Banking for All

0
8

By Wezi Tjaronda WINDHOEK Namibia’s financial sector can expect some transformation once the Financial Services Charter (FSC) as well as legislation on Black Economic Empowerment legislation are in place. While the draft charter is expected to be handed over to the Minister of Finance on June 30, the Prime Minister’s Office is currently drafting BEE regulations to sustain development and prosperity by ensuring that previously disadvantaged Namibians participate. BEE, according to Deputy Finance Minister Tjekero Tweya, will be introduced under the term Transformational Economic and Social Empowerment Framework (TESEF), to remove the negative connotation that BEE is associated with at the moment. “We don’t want government intentions to be dented,” he said. “It is expected that these two initiatives will transform the financial sector and further unleash potential within the sector”, Tweya said yesterday at a Bank of Namibia and Finmark Trust sponsored Financial Access Forum on defining a financial services charter in Namibia. While the Financial Services Charter Steering Committee is working around the clock to submit a draft FSC by the June 30 deadline, lack of a central source of information on all sectors remains its major challenge. A member of the committee yesterday told the Financial Access Forum that although the industry is perceived to be one, they relate to each other like stepchildren and their level of co-operation up until now has been one of loose arrangements. Gida Sekandi, a member of the committee, said in some cases the committee has been working on scanty information on certain issues. “Research information on some sectors is scanty,” she said. The committee is expected to submit the first draft of the charter to the Minister of Finance at midnight of June 30, which Sekandi said was also a constraint considering that time, was fast approaching. The government called on the finance industry last year to craft a finances service charter to transform the industry in a way that it increases access to financial services and affordability, banks offer alternative collateral arrangements, increases local ownership and control in the sector, offers better procurement for SMEs, stems capital outflow and strengthens enterprise and human resources development. Statistics of Finscope of 2004 indicate that 45.2 percent of Namibians do not have access to banking products. The situation of a large unbanked population according to the Bank of Namibia reflects pervasive rural poverty and a growing population of urban shack dwellers who suffer from widespread unemployment. “This situation is aggravated by the imposition of high service fees by the financial sector for the use of even basic services,” said BoN Deputy Governor, Paul Hartmann. He added that the financial sector plays an important role in any economy in mobilizing savings, allocation of credit and diversification of investment assets. Even though the sector is considered by international standards as well developed, the deputy governor said it was bogged by issues of equity, accessibility and transition because the majority of the population were excluded from the mainstream financial sector services due to collateral, limited bank branches and the high cost of borrowing as well as the fact that the sector is strongly linked to South Africa. Tweya said the government expects the financial institutions to be independent from their parent companies, the development and deepening of the sector through increased investments in the domestic economy and also for financial institutions to set aside funds to finance BEE/TESEF deals. Sekandi said the process was about starting the transformation of the Namibian industry, which needs to be done in conformity with goals outlined in both Vision 2030 and National Development Plans. Some of the work streams and champions of the charter include accessibility and affordability, ownership and control, empowerment financing and entrepreneurial development, human resources development, social responsibilities and consumer protection. The need for a financial charter, said Finmark Trust’s Anne Marie Chidzero, is now a global issue as at the level of the United Nations. Countries are being challenged to ensure that they set a vision for financial services that serve all the people. “Efforts should be country-specific but we need to address issues such as financial exclusion in Africa where the numbers may go as high as 90 percent,” Chidzero added. The starting point according to her is a basic bank account, but the challenge is for financial institutions to be innovative on how to provide commercially viable services to Namibians. Dr Penny Hawkins, who shared South Africa’s experiences in crafting their charter, said a charter should be underpinned by the following principles: physical accessibility, appropriateness, affordability, simplicity and understandability and also non-discrimination. The South African Charter came into effect in 2004.