Consulting Services for the Transformation of Fides Bank Namibia (FBN) into a Non-Bank Financial Institution
2013-12-31 - 2014-01-31
FIDES Bank Namibia is at present facing a number of challenges related to its growth and its path to full financial sustainability including a difficult start in the development of its individual loans targeted to small entrepreneurs in urban areas and in consequence the need to adapt its lending technology to a more urban environment. It also faces difficulties to promote local top management and to reach its breakeven point and has accumulated losses that have largely eroded its paid-up share capital of 50 000 000 NAD.
Given these difficulties the bank wishes to elaborate whether a transformation back into a “Money Lender” (NAMFISA-supervised non-bank financial institution) would help solve the current financial difficulties.
LFS is the Technical Partner in charge of managing the project. The project with a term of 2 months focused on exploring whether becoming a “Money Lender” is viable solution for FIDES. The main methodological elements of the assignment were the following:
Review and analysis of the Bank’s financial and organizational data, in particular on events occurred after the closure of the preliminary assessment in Q2/2013, to be supplemented by discussions with Management and – if needed – external auditors and/or tax advisors;
Review of the applicable legal and regulatory information for a credit-only finance company (‘moneylender’) under supervision of NAMFISA, to be supplemented by discussions with the Bank’s in-house legal officer as well as qualified external counsel;
Review of available secondary sources on the Namibian microfinance market (both supply and demand side), to be supplemented by structured discussions with the Bank’s staff;
Discussion with the Bank’s management on its perception of the strategic viability of the contemplated transformation and potential challenges related thereto;
Production and plausibility-testing of preliminary financial projections (based on assumptions provided mainly by the Bank’s management) against industry benchmarks;
Simplified stress-testing and sensitivity analysis under a customary range of material adverse events (MAE), and computation of recapitalisation needs for each MAE scenario.