Foreigners own lion’s share of financial sector

Home National Foreigners own lion’s share of financial sector

WINDHOEK- Namibia, as a developing nation, has done very little in the financial sector since independence–with 97 percent of its local financial institutions and insurance companies being foreign owned.

Contributing on the Namibia Deposit Guarantee Authority Bill under discussion in the National Council last week, Kabbe Constituency Councillor, John Likando, argued that 97 percent of financial and insurance institutions are not Namibian companies, but rather foreign companies that do not exist in the interest and aspiration of the Namibian people.
He said these foreign companies rather tape the existing opportunities in the financial sector with a capitalistic and monopoly approach.

Recently, Finance Minister, Calle Schlettwein, tabled the Deposit Guarantee Bill of 2018 in the National Assembly aimed to protect depositors in the event of failure of a banking institution.

The Bill was referred to the National Council for discussion and review. In recent years, a number of countries in the world experienced bank failures, and Namibia is not spared from this happening–as witnessed with the SME Bank, stated the finance minister. It is for this reason, he says, that as a country, the government should establish mechanisms to manage bank failures and protect the interest of depositors while ensuring financial stability. “Micro-prudential measures to ensure and strengthen financial stability require that we exercise effective bank resolution mechanisms. Such measures must also address the impact on depositors in the event of potential failure of deposit taking banking institutions such as what was witnessed in the case of the SME Bank,” Schlettwein said.

Once passed, this financial guarantee vehicle will be empowered with administrative authority to run its business like any state-owned enterprise.

Likando said the guarantee authority will ensure that the in event of bank failure, the defined levels of reimbursements to the depositors are carried out efficiently, transparently and speed manner, in order to contain the risk of bank collapse, and minimise the negative impact of delayed access to own funds particularly the small depositors. “It’s over a year now [that] SME clients are still struggling to have access to their monies. Majority are SME contractors, who are now at courts with their creditors; some have lot properties through attachments, while others have been blacklisted to delay in the Bank liquidation process,” he said. Therefore, he feels this bill comes with opportunity for the black majority community to create a bank that is wholly owned and created by Namibians, based on Article 98 of the Namibian constitution.

He noted the discretional powers of both the board of directors and the Minister should be carefully crafted at policy level, in order to safeguard the interest of all the depositors. Once this is taken care of at policy level, indeed the Deposit Guarantee scheme will be a meaningful financial intervention tool, and these measures will really restore confidence to foreign investors and Namibian nationals who see the opportunity in investing in this noble sector.

 Likando claimed the social corporate social responsivity of foreign financial institutions is hardly felt locally, compared to what they offer in the country of origin. He said in Namibia, these companies need to be approached for them to assist in any field or sectors that requires help – unlike in their country of origin, where they instead ask their governments and communities on sectors that need financial support.

“If I can give a practical example of our sister country, South Africa, look at what Nedbank and First National Bank sponsors in terms of sports, education, and women and youth empowerment programs. Why are they not doing the same in Namibia, where the public sector is struggling to meet ends in all these crucial sectors?” Likando asked.
He argued that Namibia’s under 23 national team (The young Brave Warriors) failed to participate in the under 23 African Cup of Nations (AFCON) due to lack of funds, while these institutions are making profit from citizens’ savings and deposits. 

“We cannot let this to continue. It’s the responsibility of the legislatures and all individual citizens, who are majority depositors of these institutions, that are enjoying surplus profit at our expense to react to the current trend of foreign owned institutions to plough back in the country economic situation,” he noted.