Tuesday 11 May 2021
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BoN Fit and Proper test

… does it speak to transformation


Professionals within the banking sector have raised concerns that the sector’s regulator, Bank of Namibia is not doing enough to see the transformation of banking institutions from being foreign to being truly nationally owned.
The professionals, who did not want to be named, said that the Bank of Namibia (BoN), who regulates the appointment of directors on the boards and executive officers can do more through the “fit and proper” assessment to contribute to transformation.
The professionals agreed that while the Act provides for the regulation of those in top positions, who can easily drive or largely contribute to the “much needed transformation of the banking sector”.
The Banking Institutions Act 2 of 1998 provides that the bank must conduct a fit and proper test to determine whether the applicant is suitable to hold the position of director on a board, principal officer or executive officer of a banking institution or controlling company.
The Act states that boards of directors who are not Namibian residents are permitted to appoint alternates, “on good cause shown; provided that a fit and proper test is conducted in the same manner as for prospective directors prior to such appointment”.
Financial sector experts specifically in the banking sector said that the fit and proper test is also supposed to assist in the issue of transformation as the regulator is the one that approves the appointments whether the candidates are from Namibia or from beyond the borders.
The test looks at areas such as experience, education, qualification and the financial record of the candidate.
When asked whether the regulator’s fit and proper assessment speaks or provides a contribution to the transformation of the banking sector,(BoN) spokesperson Kazembire Zemburuka said that transformation of the sector is contained in the Namibia Financial Sector Strategy.
The strategy acknowledges a need to have a mix of locally owned and foreign owned institutions, so as to ensure the developmental needs of the country.
“Further, financial institutions (including banks) have adopted a voluntary Financial Sector Charter for the financial sector which spells out the sector’s transformation agenda. It is expected that the industry will carry out the commitments made in the Charter in order to achieve transformation of the banking sector,” the spokesperson said.
The Charter Zemburuka is referring to, is the same one BoN and the Namibia Financial Institutions Supervisory Authority recently said that they could not regulate the targets set out in the Charter as it is not legislature and therefore not strictly enforceable.
The Patriot recently reported that the major banks such as Bank Windhoek, NedBank Namibia and First National Bank claimed to have met the targets in the voluntary document because of their board and shareholding representation. Standard Bank Namibia did not respond to questions sent to them regarding the performance in terms of the charter.
Financial institutions in 2009 were given five years to ensure that 40% of their ownership and control are local.
The Charter that took on 1 March 2009 is said to remain valid until 31 December 2019, after which the banks are still expected to honour the targets, despite them being of a voluntary nature.
The voluntary document, gave the financial institutions this period to make sure that 25% of the executive management must be from broad-based economic empowerment (BBEE) background, 10% of that must be BBEE women while 30% of financial institutions’ procurement spending must be channelled towards BBEE suppliers.

Zemburuka said that while there is a concern over dual regulations by the South African and the Namibian central banks, “banking institutions that are authorised to conduct banking business in Namibia (regardless whether they are owned by foreign shareholders) are, for all intent and purposes, Namibian companies and are subjected to Namibian laws.”
He said that it should not be assumed that since some of the banks are foreign owned, appointments of executive officers and directors of the banks are approved by regulatory authorities in jurisdictions of their parent companies.
Permitted to work
Home Affairs spokesperson Sakues Kadhikwa said that those approved by the regulator are subject to work permit regulations.
“As long as this person is taking up employment in the country, they have to meet all criteria,” Kadhikwa said.
The Immigration Control Act 19 of 1993 states that the Immigration Selection Board shall not issue an employment permit unless the applicant, amongst others, is not likely to be employed in a position in which sufficient number of persons “are already engaged in Namibia, to meet the requirements of the inhabitants of Namibia”.
A financial sector expert said that there are a number of executive appointments in the banking sector that could have been filled by Namibians, but are still occupied by non-Namibians.
This fact, the expert said also contributes to the lack or the slow rate of transformation in the sector.

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