Deregulation yet to take off in Namibia

DEREGULATION, long touted as a solution to many emerging economies in enhancing competition and growth, is not yet on the cards for Namibia.

Though the phenomenon had proved popular in other countries in the region, locally it was still a dream to be realised. Joseph Iita, Permanent Secretary in the Ministry of Mines and Energy, said in an interview that deregulation of the petroleum sector was not on the agenda.Iita said the current system was working well, much to the satisfaction of the authorities and the Namibian market.He said current laws were not preventing anyone from wrestling it out in the lucrative oil industry.Iita said the sector was operating under an open-market system where competition was the name of the game, hence there was no need for deregulation.”Tell me why should we deregulate the petroleum sector.Existing laws do not stop anyone from setting up a business in the petroleum sector,” the PS said.Analysts say deregulation is a policy option normally employed by governments to ensure that more players take up a share of the cake.In such a way, it is envisaged that competition would go a long way in easing monopolistic tendencies, allowing for better products and services at affordable prices.Martin Mwinga, economic analyst with the First National Bank of Namibia, said deregulation normally worked when there were competitive inefficiencies.He said the petroleum sector in Namibia, although it was being dominated by large international companies, was competitive.Mwinga said big companies brought a host of advantages in absorbing the huge costs and shocks associated with capital-intensive business ventures.The oil sector, he added, was capital intensive.Turning to the energy sector in general, Mwinga said although NamPower enjoyed absolute monopoly as the sole power utility, the cost of bringing electricity to the people meant that smaller local players could not ensure quality work.”Yes, deregulation works well in cases were competition is limited and inefficiencies high.”That is not necessarily the case with the energy sector.Firstly, it is capital intensive and secondly, operational efficiencies are high,” said Mwinga.The Namibian Economic Policy and Research Unit (Nepru) said competition in the banking industry is limited.At present, Namibia has five commercial banks, namely Standard Bank, FNB, Bank Windhoek, Nedbank and Agribank.A Nepru report on competition the financial services sector said this dominance by a few big players created a tendency for monopolistic practices.The report said this meant that investors and depositors had few options other than traditional banking.But Mwinga had it different, insisting that the bankable population in the country was rather small.Joseph Iita, Permanent Secretary in the Ministry of Mines and Energy, said in an interview that deregulation of the petroleum sector was not on the agenda.Iita said the current system was working well, much to the satisfaction of the authorities and the Namibian market.He said current laws were not preventing anyone from wrestling it out in the lucrative oil industry.Iita said the sector was operating under an open-market system where competition was the name of the game, hence there was no need for deregulation.”Tell me why should we deregulate the petroleum sector.Existing laws do not stop anyone from setting up a business in the petroleum sector,” the PS said.Analysts say deregulation is a policy option normally employed by governments to ensure that more players take up a share of the cake.In such a way, it is envisaged that competition would go a long way in easing monopolistic tendencies, allowing for better products and services at affordable prices.Martin Mwinga, economic analyst with the First National Bank of Namibia, said deregulation normally worked when there were competitive inefficiencies.He said the petroleum sector in Namibia, although it was being dominated by large international companies, was competitive.Mwinga said big companies brought a host of advantages in absorbing the huge costs and shocks associated with capital-intensive business ventures.The oil sector, he added, was capital intensive.Turning to the energy sector in general, Mwinga said although NamPower enjoyed absolute monopoly as the sole power utility, the cost of bringing electricity to the people meant that smaller local players could not ensure quality work.”Yes, deregulation works well in cases were competition is limited and inefficiencies high.”That is not necessarily the case with the energy sector.Firstly, it is capital intensive and secondly, operational efficiencies are high,” said Mwinga.The Namibian Economic Policy and Research Unit (Nepru) said competition in the banking industry is limited.At present, Namibia has five commercial banks, namely Standard Bank, FNB, Bank Windhoek, Nedbank and Agribank.A Nepru report on competition the financial services sector said this dominance by a few big players created a tendency for monopolistic practices.The report said this meant that investors and depositors had few options other than traditional banking.But Mwinga had it different, insisting that the bankable population in the country was rather small.