Financial Institutions Get the Stick

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By Petronella Sibeene WINDHOEK Deputy Minister of Finance Tjekero Tweya has condemned financial institutions for failing to complement government’s efforts aimed at promoting black Namibian entrepreneurs, especially those in rural areas. Financial institutions are reported to have put in place stringent credit extension measures such as 100 percent security or collateral requirements for potential entrepreneurs. Tweya says the situation suggests a lot needs to be done by the industry with regard to terms of credit extension. He questioned where potential entrepreneurs such as those from rural areas would have a sound financial history among other requirements demanded by banks. “Investing in rural areas is not forthcoming. We need to rally together and invest in innovative ideas that can further create employment and contribute to broad-based economic development,” he said. He added that 17 years after then country’s independence, transformation in the financial sector specifically in terms of ownership has not taken place. While many black economic empowerment (BEE) transactions were concluded, in the absence of proper guidelines more questions than solutions were raised. According to Tweya, “a lot still needs to be done to see a significant number of Namibian owners in the financial service industry”. He added that the idea is to work towards a collective action plan that would have a bigger impact rather than individual enrichment, hence the creation of a Financial Service Charter that will assist government implement policies to guide transformation in the industry. “We cannot start to talk of broad-based empowerment if we do not have something that guides us,” he said. The deputy minister suggested that setting up a development fund by the private sector in the industry will help in the financing of developmental projects with potential. “This will be an alternative vehicle to supplement the efforts carried out by the Development Bank of Namibia, an initiative that could greatly contribute towards the objective of Vision 2030,” he said. Heated debates and different opinions regarding high or exorbitant fees levied for services have taken place at various platforms. To date, a persisting matter of concern is the high transaction charges by the financial institutions. “Government has made that call for people to use financial institutions but deductions are too much. You put N$100 in the bank, you deduct N$20 and every day the figure is reducing. What will you say when people start keeping their money in their houses?” he queried. Tweya commended some institutions that have responded to the concerns by introducing low cost products for low-income earners. The financial industry is further faced with significant challenges that according to the deputy minister cannot be overlooked and he appealed to the industry to come up with innovations that would assist government’s initiative to minimize the outflow of capital funds. “Time has come for us to look at ways to boost our own economy and address our own challenges. We need to start creating employment and economic activities at the lowest level in order to stimulate our economic growth”, he said. Tweya said this at the inaugural breakfast launch of the Namibian Financial Sector Review 2007. The review is a comprehensive and contemporary synopsis of the financial industry. It will empower Namibians with the much-needed financial information. “The initiative to start up a platform that gives an overall view of the respective institutions in the financial service industry is long overdue,” Tweya said. He commended Intermedia Marketing Communications CC for the initiative.