BoN poorly equipped to control banks

Address gaps with legislation, BoN governor suggests
BoN governor Johannes !Gawaxab emphasised that banks are profit-driven entities but suggested legislative intervention in cases of potential market conduct issues.
Ogone Tlhage
The Bank of Namibia (BoN) is not adequately empowered to regulate the market conduct of commercial banks, the central bank's governor, Johannes !Gawaxab, said.

He emphasised the need for legislative measures to address this weakness while speaking at a parliamentary committee hearing into the conduct of commercial banks in Namibia.

It follows concerns that banks are profiteering off the prime lending rate, which is the rate at which banks lend money to the public and businesses, amid general complaints that the current rate is excessive.

“If you believe that banks are discriminatory, that is a market conduct issue, and I have to admit, we’ve got a gap there. We need to close that gap; that is a gap we have in our legislation,” Gawaxab said.

Business models

He stressed that commercial banks are – by the nature of their existence – driven towards principally making profit for their owners.

“We need to accept that banks are businesses, and they have a strong business motive. They are there to make money and that should be accepted. I personally do not see a problem with banks making money and it should be accepted when banks make a profit,” the governor said.

“Where there is scope that commercial banks may be colluding, it’s a matter for lawmakers to intervene through legislative avenues. If we see there are market conduct issues, we need to discuss that,” he said.

New financial strategy

!Gawaxab informed lawmakers that there was leeway – in the crafting of a new financial sector strategy – to introduce policy interventions that would cater to Namibia’s development needs and the well-being of the banking public.

The strategy, which ran from 2011 to 2021, sought to bring about increased financial inclusion of the banking public, increased access to financial services and products, the localisation of the financial sector and the development of local skills in the financial sector, among other things.

“A new strategy will be prepared. That strategy is another avenue; if you still feel there needs to be something done with the financial sector, that’s an opportunity,” he said.

The central bank would soon take finance minister Ipumbu Shiimi through proposed interventions that it will seek to adopt in the new strategy, !Gawaxab said.

“We are busy crafting the new financial strategy. We will take it through to the ministry of finance, and the minister will go through consultations. If you believe there needs to be more to transform the financial sector, that is an avenue you need to consider.”

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Namibian Sun 2024-11-22

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