Help us, bankers ask GovtBy: JO-MARÉ DUDDY
THE Bankers Association of Namibia (BAN) has called on Government to standardise land ownership rights in the country and to implement measures to speed up land servicing.
“Banks are the market takers and Government is the market maker. Government needs to facilitate an effective property market,” BAN chairman Christo de Vries said at the Namibia Chamber of Commerce and Industry’s (NCCI) private sector review of the economy.
De Vries highlighted the issue as one of five factors which currently hamper and affect the investment and business environment of the local banking sector. The other four are the lack of timely audited financial results of state-owned enterprises (SOEs), the regulatory environment in which banks have to operate, the skills and expertise deficit in the sector, as well as the need for Government to consult more with the banking industry.
If serviced land doesn’t become available at a more affordable and faster rate, house prices will continue to increase and Namibians won’t have access to affordable housing, De Vries said.
In addition, growth in the loan books of banks will be restricted, he said.
Home loans make up the bulk of banks’ total advances, according to the IHN Banking Review of 2012. By the end of 2011, the total loan book of FNB Namibia, Standard Bank Namibia, Nedbank Namibia and Bank Windhoek was about N$20 billion – about 48% of the four banks’ total gross advances.
De Vries suggested that local authorities should consider issuing bonds, backed by Government, to speed up the servicing of land and make it more affordable.
Varying land ownership rights also restrict banks’ business, he said, as banks are unable to accept land as collateral for transactions in certain areas of the country. This hampers growth and economic activity in regions where different rules apply, he said.
Land rights should be aligned and standardised so that it can be used for collateral, he said.
BAN also called on Government to implement measures that would ensure effective corporate governance in state-owned enterprises (SOEs), resulting in “proper and timeous auditing of financial statements.
Not only should Government lay down the law on timely audited results, but it should also ensure that SOEs adopt the 2009 King Report on Corporate Governance (King III), BAN urged.
Without the latest audited financial results, banks can’t assess the financial position of an SOE or do a proper risk assessment as required by law. As such, banks cannot lend money to such an SOE, De Vries said.
If Government doesn’t address the issue, it might hamper growth in the SOE sector, he said.
BAN furthermore wants proper consultation with Government on regulatory and policy issues.
“The consultation process prior to the changes in legislation or regulatory requirements is not always effective,” De Vries said.
The banking sector plays an important role to maintain a stable economic environment and should therefore be a “key stakeholder” in the consultative process, he said. In addition, proper impact assessment of new and revised legislation and its effect on the banking sector should always be done before these changes are implemented.
“Legislation should be right-sized and fit for purpose in the Namibian environment, and effectively and efficiently debated, enacted and implemented,” De Vries said.
If not, it will limit growth prospects and the deepening of the economy, specifically the financial sector, he said. It would also create uncertainty and result in “investors losing confidence in the long-term commitment of Government to uphold legal rights”, he added.
BAN would also like to be more directly involved in Government planning initiatives such as the New Equitable Economic Empowerment Framework (NEEEF), the Fourth National Development Plan (NDP4) and the Namibia Financial Sector Strategy. However, banks want to be engaged as a sector, De Vries said.
“There is a distinction to be made between the BAN and the BoN [Bank of Namibia],” he said.
BAN urged Government to implement “efficient and effective” processes to address the shortage of skills in the banking sector.
“[An] increased shortage in skills will dampen innovation, growth and development in the banking/financial sector and may lead to inability to meet regulatory requirements,” De Vries said.