Windhoek: Enough is enough! It is time financial institutions enable small and medium enterprises to access financing, Bank of Namibia Governor, Ipumbu Shiimi, has informed the financial sector. The reserve bank is asking financial institutions to start brainstorming for innovative business models that include all sectors of society. At present certain segments of the Namibia economy, particularly SMEs, rural communities and the poor 'are still not benefiting from access to finance', with SMEs finding it difficult to access credit that they have resorted to borrowing business credit from friends and relatives.
Yet, for the past two years the country exported more than N$16 billion of its national savings to South Africa - money that could have funded investment opportunities through SMEs in the local economy. Shiimi described the situation as 'disheartening' and 'not sustainable for a country that aspires to be a developed nation by 2030'.
While recognising the various activities and 'praiseworthy achievements' by the private sector to increase access to financial services, Shiimi said, 'It is important to note that more needs to be done'.
Latest survey figures show that more than 51 percent of economically active Namibians 'are unbanked or do not have access to financial services [and] the picture does not get any better with SMEs'.
A 2009 survey by the Namibia Chamber of Commerce and Industry found that 55 percent of informal business could not access credit and 37.1 percent of those that had access to credit, obtained this from friends and relatives.
'We cannot and should not continue with this status quo. We should take tough decisions to reverse these trends, with the aim of further increasing access to financial services. Our financial sector must become an important pillar of strength to our economy through financial inclusion,' said Shiimi.
Financial inclusion should mean that every economic activity, geographic region and segment of society has access to financial services. Shiimi says it is only through such a way that there would be a more balanced economic growth and development.
On its part, the reserve bank has pledged to ensure that it does not over-regulate the industry, but that regulation encourages innovative and alternative business models. It would also ensure consumer literacy and protection, enhance access to financial services by enforcing transparent and competitive banking fess and charges, as well as promoting local ownership in commercial banks.
The amended Banking Institutions Act gives the Minister of Finance power to facilitate transformation of the local banking industry through diversifying of shareholding structure and reducing concentrated ownership and control.
Nevertheless, the regulator cannot be effective if the financial institutions are not responding to the regulator’s relevant and enabling regulations.
'It would be a fruitless exercise,' says Shiimi, adding that time has come for more concerted efforts by all.
'This calls for financial institutions to come up with alternative and sustainable business models; for the regulator to provide an enabling environment which does not compromise financial stability, and for Government to play a supporting role,' said Shiimi.