(First appeared in New Era 4 February 2015)
THE birth of our son has brought us a lot of pleasure, but also added to our responsibilities, and worries for what the future will bring. At the same time my father is reaching pensionable age and I have been assisting him in ensuring his financial security. This has meant looking at both the financial services that we must put in place for our children, as well as examining the services that my father had planned. These include how we manage banking, pension funds, savings accounts, medical and hospital cover as well as purchasing larger items like a motor vehicle and a house on credit. All these products and services are meant to ensure that we can sleep more peacefully at night because we have the knowledge and ability to access them.
The question remains though at the back of my head, “What if these services were not available to me?” And the even larger question looms, “What about my fellow consumers who struggle to get the same access to allow them to sleep peacefully at night?”
The issue of access to financial services and products is referred to as “financial inclusion”. This term is often used by the Bank of Namibia, Namfisa, Ministry of Finance and the Financial Literacy Initiative (FLI) to encourage the providers of these services to widen the net to allow more “inclusion”. When looking at financial inclusion, I prefer to define what services consumers are being excluded from so that we can identify what should be addressed. Very often the exclusion of consumers to financial services include: a) insufficient income; b) high risk of non-payment; c) discrimination (on the basis of race, marital status, etc.); d) lack of information – both by the clients and by the service providers; e) weak contract enforcement by the courts; f) product features – use of technical terms for example that are not fully understood; and g) price barriers due to market imperfections.
Thus financial inclusion means minimising or removing financial exclusion arising from market or government failures. Some supporters of financial inclusion want to see a situation where banks do not even charge a fee when a client deposits money for safe-keeping.
However, one of our regular readers who is a financial advisor warns of the expectations that these services should be provided at no cost. “Although technology has advanced so much that we can reduce costs significantly, there is no such thing as a free lunch. Costs will just be claimed somewhere else.”
Financial service providers use the issues mentioned to design their products and services and this (unfortunately) leads to the best services and products being offered to the more well-off clients. The people who need these services are thus being penalised twice – on the availability of the service and the extra high cost they must pay to make use of the service. The financial providers however insist that all clients have equal access to their services.
When all is said and done, peace of mind is essential to all Namibians. We as the consumers, and government and service providers need to take ownership and have justness in solutions for all consumers. After all is said and done, we cannot continue with the belief that “all animals are equal, but some animals are more equal than others.”