In recent years, financial inclusion has taken centre-stage as a key driver of economic growth, poverty reduction and prosperity.
In this regard, deposit insurance schemes are among the key vehicles through which financial inclusion is enhanced.
This was the sentiment expressed last week by Michael Humavindu, executive director in the finance ministry, at release of the annual report by the Namibia Deposit Guarantee Authority (NDGA).
He noted that the NDGA is one of the critical institutions in the domestic governance architecture, established with a clear mandate and purpose of being a safety net within the financial sector. Said Humavindu: “I am gratified that Namibia is one of the forerunners on the continent and indeed the sub-region as many countries in the region, particularly within the Southern African Development Community, are still grappling with ideas of establishing their own Deposit Guarantee Schemes.
“The presence of a strong safety net is key to restoring consumers’ confidence in the financial system, as you have heard today. It plays an essential role in protecting consumers and ensuring financial stability”.
“When consumers are aware that their funds placed with the various financial institutions are safe and secured, they would comfortably participate in the financial system. I am happy to learn that, at the current coverage limit of N$25 000, the Namibia Deposit Guarantee Scheme fully covers well over 90% of depositors in our country. Going forward, the Authority must continue to periodically review this coverage limit to ensure that a significant number of depositors are covered at any given time. This is also in line with the core principle of the International Association of Deposit Insurers,” he added.
Humavindu recommended that the NDGA continues to collaborate with relevant institutions for greater public education and awareness.
He stated that public awareness is critical for effective deposit insurance.
He encouraged member institutions, particularly commercial banks, to play their part in disseminating information about the Deposit Guarantee Scheme.
At the same time, chairperson of the NDGA board and deputy governor of the Bank of Namibia Ebson Uanguta said the occasion belongs to domestic depositors, particularly those small depositors who have entrusted their hard-earned savings with Namibia’s financial institutions.
“They are the primary beneficiaries of the scheme. Our commitment to safeguarding their funds will only be strengthened each year,” he declared.
“Our commitment to protecting depositors and maintaining the integrity of our financial system has never been stronger.
The idea is simple: in the event of bank failure, depositors are to be reimbursed for their funds, up to a cover limit, in a speedy and transparent manner. The orderly payment of claims to depositors is thus crucial in reinforcing the credibility of the deposit insurance system,” Uanguta added.
He continued that NDGA remains steadfast in its commitment to adapting to new challenges, and ensuring the financial security of all Namibians.
“Together, we will continue to build a resilient and trustworthy financial environment. What we have achieved over the past five years gives us hope and optimism for what we can and must achieve in future…I want to leave you with this assurance that ours is not a journey of convenience, but of conviction – to shield depositors, safeguard the economy and strengthen the foundation on which our nation builds its future,” said Uanguta.