Financial Charter Should Radicalize Economy

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Agreement has been reached on a comprehensive Namibian Financial Services Charter to be finalised by the end of 2006, according to a statement released yesterday by the steering committee responsible for the drafting process. This follows a second consultative meeting held Tuesday by representatives from the financial services industry, Government and other stakeholders. The meeting was a follow-up to a first consultative session held in July 2005 and was aimed at finalising the drafting of the Namibian Financial Services Charter (NFSC). The statement from the steering committee said the meeting identified key issues to be addressed, as well as agreeing on action plans and timelines for finalisation of the charter. A common purpose was identified at the meeting, setting a firm foundation for the final process of the development of the NFSC, the statement said. The objective of the session was to consult the financial services industry on progress made so far, as well as to chart the way forward. “If we are to have a sustainable and prosperous country, it is imperative that we improve the participation of black Namibians in mainstream economic activities, as well as the extent to which they influence capital flow in our country,” said participant Johannes !Gawaxab. Minister of Finance Saraa Kuugongelwa-Amadhila, speaking at the opening of the session, provided the following policy guidelines to the steering committee to outline Governments expectations: 1. Improving Access to Financial Services and Products This involves making existing financial products more affordable and at the same time developing new products for the un-banked part of the population and for those parts of the business community who struggle to have access to financial services. The penetration of financial services into the regions is another important issue in this regard. 2. Focus on Local Needs and Autonomy of Operations The integration of the Namibian and South African financial markets has contributed substantially to the development of the local financial market. However, the dependence of Namibian operations on their foreign parent companies sometimes shifts the focus away from local needs. Both the shareholding structure and procurement policies are affected by the firm’s orientation towards their parent company. In this regard, there is a need to encourage companies to become more focused on the development of their Namibian operations and on addressing the needs of the Namibian market. 3. Developing and Deepening the Financial Sector Namibia faces unique challenges in further developing its financial sector. The charter should therefore serve as a guide for the direction in which the financial sector shall develop. The high capital outflow is one of the main problems that need to be tackled and the charter needs to pronounce itself on this matter. Other issues that need attention are the support the financial sector could offer to the development of local enterprises through training and strengthening their financial capacity. The financial sector should also be encouraged to engage in the empowerment of previously disadvantaged employees to increase their participation in skilled, strategic and operational leadership. 4. Social Responsibility Given the social challenges that Namibia faces, it is imperative that each sector is aware of its own responsibility in contributing to social development. Encouraging corporate social investments, the support of education, community training projects and environmental projects are just a few of the options the FSC could embrace. A sector-wide approach to HIV/Aids is also needed. 5. Empowerment Financing In support of the transformation of the Namibian economy, changes in ownership are a crucial aspect. To be meaningful, however, such changes have to attempt to achieve inclusion of a broad spectrum of the society. The charter is thus expected to make a firm commitment to Broad Based Economic Empowerment and develop special financing vehicles in support of the transformation process. 6. Consumer Protection The protection of consumer rights fulfils an important role as it ensures high quality and transparency of financial services. To ensure consumers’ rights protection, institutions such as an ombudsman for financial services may have to be created that will allow consumers to voice their concern and exert pressure on the financial industry to address complaints. The Financial Charter should also address these aspects. 7. Corporate Governance Corporate governance issues have recently emerged as a priority in the country, both in government owned business and in the private sector. It is in the industry’s own interest to ensure that all its members adhere to best practices. Therefore, the charter should strive to strengthen corporate governance.