TIRI MASAWI
THE government is facing questions over its ability to repay a N$1 billion loan from the state-owned Development Bank of Namibia (DBN) for the construction of the Windhoek District Hospital.
Last month, Namibia Business Review revealed that nearly one in four DBN loans goes unpaid, exposing the bank’s struggle to recover money from clients, a situation that has already weakened its financial performance. Yet, despite this track record, DBN announced last week that it is lending N$1 billion to the government, an institution notorious for delaying payments.
DBN spokesperson Jerome Mutumba confirmed to Namibia Business Review last week that the funding is a loan, not a grant, but refused to share repayment details.
“I can safely confirm for you that it is a loan not a grant. We will expect the government to pay back. However, I cannot give you more details aside from this as this infringes on client privileges. I suggest you engage the Ministry of Finance on the finer details of the loan going forward.”
Questions sent to the Ministry of Finance were not answered.
The N$1 billion loan, disbursed through the Ministry of Health and Social Services, is part of a national push to expand healthcare infrastructure. DBN called it a “significant milestone” for strengthening Namibia’s health system under the government’s roadmap initiative, aligned with the Medium-Term Expenditure Framework.
The funds will go towards building the 500-bed Class C Windhoek District Hospital, which aims to ease bed shortages in the Khomas Region and support the development of Nkurenkuru, Otjiwarongo, and Ondangwa District Hospitals.
Corporate governance expert Ntelamo Ntelamo questioned whether it is appropriate for the state to lend to itself.
“The DBN is a State-Owned Enterprise — the state is its shareholder. Now, in line with its business, to lend for economic development, DBN being a State entity, should the State be lending to itself? For a venture/project unassociated with profit making.”
Ntelamo provided a deeper look at repayment challenges. He argued that better governance could have come from using DBN dividends or advancing funds through its social investment vote rather than issuing a loan.
“As it stands; the government will have to source money from somewhere to repay the loan, if at all, as the hospital is a public, non-profit institution. Thus no money will be generated from its operations to repay the loan.”
He added that a loan must be properly accounted for and repaid.
“A loan is what it says it is. Without pre-empting, it might be difficult to enforce the loan repayment, whose terms must also be checked. If at some point the government has been extending continued subsidy/capitalisation to the DBN, this will further complicate the actual repayment of the loan in question.”
Namibia Business Review last month reported that nearly one in four people who borrowed money from the Development Bank of Namibia is not paying it back.
The bank’s own figures show that 22% of its loans are now defaulting, raising fresh questions about risk, oversight and who is benefiting from state-backed funding. This means that more than N$1 out of every N$5 loaned by DBN is not being repaid. With 22% of its loan book non-performing and N$579 million written off in a single year in 2024.
Ntelamo warned that failure to repay could reflect poorly on DBN’s governance.
“Should the loan not be repaid, it will reflect in the DBN’s books as unpaid, which may reflect badly on its governance — as substantial funds were loaned out when the DBN should have known it was a bad deal, and it had an opportunity to classify the funding accurately.”
Landless People’s Movement (LPM) spokesperson Lifalaza Simataa criticised the government for a lack of transparency.
“The Ministry of Health has not had a good track record when it comes to infrastructure nor procurement. Such a massive loan could potentially not be recouped, or worse, will have the ministry indebted, where funds from its budget would then need to return to the bank.”
Simataa also raised concerns about interest rates, repayment timelines, and whether Namibian construction companies, workers, and supplies would benefit.
“The nature of the contract and procurement process, down to is this an opportunity open to Namibian construction companies or has the construction company been handpicked.”
ECONOMY BOOSTER
Mutumba said the hospital project will boost economic activity through construction, local procurement, and job creation, while allowing DBN to invest capital into development-oriented assets.
DBN CEO Titus Ndove highlighted the strategic value of the loan.
“This investment demonstrates the power of coordinated financing by the Ministry of Finance in addressing national priorities while ensuring a holistic approach to healthcare delivery that will have a lasting impact on our communities.”
COMMENTS