Profitable banking can be pro-poor, says new player

THE plight of the ‘unbankable’ and collateral-hampered small and medium entrepreneurs (SMEs) battling to secure financing for grass-roots business will hopefully be eased when the first micro-financing bank in the history of the country, Fides Bank Namibia, receives its provisional banking licence from the Bank of Namibia (BoN) this morning.

Once formalities are concluded, scheduled for around 11:00, the vulnerable of most vulnerable in terms of banking should have access to a bank specifically catering for ‘vulnerable people who are exposed to a range of life and business shocks (closely linked for self-employed people)’, Fides recently explained in a presentation on its plan for Namibia.Fides, short for Financial System Development Services AG, backed heavily by the KfW, the German Development Bank, and other European investors, will have its headquarters at Oshakati.From here, the bank intends driving its mission ‘to provide reliable and sustainable solutions for customers who are excluded from the normal banking system’, according to a Fides workshop in Bern last December.The introduction of a micro-financing bank in Namibia comes amidst heated debate about the role of the Development Bank of Namibia (DBN) in fulfilling the needs of the budding SME sector locally.Fides Bank Namibia aims to bridge this gap.'(About) 67 per cent of our clients are poor and likely to spend less than N$10 a day…. but have a clear motivation to overcome their difficulties.’The new bank will support them by providing financial services enabling asset building strategies,’ Fides said.From the December presentation, Fides intends to enter the local market offering easy pricing and simple products at cost-covering interest rates.Micro-loans vary from N$100 to N$4 000, with a flexible repayment schedule of weeks or months. Small business loans start at N$4 000 and go up to N$80 000, with monthly repayment requirements, according to the presentation.Fides will apparently also offer a weekly savings plan, starting with as little as N$1 a week.The group firmly believes that financially sustainable and pro-poor are not contradictions, Fides stressed in its presentation.From the document, it appears that Fides Bank Namibia intends seeking a full banking licence from the BoN.This will allow the bank to ‘better protect the assets of poor people, to create a sustainable private bank dedicated to micro-entrepreneurs, and to offer a broader range of products and services’.According to Fides, the ongoing transformation into a full commercial bank will enable it to serve 80 000 savings clients and 40 000 credit clients within five years.Fides’ track record includes micro-financing institutions in Moldova and Albania. Its expansion into Africa forms part of a planned network spanning Namibia, Mali, Algeria, Senegal and Ghana.’The objective is to build a network of ten to twelve micro-finance banks by 2015,’ Fides said in its presentation.jo-mare@namibian.com.na