The abrupt intention of the Bank of Namibia (BoN) and the Minister of Finance to close down the small and medium enterprise (SME) bank is totally uncalled for, highly ill-advised, very unprofessional, very immature, highly unpatriotic, historically and socially inconsiderate and definitely unjustifiable.
In the context of the Namibian banking sector history, the SME Bank is still a very relatively young bank that was substantially created based on a very real and simple logic of white-owned banks not significantly catering to the financial needs of the emerging black-owned small and medium-sized businesses due to the obvious lack of tangible collateral.
This sad situation is still a major challenge and a reality to this day to such an extent that many promising black-owned business entities are not able to access business loans from these same banks and as such are not be able to develop and grow their businesses. Based on this historic and current reality the Namibian government rightly intervened by all means necessary to ensure that the financial needs of the majority of its people are catered for through the establishment of the SME Bank.
Before I proceed on this very important matter, I would like to present a very brief historic background of the Namibian banking sector relative to the establishment of the SME Bank and its relevance to the socio-economic development of the Namibian economy.
The Namibian banking sector has been in existence for more than a century upon which many of the current established white-owned banks were substantial financiers of the previous apartheid regime which significantly delayed the attainment of our national independence. Things however changed after independence upon which they had to accommodate the new dispensation albeit at a very high cost.
With this historic background in mind, many of the previously disadvantaged business members of our society do not up to this stage meet these established banks’ stringent loan requirements which subsequently led to the government in partnership with private investors to establish the SME Bank as a means to address the situation. This same reason still exists today and is still justifiable for the continued existence of the SME Bank unless proven otherwise.
It is however important to take note at this stage that because of this huge historic imbalance in the Namibian banking sector, the Bank of Namibia is struggling to rein in the established banks in terms of the too high and unjustified banking fees that they are charging the public and businesses but as an easy scapegoat the bank is going after an institution which is essentially established by the government to eventually and gradually balance the banking situation in the country for the benefit of the previously disadvantaged majority.
In this regard, the real culprits that the Bank of Namibia was supposed to be focusing on without any fear nor favour are the established white-owned banks to ensure that they drastically reduce their banking fees which are unjustifiably too high. It is also a known fact at this juncture that the huge profits that are being generated by these established white-owned banks from the abnormally high banking fees are not significantly re-invested in the country but repatriated back to their headquarters in South Africa and elsewhere. With that said and in this context, the Namibian banking sector is in its current format a very lucrative business industry and the eminent closure of the SME Bank will be to the continued benefit of the established white-owned banks. And apart from that these white-owned banks have no substantial reinvestment portfolio in the country like their controlling companies in South Africa and elsewhere. No white-owned bank in this country has directly built schools, clinics, stadiums on their names or are involved in the provision of large-scale water and electricity for the mass benefit of the previously disadvantaged Namibian communities, hence the substantial high poverty levels.
In this regard, the successful closure of the SME Bank will in the medium to long term be more economically regressive than progressive as it will revert the nation back to the previous status quo which somehow still exists for the continued benefit and total control of the banking sector by the already established white-owned banks to the detrimental state of the nation at large.
In the final analysis, the SME Bank, just like its already established banking counterparts also need enough time to really stabilize and to adjust to the Namibian banking conditions post-independence especially to an extent that it is well capitalized, right-sized in terms of its board and management competency, operational systems and processes that will ensure that it fulfil its mandate sustainably without the continued harassment by the Bank of Namibia and interference by politicians and other wolves that may have ill intentions.
What transpired at the bank can be attributed to gross mismanagement and if proven otherwise should be ring-fenced as a criminal case which at this juncture does not justify the entire closure of the bank. Corrective measures can still be instituted at the bank without resorting to the last drastic action based on bad judgement.
Going forward, the SME Bank is still a relevant national intervention measure that was created to specifically provide a banking service which is justifiably in demand and should in that regard not be closed down. Any decision to the contrary will move the nation more backwards than forwards.
• Pendapala Hangala is a Namibian socio-economist.