Nangula Shejavali
30 October 2008
The Development Bank of Namibia (DBN) has thrown a N$14 million lifeline to the financially troubled TransNamib.
The latest bailout comes a month after a N$14,2 million Government rescue package for the ailing national rail and road carrier at the end of September.
The N$14 million bridging finance to TransNamib was announced yesterday by the DBN as part of the new projects approved for funding totalling N$405,81 million, of which N$100 million was extended through lines of credit to Bank Windhoek and FNB Namibia for on-lending to SMEs.
The money for the new projects was approved since May this year and the most recent board meeting held on 23 October.
High on the list of loan recipients is TransNamib Holdings, which received a bridging finance facility of N$14 million.
TransNamib's financial troubles started after a week-long national strike by its workers, which according to the parastatal resulted in a loss of N$52 million.
The workers went on strike after the TransNamib board suspended its CEO, Titus Haimbili, for alleged irregularities.
The company resorted to the Labour Court, which declared the strike illegal and ordered the workers back to work.
The strike only ended four days after the Labour Court order.
Following the suspension of Haimbili, local banks stopped providing credit facilities to TransNamib, citing instability at the rail and road carrier.
At the end of September, TransNamib's cash position had deteriorated to the point that it could not pay the salaries of its workers and it requested a N$52 million bailout from Government.
The Government only provided N$14 million and directed TransNamib to DBN for a loan.
In addition to the September bailout, Government again guaranteed the DBN loan.
David Nuyoma, the DBN's Chief Executive Officer, said the development bank provided the bridging facility to keep the company afloat after a the week-long strike in September that resulted in millions of dollars of losses and unsettled the country's economy.
"DBN's Bridging Facility will contribute to stabilising the immediate future of the company by providing the means to secure the incomes of its more than 1 700 employees and their dependants," he said.
He further highlighted TransNamib's unique position as an important player in enhancing Namibia's standing as a key player in the SADC Free Trade Area in terms of the transport of goods, stating that "the facility will help to secure Namibia's position as a regional trade nexus".
Nuyoma added that "although the rail infrastructure is being put in place, it is vital that there be institutional capacity to manage the infrastructure.
The short-term measure of retaining the jobs at TransNamib is an important step to securing institutional capacity."
The bank's bridging finance facility allows existing organisations and enterprises to grow their operations with loans targeted at acquiring equipment, providing stock required for income, and the creation and retention of jobs.
DBN's largest chunk of financing - N$27,2 million - went to Cenored, an existing client of the bank.
Cenored was registered as a private company in 2003 and is the regional electricity supplier for the Otjozondjupa, Oshikoto and Kunene regions as part of Government's controversial electricity industry restructuring.
Another major recipient of financing from DBN was the Henties Bay Municipality, which received a loan of N$15 million "towards the planning, design, development of serviced infrastructure such as roads, storm-water drainage, electricity, water and sewer reticulation to expand service stands for residential development in Extension 10 in Henties Bay," thereby creating 252 residential and institutional erven.
Twenty-one other entities form the remainder of the recipient list, with financing ranging between N$250 000 and N$3 million per project.
The bulk of the projects are construction and infrastructural development initiatives, which Nuyoma said form the backbone of the bank's bridging finance facility.
Be the first to Write a Comment!
Copyright © 2008 The Namibian. All rights reserved. Distributed by AllAfrica Global Media (allAfrica.com). To contact the copyright holder directly for corrections — or for permission to republish or make other authorized use of this material, click here.
AllAfrica aggregates and indexes content from over 125 African news organizations, plus more than 200 other sources, who are responsible for their own reporting and views. Articles and commentaries that identify allAfrica.com as the publisher are produced or commissioned by AllAfrica.
