“The loan repayment period is set between 2 years as a minimum and 7 years as maximum but with the flexibility of going up to 10 years in exceptional circumstances” Mandala NBM Development Bank Ltd, a wholly owned subsidiary of National Bank of Malawi (NBM) plc has said that apart from offering long term loans to Small to Medium Enterprises (SMEs), the development bank is also offering equity and quasi equity financing solutions to supportive SME growth. In an interview with Moneymail Newsletter, NBM Development Bank Ltd.’s General Manager, Lucius Mandala said equity and quasi equity financial solutions have an element of part of ownership of investments. In that the bank finances and the equity partnership would be for an agreed period of time. “The major advantages of investing in such equity instruments are that the bank relives the client projects of heavy interest payments that may make the projects financially unsustainable and the bank would be targeting a future return in the form of dividends.” “The other advantage is that NBM Development Bank would have partial control of the Investments thereby help in driving the strategies and policies of the project companies,” said Mandala Giving a background of the formation of the company, Mandala said NBM Development Bank Ltd is a separately regulated Development Finance Institution (DFI). It was licensed by the Reserve Bank of Malawi (RBM) to undertake the business of a DFI on 7 th May 2019 before being launched on the 5 th September 2019 and commenced operations in the last quarter of 2019. He said although it is separately regulated, NBM Development Bank, which was set up as a long term financing aim of NBM plc specifically to cater for SMEs, adheres to the policies of the NBM plc Group. Mandala also said the company targets seven economic sections namely Agri-business, Energy, Information and Communications Technology (ICT), Manufacturing, Health, Education and Tourism. “The key operations of the company include, among other things, facility applications to determine if the subject projects are technically feasible, financially sustainable and commercially viable. Assessment of sustainability of a project also includes determining how environmentally friendly it is. The company aims at financing projects that promotes environmental sustainability,” said Mandela. He further said the company also monitors investments to assume that initial objectives and plans for the projects are being achieved. Business support services are also offered during implementation and operational stages of projects and include various Interventions such as business clinics, mentoring, targeted training and turnarounds. This is a handholding service to SMEs to ensure long term sustainability of businesses. Mandela said the newly formed company has also been affected by the Covid-19 pandemic. “There was reluctance and subsequent delays in completing credit applications by potential clients. Clients were not sure if their projects would continue to be viable in the face of the pandemic that is economies due to lock downs.” “There was also reluctance and subsequent delays in submitting drawdown requests on already approved credit facilities. On top of that, due to restrictions on gatherings, the bank could no longer organize business clinics which was found to be the most effective way of engaging potential clients during the facility application process. The bank had to make do with other means of interaction mainly telephones and emails. E-meeting have not been adopted by most SMEs yet,” said Mandala. The General Manager also said that the ticket sizes that project companies can get range from K15 million to K250 million. “The loan repayment period is set between 2 years as a minimum and 7 years as maximum but with the flexibility of going up to 10 years in exceptional circumstances. NBM Development Bank Ltd does not take deposits or offer overdraft facilities as this is specifically disallowed as per licensing requirements.” “The company finances both start-ups and existing businesses within the SME space and offer other flexible conditions which include a repayment moratorium on both internet and capital up to a maximum of 2 years. The NBM Development Banks financing model is to promote projects that have a high developmental impact and that is why is chose to operate in the prescribed sectors,” explained Mandala. NBM Development Bank Structure NBM Development Bank has a separate Board from that of NBM Plc. The company has six Board members consisting of three non-executive members coming from NBM plc and three non- executive and independent members. Board of Directors Chairman Mr Macfussy Kawawa (CEO-NBM plc) Board Members Mr Harold Jiya (Deputy CEO and Chief Commercial Officer of NBM plc) Mr Masauko Katsala (CFO of NBM plc) Mr Kassim Aroni (Managing Director of Superfit Limited) Mr Frank Muula (Chief Executive Officer of Unified Technologies Limited) Mr Alick Sukasuka (Loan Management Specialist at the Development Bank of Southern Africa) The Board has two committees namely Credit and Investment Committee which oversee credit and investment policies and approves new projects and the Finance and Audit Committee- that checks the financial health of the company and oversees finance and accounting policies. The total workforce is currently at 5 but the company outsources Finance and Accounting, Internal Audit, Risk, Human Resources, Marketing, Operations, ICT and Client Coverage Services to the NBM plc group.