Thursday 17 June 2021
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All eyes on financial sector reforms

With the Namibian Financial Services Charter’s 10-year implementation period set to come to an end next year, the central bank is hopeful that financial institutions in the country will heed the call for transformation.
Bank of Namibia’s (BoN) spokesperson Kazembire Zemburuka said the Namibian Financial Sector Charter is a voluntary undertaking developed by financial institutions which include banks and non-banks, but despite it being voluntary, he remains hopeful that those who have committed to the charter will do what is expected from them.
The Charter is coordinated by a Secretariat and overseen by the Charter Council.
The Charter is championed by the Ministry of Finance and thus the Council reports to the Minister.
BoN was responding to questions from The Patriot on an update on the progress of the Namibian Financial Sector Charter (NFSC) that was launched in 2009.
The charter commits banks and non-banking financial service institutions voluntarily over a ten-year period to make a certain percentage of procurements from black economic empowerment (BEE) companies and from small and medium enterprises owned or partly owned by previously disadvantaged Namibians.

It further provides for a certain percentage of BEE ownership in financial institutions and appointment of previously disadvantaged people in management levels and to increase Namibian ownership in such institutions.
The charter is made up of seven pillars which ranges from Human Resource Development; Preferential Procurement; Access to/and affordability of financial products and services; Ownership and Control; Empowerment financing and Enterprise Development; Corporate Social Investment and Consumer Protection and Education.
As per the provisions of the Banking Institutions Act of 1998, in the section that deals with the appointment of directors, principal officers and senior officers, commercial banks are compelled to give BoN written notice of its nominees for any of the positions mentioned.
The Patriot wanted to know whether BoN has ever declined a nomination and what the specific circumstances were.
“In terms of the same provisions of section 41 of the Act, the Bank may object to the proposed nomination for appointment on grounds that such director or principal officer or executive officer is not fit and proper to hold such a position.
In the recent past, where the Bank of Namibia objected against the appointment of certain Executive Officers at banking institutions, those institutions were afforded an opportunity to present to the Bank evidence relating to qualifications, experience and competence considered in the appointment of such executives. On that basis, the Bank considered such representations favourably,” he said.
Zemburuka emphasised that the obligation for the effective management of banking institutions resides with the relevant shareholders and the boards, whichever the case may be, and not the regulator.
He said shareholders and boards are accountable for the functionaries they appoint to run the business on their behalf, and therefore the onus is on them to always conduct the requisite due diligence when making such appointments.
Asked to which extent BoN applies itself to ensure that the sector becomes increasingly transformed before the 2019 deadline, Zemburuka said: “It is important to note that the Charter is a voluntarily adopted transformation charter which constitutes a framework and establishes the principles upon which empowerment will be implemented in the financial industry.
All signatories to the Charter are expected to commit to the full realisation of the objectives of the Charter,” said Zemburuka.
He said BoN supports initiatives that are geared towards realising transformation of the financial sector and for this reason is committed to the full implementation of the Namibia Financial Sector Strategy, currently being implemented.
“In this regard, the Bank has welcomed opportunities for Namibians to participate meaningfully in the sector including taking up shares in some financial institutions listed on the Namibia Stock Exchange and the representation of qualified Namibians on the Board and management of financial institutions.
The Bank is, however, aware that this work is not complete and therefore calls on all relevant stakeholders to re-dedicate themselves to the attainment of the objectives of the Namibia Financial Sector Strategy,” he urged.
Regarding the pending NEEEF bill and the possible impact it would have on the Charter if implemented, he responded: “Since NEEEF is not implemented yet, it would be pre-mature to comment on the impact thereof.
However, it should be noted that provisions under NEEEF and the undertaking by the voluntary Namibia Financial Sector Charter (NFSC) are to improve and/or reduce the inequitable distribution of ownership and control of financial institutions through transformation.”

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