Lot Ndamanomhata

The recent decision by the Monetary Policy Committee (MPC) of the Bank of Namibia to reduce the repo rate by 25 basis points to 7.50% comes at a pivotal moment for the country’s economy. 

This reduction is intended to boost economic growth while maintaining the Namibia Dollar’s peg to the South African Rand. 

Lower car payments, mortgage rates and personal loan interest rates are expected, but whether ordinary Namibians will truly benefit depends on whether commercial banks extend these repo rate reductions to their customers. 

Bank of Namibia Governor Johannes !Gawaxab stressed that this policy shift must directly impact the everyday lives of citizens by ensuring fair lending practices.

This monetary policy shift coincides with the enactment of the Banking Institutions Act, a landmark piece of legislation aimed at regulating fees and charges imposed by banking institutions. For too long, Namibian consumers have faced exorbitant fees, with little recourse to challenge them. This new law empowers the minister of finance and public enterprises to address these long-standing issues, and Namibians are eagerly awaiting the first concrete steps under this Act. As !Gawaxa

b emphasised, market conduct reforms are essential to protect consumers and ensure that banking services are accessible to all. 

The need for reform is clear. Commercial banks in Namibia have seen their profits skyrocket, particularly through non-interest income derived from fees and charges. 

In 2023 alone, banks generated N$4.5 billion in non-interest income, a significant increase from the N$3.5 billion recorded in 2019. 

This surge in income highlights the pressing need for regulatory intervention to ensure that consumers are treated fairly, and not unduly burdened by excessive fees. 

Economist Omu Kakujaha-Matundu, a senior lecturer in economics at the University of Namibia, has raised concerns about the effectiveness of these regulations, especially when they are developed in consultation with the banking industry itself. 

There is a legitimate fear that the interests of financial institutions may take precedence over those of consumers. 

The fact that banks refunded only N$156 400 to customers following complaints in 2023 – despite 28% of complaints received by the Bank of Namibia being related to fees and charges – underscores the need for stronger consumer protection measures. 

Beyond banking fees, there is a larger issue at play: economic growth must translate into economic development. In recent years, Namibia’s economic growth has largely benefited the private sector, often driven by government expansion and expenditure programmes. 

However, this growth has not always trickled down to the broader population. As the Namibia Statistics Agency reports, while sectors such as mining and construction have seen recovery, employment and income levels have not risen proportionately, leading to unequal benefits from economic growth. Namibia cannot achieve true economic progress if a significant portion of its population remains in poverty, while only a select few reap the rewards of the system. 

The reduction in the repo rate offers an opportunity for relief, but this relief must be accompanied by fair pricing that reflects the realities of living conditions in Namibia. The 2008 financial crisis in the United States serves as a stark reminder of what can happen when economic policies fail to protect most citizens. Policies that favoured financial institutions over ordinary citizens led to widespread economic hardship. Namibia must avoid repeating this mistake by ensuring that economic growth benefits everyone, not just a privileged few. 

Namibians are not denying that there has been economic development; rather, they are calling for more inclusive growth that reaches all sectors of society. 

The implementation of the Banking Institutions Act, along with the expected extension of repo rate reductions to consumers, could help create a more equitable financial system. As Namibia navigates these challenging times, collaboration between the government and financial institutions will be crucial to ensuring that economic growth benefits everyone.

The nation eagerly anticipates the enforcement of the new banking regulations and the concrete actions that will finally provide the financial relief consumers have long been promised. 

Only then can Namibia begin to build a financial landscape that promotes sustainable development, and ensures that economic prosperity is shared by all. 

As !Gawaxab highlighted, consumer protection must be at the centre of these reforms to make the financial system work for everyone, not just the wealthy few. 

This moment presents a critical opportunity for Namibia to create a more just and equitable financial system – one that supports sustainable economic development, and offers real opportunities for growth and prosperity for all citizens.

*Lot Ndamanomhata is graduate of public management, journalism and communication. He writes in his personal capacity.