The chairperson of the Parliamentary Standing Committee on Economics and Public Administration, Natangwe Ithete, yesterday blasted commercial banks for what he called “mafia tactics”.
He accused the banks of making massive profits at the expense of ordinary Namibians.
“Because of antiquated regulations, there is still a significant disparity between black and white people after 33 years of independence. Interest rate discrimination is practised by commercial banks. Black individuals are a bigger source of profit for banks than white people. Interest rates are lower for white people than for black people. Stop generating wealth at the expense of certain individuals. Commercial banks are engaging in mafia-style methods,” said a concerned Ithete.
The former deputy finance minister raised these concerns during a public hearing on the motion of “Overcharges and unethical multiple charges resulting in profiteering by commercial banks in Namibia”.
The motion was tabled by member of parliament Veikko Nekundi earlier this year. Motivating the motion at the time, he said bank charges are but another scheme by commercial banks to swindle people out of their hard-earned money.
“These bank charges are not only high; they are unjustifiable and unreasonable. These schemes are designed to rob our people, and derail them economically. When the Bank of Namibia (BoN) directed that cash deposit fees be done away with, the capitalist institutions quickly came up with account management fees, another daylight robbery scheme,” the parliamentarian charged.
The motion, Nekundi said, seeks to amend central bank legislation to include powers to regulate commercial banks, and give BoN the right to oversee all bank charges.
Some of the charges which irked him include those for electronic fund transfers (EFTs), cash withdrawal charges, debit and credit card swiping, online transactions, as well as account management fees.
Strong motive
Responding to the concerns via a presentation to the committee yesterday, Bank of Namibia (BoN) governor Johannes !Gawaxab said Namibians should accept that commercial banks are in business, and they have a strong motive of making profit.
“Profit today is capital tomorrow, so I see nothing wrong with them making money. The issues of discrimination that you are stating is a market conduct issue. Thus, it is an area that we should zoom into. Fees differ, depending on the nature of the transaction and amount. Commercial banks charge fees to recover their costs, maintain liquidity in the financial market and for risk management practices,” he explained.
!Gawaxab said individuals with higher risk profiles in terms of debt tend to pay more interest. Unfortunately for ordinary Namibians, this means that poorer clients pay more to access and service bank loans.
He noted that from 2015 to 2022, a respectable number of Namibians opened basic bank accounts, totalling almost 146 000.
The central bank governor added that approximately 2.4 million Namibians are currently using digital payment options.
Profit levels
Nedbank Namibia recorded a total income of N$1.2 billion for the year ended 31 December 2022, representing an increase of 13% from the previous financial year, with profit after tax up by 35% to N$275 million.
Capricorn Group Limited achieved solid results, with profit after tax for the six months ended 31 December 2022 increasing by 20.3%, compared to the prior period. Capricorn’s annualised return on equity also increased to 16.6% (December 2021: 14.9%).
Standard Bank Namibia shook off the adverse impact of Covid-19 in its 2022 year-end results after the bank recorded an increased profit of 70.5% for the year – up from N$366 million to N$624 million. These figures are according to the bank’s annual report for 2022.
A mafia can be explained as an organised crime syndicate whose primary activities involve protection, racketeering, arbitrating disputes between criminals, as well as brokering and enforcing illegal agreements and transactions.