WINDHOEK - The newly launched Financial Sector Strategy is a necessary improvement to an already stable financial system that has thus far been able to withstand the adverse impacts of the global financial and economic crises experienced since 2008.
However, the financial stability the country enjoys disguises historical structural weaknesses, says Minister of Finance Saara Kuugongelwa-Amadhila of the Financial Sector Strategy.
“A dichotomy of a multi-billion dollar industry, with assets valued at over twice the size of the Gross Domestic Product (GDP) on the one hand and, an enclave of limited access to finance, skills shortages and under-developed capital markets on the other hand, still exists.
This situation requires a paradigm shift, resoluteness and focus in addressing the challenges facing the industry,” said Kuugongelwa-Amadhila.
Last week government launched a 10-year Namibia Financial Sector Strategy for 2011 to 2021 with the Bank of Namibia spearheading the strategy formulation.
Government has often criticised the financial industry for failing to implement the voluntary Financial Sector Charter, saying the slow progress “cast doubts for the financial sector to reform”.
“The Financial Sector Strategy serves as an overarching blueprint for accelerated sector development and reform. The actions engendered in the strategy are aimed at addressing the historical weaknesses in five core areas of sector development,” says government.
In the next 10 years, there would be concrete are activities aimed at strengthening the contribution of the financial sector to economic growth and strengthening the stability and robustness of the financial system.
This is to be achieved through the promotion of expanded product offerings and development of a capital market characterised by things such as an active bourse. The financial services industry is expected to provide broader access to affordable credit, especially for small and medium enterprises as well as the segment of consumers where until now there are no appropriate product offerings.
There would be initiatives to diversify the bond market by encouraging state-owned enterprises to issue debt papers and for private corporates to list on the stock exchange and leverage on the business opportunities presented by public-private partnerships.
Regulatory institutions would have to commit to adopting risk-based regulatory approaches and modernisation of the financial systems in order to ensure that Namibia conforms to best international practices and develops capacity to avert any shocks to the sector through effective early warning systems.
Financial institutions in the country should be more competitive and a competitive environment would be further stimulated through the legislation amendments on the Banking Institutions Act in 2010, the Payment Systems Management Act, the financial intelligence market and the Competition Commission Act.
There would be continuous assessment specifically to shore up “the stability of the financial system and the viability of financial safety nets to buttress the country crisis response mechanism in the event of possible future shocks to the sector and the economy in general”.
To drive the financial inclusion agenda, the Financial Inclusion Council under the stewardship of the Prime Minister was established to provide innovations to cater for the needs of the market.