Spotlight on Bank Charges

0
11

By Wezi Tjaronda WINDHOEK Namibian consumers want the Parliamentary Standing Committee on Economics, Natural Resources and Public Administration to investigate whether the country’s banks are colluding with each other to keep banking charges high. They want Parliament to also look into other issues such as how the high bank charges have contributed to the mushrooming of the cash loans business, the existence of discrimination on racial grounds and also the existence of restrictive laws that discourage competition in the sector. Despite the existence of four commercial banks in the country, consumers say, all the banks charge high fees that leave them with no alternative, which could point to the fact that there is collusion. “It is interesting to note that despite the presence of at least four commercial banks, the bank charges still remain very high. Therefore, could you investigate if there is collusion between the banks and make such collusion illegal,” said Michael Gaweseb of the recently established Namibia Consumer Association. These concerns were raised at a public hearing on bank fees, which was held last Friday by the standing committee to hear people’s concerns and how the situation could be solved. The hearing was not well attended as was anticipated, considering the public outcry on the cost of banking services in the country. They also want the sector to have some competition, which might result in reduced fees. Steve Gericke in his submission said although banks perform an essential service, there is a perception that “the four banks represent a monopoly and operate in collusion to fix banking fees”. Milton Louw, Secretary of the ICT Alliance told the committee the high level of non-performing loans led to many institutions to recoup their losses and to provide themselves with profit through high interest and “innovative” banking charges. Due to the vastness of the country, it has been said that it is expensive to take banking services to the very remote rural masses. But at the same time, Gericke said it looked like Namibia was unwilling to attract more banks to ensure a competitive environment. He said Utah, one of the states in the United States of America with 1.6 million people, has 16 banks and wondered why Namibia with close to 2 million inhabitants only has four banks. In addition, Gaweseb said if more competition was brought into the sector, charges would not be that expensive. “If more competition would lower charges, then I would suggest that parliament relax restrictive laws (if any) in order to enable foreign investors to enter that sector or simply to do whatever is in its power to create a conducive environment,” he said. A Finscope study carried out in 2004 found that 45 percent of the Namibian population remained unbanked partly due to the unaffordability of banking services. These people among others keep their earnings in tin cans underground, under mattresses and pillows. Ulli Eins hinted that while many people did not have money, those that have it and have attempted to open bank accounts have their money “eaten up by the innovative banking charges”. Due to this, consumers have called for the transformation of the banking sector, which will enable the end users “not to feel captive to a monopolistic system” and also to empower the previously disadvantaged and those that have been left out. Committee member Johan de Waal said the banking situation presented the country with an opportunity for other players to come into the sector especially with a banking system for poor people. With the two options at present being banks and cash loans, de Waal said, “We need something in between to stop people from going to cash loans.”