Friday, 24 September 2010

More Namibians have access to banking – World Bank

By: Milton Louw

The banking population in Namibia has increased substantially in 2009 according to the World Bank’s Financial Access 2010 report released on Thursday, 16 September. The number of deposit account holders in Namibia has grown by 23 percent, with statistics confirming the resilience of the seven commercial banks during a year weighed down by the international financial crises.

According to the report, more than three quarters of the population (752 per 1000 adults) hold deposit accounts and 20 percent have loans with financial institutions. In comparison, the report shows that sub-Saharan Africa had an average of 163 deposit accounts per 1000 adults and only 28 bank loans per 1000 adults.

In addition the report shows that the disbursement of loans shrank across sub-Saharan Africa last year, with Namibian loan accounts declining in volume by 36 percent.

The most remarkable was that Namibia scored the highest with 1185 “Depositors with Other Depository Corporations” per 1000 adults. No other country on the Continent, or in any developing country for that matter, scored as high. In fact, Namibia is placed 16th in the world. To put that in perspective, Austria at number one scored 4785 and Italy, two places above Namibia, scored 1285 per thousand adults.

The Financial Access 2010 Report stresses consumer protection, financial literacy and rural, SMME and savings promotion as critical in the spread of services and products to unbanked populations. The World Bank's researchers note that while consumer protection legislation is in place in most countries, implementation and enforcement is often lacking.

"Legislation is often broad and does not cover issues specific to the financial industry," said a researcher. "Only half of the economies (studied in the Report) have legal provisions restricting unfair and high-pressure selling practices and abusive collection practices.

"Regulators in only about half of the economies are empowered to issue warnings or impose fines on financial institutions violating consumer protection regulations. A public notice of violation - one of the most effective deterrence tools - can be used in only about a third of economies." According to the Report, Namibia scores well across five critical areas, which include consumer protection, financial literacy and rural, SMME, savings and microfinance promotion.

The Financial Access 2010 Report encompasses survey responses from 142 economies, including Namibia, and analyses changes that took place in the banking landscape in 2009. The Financial Access 2009 Report covered 139 economies.