Financial Sector Review Pinpoints Loan Sharks

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By Desie Heita

Windhoek

The zest of the contents for the Namibian Financial Sector Review 2008 is on educating consumers, especially the low-income earners, on issues of micro lending and on the availability of affordable health care and insurance products.

The voluminous book – 162 pages – carries 70 interviews with leaders and decision-makers in financial and related industries.

Of interest are topics on micro-financing, medical aid, insurance brokers and asset management. However, the two topics of medical aid and micro financing make the Namibian Financial Sector Review (NFSR) a book worth reading. The NFSR is published by Intermedia and edited by Sarah Tylor.

Naturally, the ever-increasing cost of living affected the medical aid sector, and although medical aid funds have increased their premiums from members, such increases seem not to be sufficient to cover the three common services demanded by members – hospitalisation, medicine and specialist services. The high cost of living has also widened the gap between the reimbursement rate by the Namibia Medical Aid Fund (Namaf) and the fees charged by medical service providers.

On the plus side, nevertheless, the medical aid industry has realised that they need to care for low-income earners, and in a way alleviate the burden from Government, especially when it comes to the treatment of the so-called high risk diseases. Towards the end of last year, the private sector pooled its resources to support an industry initiative of the Risk Equalisation Fund, meant to address ‘dreaded’ diseases that put a strain on funds such as HIV/AIDS, cancer and multiple sclerosis.

While everything seems to be running smoothly with the medical sector, the micro-finance sector, on the other hand, appears to be tainted by loan sharks who are only there to make money. The industry players, by themselves, speak of reinvesting back in the community and stress that ‘making use of micro-lenders should enhance the quality of people living and not make people poorer’.

In between the mix of things is Namibia Financial Institutions Supervisory Authority (Namfisa) whom the industry, when reading in between the lines, wants to start or to introduce better control mechanisms that would eliminate loan sharks from the industry.

A review of NFSR would not be complete, however, without mentioning the concerns expressed by the Parliamentary Standing Committee on Economics, Natural Resources and Public Administration. This time around, the committee is looking at some sort of operational reforms in the insurance industry. In the first pages of the NFSR the deputy chairperson of the committee, Peya Mushelenga, speaks of public concerns, as expressed in many public hearings that the committee held, and suggests that insurance houses start operating as banks where members of the public approach them at their offices instead of insurance agents going to the public.

Such an approach, the committee suggests, would eliminate the many public concerns and displeasure.

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