SA banks, smiling all the way to the bank in Nam

By Timo Shihepo

WINDHOEK – THERE is general public consensus that Namibian foreign-owned banks are profiteering by taking advantage of the country’s small, fragile banking sector. In this analysis, The Southern Times goes beyond the crunching numbers of how much the banks make, how much they invest in corporate social responsibility and also compare how they conduct business in their parent country, South Africa.

In the last financial year, 2015/2016, Namibian foreign-owned banks, First National Bank (FNB), Standard Bank Namibia (SBN) and Nedbank made a combined profit of R1.7 billion from Namibia’s population of just 2.2 million people. Half of the population is considered unemployed and would not have access to banks.

In contrast, the three banks only invested less than R20 million in corporate social responsibility in the last financial year. FNB, which made R 1.2 billion last year, only invested R10.3 million, which amounts to less than 1 percent of the bank’s profits.  Standard Bank invested about R4 million while Nedbank also invested less than R6 million.

In contrast, Nedbank alone sponsors a football competition in South Africa to the value of R19.3 million a year. The deal was signed in 2008 and by the time it lapses this year, the whole package would have totalled R400 million over five years.

FNB, which is rumoured to make more money in Namibia (in terms of its assets and profit) than in its parent South Africa, also invests heavily in sports in South Africa compared to Namibia.

Namibia’s banking regulator, the Bank of Namibia (BoN), however, pointed out that there is no law compelling commercial banks to “give back to the community” in social responsibility programmes. “Commercial banks, like other corporate citizens are morally obliged to invest back in the communities that provide them the opportunity to succeed in their business operations. However, this is a voluntary exercise and there is no legal requirement compelling banks to do so,” said BoN’s Director of Strategic Communications and Financial Sector Development, Emma Haiyambo, said.

There are, however, those who are of the opinion that commercial banks have it easy in Namibia. In 2009, the country adopted a financial sector charter, which compels the commercial banks to spend a percentage of their estimated after-tax income or, if not taxable, of their estimated income on Corporate Social Investment (CSI). But the charter is impotent, because no penalties are enforceable if banks are noncompliant.

The charter also made it clearly that local financial institutions have five years to ensure that 40 percent of their ownership and control are in Namibian hands. Five years later, little to no progress was made in this regard, while Namibians continue to complain about participation and ownership in the banking sector.  “The Namibian Financial Services Charter sets targets that commercial banks should voluntarily meet and it is expected that commercial banks live up to these commitments,” said Haiyambo.

The latest statistics available from the FinScope Survey of 2011/12 show that the number of Namibians outside the banking sector was still high.

At that time, about 53 percent of the Namibian population was not bankable, either because they could not afford to bank their meagre earnings or deliberately stayed away from the formal banking system.

On the basis of that, government then came up with the idea of financial inclusion.

The concept of financial inclusion was introduced in Namibia in 2004 and re-invigorated by then Prime Minister Nahas Angula in 2009 after constant reports that the banking sector had been profiteering through charging exorbitant bank charges, which in turn, made it very difficult for the low-income earners to bank their money.

In their defence, the banks find it difficult to deliver banking services to the majority of Namibians because the country’s population of 2.2 million people is sparsely settled.

Government, however, still believes that the transformation rate of the sector to give access and allow the majority participation in the sector is painfully slow.

“We believe there is still room for improvement and a lot more can be done by the financial sector to accommodate the poor. The most accessible and cheap bank for the low-income earning in the country still remains NamPost, through its banking division, which is also well-decentralised across the country,” said Prime Minister Saara Kuugongelwa-Amadhila

Hidden charges

On grid comparison, Namibia has the second highest bank charges in the southern Africa, with every transaction knocking off between five to R100 fees. Some complaints about that fact that despite BoN outlawing charges on money deposited into bank accounts, commercial banks continue to charge their clients such fees.

The central bank is, however, calling on individual customers and small and medium enterprises who qualify for the benefit of zero-rated cash deposit fees to launch complaints, against transgressing commercial banks, with it.

January 2017
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