneur’s” letter, Oshipe welcomes positive criticism and intends to incorporate suggestions in the growth and changes of the Fund as we proceed.It is however a pity that individuals like these do not verify their facts before they go public with their opinion and consequently damage not only the image and intentions of Oshipe, but also that of our mother company, Namdeb.Despite the extremely sensitive nature of the industry in which we operate, we continue to see many successful businesses arise with the assistance of Oshipe.These are apart from the ones that OSHIPE has funded, but others consist of businesses which have persistently gone through the painful road of continuously improving their businesses plans up to a point where other financial institutions are willing to assist them financially.To this effect, Oshipe has delivered and continues to deliver on its promise to promote entrepreneurial and SME development in Namibia.Given the amount of applications that Oshipe receives monthly, we believe that we do occupy a small and important niche market in the SME industry and although we are not very popular with those that do not agree with our processes or due diligence and investment criteria, we will remain available to many prospective entrepreneurs who wish to start their own businesses.Janita von Wielligh Executive Manager Oshipe Development Fund