N$300m SME Bank bailout mooted

19 May 2017 Author   CHAMWE KAIRA
Government is working on a plan to pump in at least N$300 million into the financially troubled SME Bank, a Treasury source said this week.
“The bank urgently needs the money,” a Treasury source told the Windhoek Observer.
The N$300 million, if approved, will be in addition to the N$47 million subsidy already budgeted over the next three years.
Budget documents show that SME Bank would receive N$15 million in the 2017/18 financial year, N$15 million next year and N$17 million in the 2019/20 fiscal year.
Government has already invested N$470 million into the bank since its inception in 2012.
Finance Minister Calle Schlettwein and Industrialisation, Trade and SME Development Minister Immanuel Ngatjizeko remained tight lipped when approached for comment, referring all questions to the central bank.
But Bank of Namibia Deputy Director of Corporate Communications, Kazembire Zemburuka, was also not forthcoming, saying the matter was sensitive.
“Bank of Namibia has taken note of your questions related to the SME Bank. Unfortunately, due to the sensitivity of the matter and associated legal consequences, the bank will not comprehensively respond to them.
“Needless to say, the assessment into the investment portfolio of SME Bank is progressing well. Additionally, the Bank of Namibia continues to engage with relevant stakeholders of SME Bank in order to apprise them of all developments,” Zemburuka said.
In his budget motivation speech in the National Assembly last month, Ngatjizeko said SME Bank had grown its balance sheet to N$1,298 billion over the last four financial years.
As at 31 January 2017, customer deposits had grown to N$1,157 billion and the bank’s loan book stood at N$620 million.
Insiders say SME Bank has been operating on survival mode since it became clear that a substantial part of the N$200 million that was invested in South Africa could have been lost.
Sources further said that authorities had long concluded that about N$150 million of the N$200 million SME Bank invested in little known South African financial institutions, will never be recovered, hence the need to recapitalise the bank.
SME Bank only produced its first financial statements last year, which showed that the bank had incurred a combined N$182 million in losses since its inception.
In the first year, the bank made a loss of N$4,2 million, which grew to N$37 million the following year and to N$69 million in 2014, before reaching N$72 million in 2015.
Takeover
Documents filed by the central bank in the High Court when it took over the running of the SME Bank showed that management of the bank had made unsound investments worth N$200m in two banks in South Africa.
The takeover of the bank at the beginning of March led to the dismissal of the bank’s board, CEO, finance manager and head of treasury.
The SME Bank is a joint venture between the Namibian Government, the Metropolitan Bank of Zimbabwe and Zimbabwean businessman Enoch Kamushinda. Government owns 65 percent, Metbank 30 percent and Kamushinda’s World Eagle Investments 5 percent.
Media reports said this week that the SME Bank Acting CEO, Benastus Herunga, had opened a criminal case against former CEO Tawanda Mumvuma, Finance Manager, Joseph Banda and Treasury Manager, Alec Gore, to be held accountable for about N$150 million that went missing in South Africa.

WINDHOEK OBSERVER

The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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