WINDHOEK – Minister of Finance, Saara Kuugongelwa-Amadhila, yesterday said Namibia needs to ensure that regulatory frameworks and supervisory practices give sufficient space to encourage competition and innovation to promote formal financial sector participation by individuals and small and medium enterprises (SMEs).
As the keynote speaker at the Development Bank of Namibia’s Good Business Awards and Innovation Award, the Finance Minister noted that innovation is not only needed in science and technology but is needed in all walks of life, be it poets, actors, journalists or politicians. As an example, Kuugongelwa-Amadhila focused on economic and financial policy developments where innovation is of crucial importance. “The TIPEEG (Targeted Intervention Programme for Employment and Economic Growth), the Namibia Financial Sector Strategy and our Growth at Home Strategy are good examples of innovation, since the simple definition of an innovation is something new or different being introduced. On the other hand, the impact of an innovation will only be known once tried and tested,” said the Finance Minister. She was quick to add however that innovation can also be applied with malicious intentions. “Just think about the destructive nature of certain weapons and the toxic nature of certain financial instruments that partly were the root cause of the Global Financial Crisis. On the positive side, however, great strides were made through constructive innovations in the communications and financial industries.”
Kuugongelwa-Amadhila also remarked that many of the most effective methods of increasing financial inclusion have been based on the application of new technologies, such as mobile phones, or the introduction of new institutional arrangements, such as banking agents. “These allow rapid expansion of services to reach excluded populations, while at the same time reducing the costs of service delivery. For example, the massive global growth in mobile phone use means that financial services offered through the mobile phone networks can be delivered cost-effectively to a wide population. Financial innovation, when used responsibly, will contribute to making the financial sector more efficient and user friendly, and thereby, contribute to growth and the welfare in the nation,” noted Kuugongelwa-Amadhila.
The Finance Minister continued that in some cases experience has shown that existing financial services infrastructure can be a barrier to innovation. She cited the the interbank payments system, which she said might make it difficult for new providers, especially non-banking institutions, to enter the market and hence policymakers are addressing such barriers as part of her ministry’s Financial Sector Strategy.
Meanwhile, Development Bank of Namibia (DBN) Board Chairperson, Elise Angula, added that innovation is sometimes not given the space it needs to thrive as it is seen as a risk to capital preservation because the ideas are most likely untried and untested. In a speech delivered on her behalf by fellow Board Member, Albie Basson, Angula said that through the bank’s Innovation Award, it is actively seeking to unlock the potential gains of innovation.
“We received a large number of proposals for the Innovation Award. There is obviously no shortage of ideas. Tonight we will unveil to you three of them which in our opinion are excellent, one of which will win the Innovation Award. We ask you to consider the ideas and innovative enterprises that you will see tonight as models for investments in the future. We also ask you to open your minds to the long-term prospects, not to consider their potential and returns, now or next year, but to consider where they might be, and the benefits and returns they might bring, five or ten years from now,” noted Angula.
This year’s winners of the several of the DBN’s Awards were all from the transport and logistics sector, with the Innovation Award going to a financial product related to the transport sector. Communication Manager, Jerome Mutumba said this was not a bias towards the sector but due to excellent performance of each company from among entries across all sectors, as rated by a panel consisting of DBN and independent external judges. The 2014 Innovation Award went to Namib Industrial Group’s product ‘Eenda Nawa – Go Safe’. Eenda Nawa is travel insurance for persons using public transport, particularly taxis and long distance buses. Members of the public using any form of transport on Namibian Roads can send a text message to Eenda Nawa as payment for insurance to cover accidents during the 24 hour period after the text message.
According to DBN, Namib Industrial Group identified a gap in the market for insurance cover on Namibian roads, and cited the nation’s relatively high number of accidents. In the event of an accident, the product provides pay-outs to individuals and/or families, depending on the cover selected. The cover is applicable to hospitalisation and funeral expenses. Runners-up in the Innovation Award were Smart Solutions and Malakia Tyre Recycling.
The winner in the category Large Enterprise was The Six Thousand Transport CC. The transport company received DBN finance to expand its truck fleet to provide contracted transport to large manufacturers, subcontract to large logistic groups and provide transport for smaller retailers.
The expansion added 9 new employees to an existing 18 employees. Indirectly, the additional revenue contributes to employment of approximately 327 employees in sister companies within the group.
The winner in the category for SMEs was Raino’s Trucks, which specialises in repairs to trucks and delivery vehicles. It has established workshops in Windhoek, Ondangwa, Grootfontein and Khorixas. The company holds contracts with the Government of Namibia and the City of Windhoek and has twice been financed by DBN, once to acquire premises in Windhoek and once for premises in Grootfontein. The company employs approximately 43 people.