Namibia moves on Financial Service Charter

Following numerous calls, Namibia has moved a step closer to implementing a Financial Service Charter. The charter aims to facilitate the participation in the financial sector by previously disadvantaged Namibians. The country's multi-billion dollar financial sector is still being dominated and controlled by foreign players. The charter will also serve to provide guidelines through which to regulate the financial sector.

Finance Minister Saara Kuugongelwa- Amadhila has been championing reform in the financial sector. Such reforms would encompass enhancing the skills level, promoting labour absorbing export sectors, improving access to finance through the consolidation of the property system, establishing new financial vehicles such as venture capital industry and by increasing the local ownership of the Namibian financial sector. Namibian commercial banks have also come under increasing pressure from government, the central bank and consumers to lower their fees which are said to be negatively affecting the country's economic growth. Namibia's banking sector is still in the hands of foreign-owned companies, mostly South African. The central bank, the Bank of Namibia, says Namibian banks still serve simply as branches of their South African mother banks.

Presenting the 2005-06 budget to parliament last month, the finance minister said the high bank charges had "crippling effects on the banking customers and especially small and medium enterprises and the sector is called upon to ensure that their fees structures are fair and are supportive of business expansion". Last week one of the key players in the Namibian financial sector, Old Mutual, brought together key figures from the financial sector to brainstorm on what is an appropriate charter for Namibia and how to go about crafting it.

Old Mutual Namibia Chief Executive Officer Johannes !Gawaxab however said the workshop was not merely a response to the increased pressure for reform from government. "I wish to emphasise that it is not merely a response to the call, but a charter is a necessity for us in terms of bringing the previously excluded people into the mainstream of economic development by way of skills development and active participation in all economic sectors," he said. He said the multi-billion dollar financial industry played a significant role in the country's development and should act towards enhancing economic growth by designing a code of conduct that promotes transformation, provides access to affordable services and products and contributes to an equitable society. !Gawaxab also said a number of Black Economic Empowerment (BEE) transactions had already been concluded in the absence of a BEE policy and that these deals needed be accommodated in the designing of the financial service charter.

He said the industry had taken the first step and would try and incorporate and accommodate divergent and also competing views, agendas and interests. He said even if sub-sectoral charters — like in the banking sectors — were currently being drafted it was important that the entire financial sector came up with one legislation. "Each sector has a different idea of what the FSC should constitute. “I am mindful of the fact that sub-sectoral charters are being drafted. It is my sense that we should leverage the good work done by these sub-sectors and try and accommodate them in the charter that we are crafting," he said. "It is my understanding that government would prefer a comprehensive charter including the entire financial services industry, rather than sectoral charters from within the industry." Kuugongelwa-Amadhila said economic empowerment meant wealth creation and the real gains for both the corporate sector and Namibian society.

She said since the private sector had more resources than government, it was in a much better position to provide affordable financial services. The Finance Minister called for a well coordinated strategy for the upliftment of the economy, with defined goals and targets and that it be implemented vigorously. "We continue to be an exporter of capital, a paradoxical situation for a country of our level of development and one that is a real development concern. The time has, therefore, come for Namibia to take bold steps to address the limitations in the financial sector if our country is not to be left behind other nations in terms of economic development," she said.

The Bankers Association of Namibia believes that a charter would lead to black Namibians acquiring major stakes in the banking industry. So far, the major commercial banks in Namibia have employed black CEOs as part of their black empowerment process. The South African charter, which was drawn up by the industry itself, promises to ensure that at least a quarter of all companies in the sector will be owned by black people before the end of the decade.