Rate spread, loan access worry WEF

NAMIBIA’S banking system is among the ten soundest in the world, the World Economic Forum (WEF) has found.

One of the few systems to have emerged from the global credit crunch virtually unscathed, the local banking system has shot up from 34th position on the WEF Global Competitive Index (GCI) last year to seventh this year.It is rated as one of the country’s relatively few competitive advantages, and helped Namibia to achieve an overall ranking of 74th out of 133 countries worldwide.Also boosting Namibia’s competitiveness was the sophistication of the domestic financial market. Namibia is ranked 36th in the world, a significant improvement from the 42nd position last year and 56th in 2007. Unfortunately the WEF doesn’t see the interest rate spread, access to loans and venture capital availability the country in the same positive light. All three these issues are competitive disadvantages, the latest CGI shows.Namibia’s huge interest rate spread, long a bone of contention between the Bank of Namibia (BoN) and the commercial banks, is placed 61st out of 133.The spread, the difference between the BoN’s repo rate and the prime lending rate of the commercial banks, currently ranges from 425 to 450 basis points.BoN Governor Tom Alweendo wants the gap to shrink to 375 basis points by year-end.The ease of access to loans in Namibia is another controversial matter, which stranded the country at spot number 57 on the competition ladder.Venture capital availability is ranked 67th, while financing through the local equity market holds the 68th spot.