Expect Finance Charter Come June

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By Wezi Tjaronda WINDHOEK Namibia can expect a draft Financial Services Charter by June this year. The Financial Services Charter is in response to calls that have been made to address national and social economic concerns. This is in response to calls the Minister of Finance, Saara Kuugongelwa -Amadhila made when she presented the current and previous budget statements for the financial sector to craft a charter for the good of the country. Yesterday, the Secretary of the Financial Services Charter Steering Committee, Monica Kalondo, told New Era that although the process had been put on hold because of certain issues that needed to be resolved, “We are looking at having a draft charter by June 2006.” Some of the features of the guidelines that the Inter Agency Committee in conjunction with the steering committee have been working on are access and affordability of financial services, human resource development, empowerment financing, procurement policies, participation and ownership of financial institutions and corporate governance, among others. These principles would pertain to increased access to financial services and affordability and shareholding activism, aimed at increasing the participation of the formerly disadvantaged groups in terms of management and ownership of financial institutions. Minister Kuugongelwa-Amadhila has said before that economic empowerment is central to Government’s development objective, citing its public funding institutions, which needed to be augmented by contributions from the private sector. It also pertains to a commitment to the reduction of capital outflow through increased investment in the domestic economy with the purpose of diversifying and expanding economic activities in Namibia and also developing skills in scarce and specialised areas within the financial sector, as this would enable the previously disadvantaged employees to increase their participation in management in the financial sector and for the sector to handle locally complex financing schemes for which capacity is currently lacking. The charter will also include an assessment mechanism that provides targets, monitoring and evaluation strategies and clear definitions of concepts. At the moment, the steering committee is in the process of confirming champions or convenors of each of the topics that the charter is going to address. The minister said in her budget speech last month that necessary reforms were needed to enhance the skills level, the promotion of labour-absorbing export sectors, improving access to finance through the consolidation of our property system, establishing new financing vehicles such as a venture capital industry, and increasing the local ownership of the financial sector. In the absence of Black Economic Empowerment legislation, it is believed that the FSC would leverage the good work that has been accomplished by the number of BEE transactions that have been concluded so far. But for BEE to succeed, there is a need for a twin approach of government policies and a mind-shift by the private sector to create linkages between first and second economies. Kalondo said although Namibia’s charter will be a unique transformation of the country’s financial sector, it has learnt from experiences of countries like South Africa, which already have a charter. The guidelines of the South African Financial Sector Charter, which came into effect in 2004, are the following: human resource development, procurement policies, enterprise development, access to financial services, empowerment financing, and ownership in the financial sector, among others. The South African charter requires all financial institutions to have a target of a minimum of 25 percent black ownership measured at holding level by 2010. In relation to providing access to financial services, some of the actions that the sector agreed upon include ensuring first order retail financing services including sustainable and affordable banking services, contractual savings and credit for small-scale and micro institutions to serve poor communities. Namibia last year saw two commercial banks providing banking services to the lower income bracket, who were formerly unbanked. Due to the unaffordability of the services in the banking sector, statistics have it that around 45 percent of the population still keep their money in tins and under mattresses.