• Market Watch

Serviced land vital for economic activity

- 2022-10-26 00:00:00

Lack of serviced land hampers progression of home ownership and socio-economic wellbeing, as well as capital formation in families. The presence of serviced land is not just an asset accounted for in the present. It represents the promise of prosperity and economic activity for the future.
These remarks were made by the Development Bank of Namibia (DBN) CEO Martin Inkumbi at the launch of Auasblick Extension 1, a public private partnership (PPP) between Sinco Investments and the City of Windhoek.
Inkumbi said commercial lenders mainly focus on financing top structures, which consists of housing units which fall either, in the of affordable or higher-end segments of the market. There is often a shortage of lenders willing to finance the development of bulk land infrastructure, and this is the gap DBN aims to fill.
Firstly, Inkumbi explained, serviced land and houses can be used as collateral for businesses that are financed. Lack of sufficient collateral is an ongoing challenge in development of the Namibian enterprise ecosystem. By making serviced land available, the entire private sector economy is enhanced.
Secondly, land and houses have value that can be transferred between generations, as intra-generational transfer of wealth between living parents and children, or through inheritances as inter-generational transfer of wealth.
Thirdly, Inkumbi said, serviced land appreciates in value. This appreciation of value can be redeemed through resale.
Talking about the importance of serviced land for the capital, he said Windhoek, which is experiencing a shortage of serviced land and land expected to become part of the wealth of families in all income brackets. This shortage impacts the potential ability of the City to become a driver of economic activity.
Benefits
Inkumbi went on to explain that all income brackets benefit from land ownership, proportionately to the value of the land. Thus, he explained, smaller parcels of land with a lower municipal value can be used as collateral in financing arrangements for smaller enterprises, while land with a higher value can be used as collateral for larger enterprises. The need for serviced land in higher income brackets is an often overlooked facet of enterprise financing.
A healthy economic ecosystem, he said, consists of an optimal number of small, medium and large businesses with linkages. In this way small enterprises become off-takers of large enterprise goods and services, and vice versa.
He pointed out that Development Bank plays an active role in finance and stimulus for land servicing. In this case, the Bank has approved finance of N$76.855 million for bulk infrastructure for phase one of the Auasblick extension, consisting of 281 erven.
In addition to delivering serviced land on which residential properties will be erected, there is a definite, immediate development impact. During the construction phase employment is created, construction enterprises have the opportunity to earn income and the building supply and manufacturing sectors have opportunities to benefit.
Inkumbi concluded by saying that the Bank is ready and willing to finance land development projects across Namibia, either by financing private developers, local authorities and or through the Bank’s PPP model and its win-win proposition and invited initiators of land development projects to make contact with the Bank.