By:Justicia Shipena
The Bank of Namibia (BoN) says the Banking Institutions Act lacks a clear directive authorising the central bank to control fees and charges imposed by the banks.
This was disclosed in an interview with The Villager by Kazembire Zemburuka, the Director of Strategic Communications and International Relations at BoN when asked about fees and charges levied by commercial banks.
This comes as deputy Minister of Transport Veikko Nekundi, in the National Assembly, requested that parliament explore “dishonest” charges by commercial banks in Namibia.
Nekundi claimed that this is becoming excessively exploitative and that these banks are promoting the local tradition of class and racial division against people.
Zemburuka said the central bank has been dealing with the question about bank charges for a number of years.
“Over the years, we have introduced a number of innovations and solutions to address the problem,” the central bank spokesperson said.
He explained that one of the solutions put forth was the creation of a basic income account or basic banking account so that Namibians without a certain level of income, particularly those in the lower segment of the market, could have access to a basic bank account with no fees at all.
“That was a first attempt to address the issue of fees and charges holistically. We have in addition to that also instituted a no deposit fee charged determination. When you deposit money into a bank into your account you are not supposed to be charged for that. So that is a regulation that we have put in place,” he explained.
He added that the central bank had tried to determine the source of the consumer complaints about fees and charges and what could be done. He also said that the bank had acknowledged the outcry.
Zemburuka disclosed that BoN will conduct a survey this year to ascertain where the most complaints are coming from.
This survey, he said, will be a catalyst for meaningful discussions and dialogues around how the issue can be fixed within the country.
He said the central bank welcomed the intervention by Nekundi on the issue, saying this motion, once taken up by the lawmakers, will be able to come up with recommendations that will be able to serve the interests of Namibia.
He said the banking sector remains profitable, stable and sound, adding that without banks generating a profit, it will not auger well for the country.
“You want a profitable and sound banking system so that it can lend. This is very important in terms of financial mediation so that those borrowers once they get those funds, they are able to buy a property, a car and business people are able to open and expand their businesses and employ many people,” Zemburuka said.
In his motion submission, Nekundi compared the commercial banks to elephants in the boardroom and sharks that are wolfing the Namibian populace.
He claimed that no provisions in the Bank of Namibia Act give the central bank the authority to control commercial bank fees and discriminatory practices, asking for the Act of the Bank of Namibia to be urgently amended.
According to Nekundi, this will help it protect the society’s most vulnerable members.
The bank fees have been dubbed by Nekundi as “just another attempt to defraud individuals of their extremely hard-earned money”.
“These bank charges are not only higher; they are unjustifiable and unreasonably multiple. FNB alone charges not less than 138 different charges. Without any doubt, clearly these schemes are designed to rob our people and derail them economically,” the lawmaker said.
He continued by saying that these commercial banks must be held accountable and responsible for “looting” the populace through exorbitant and numerous charges.
He said that depending on the transactions conducted on arbitrary bank fees alone, SMEs lose anywhere from N$180 to N$1000 on average each month.
Additionally, he stated that unfair business practises, unchecked scams, poor corporate governance, shoddy cybersecurity, and lax central bank oversight were to blame for business closures.
“This overcharging and multiple charges by the commercial banks, force people to keep cash in their properties such as houses and shops to protect their money from being stolen by the banks,” Nekundi claimed.
He concluded that the members of the August house should be proactive, reduce the charges, and reinforce cybersecurity.
According to the BoN’s banking fees and charges comparison report published in December of last year, FNB and Standard Bank would charge N$2.50, Nedbank N$1.90, and Letshego Bank Namibia N$1.20 for a basic bank account when purchasing airtime as of September 30, 2022.
In 2014, it was suggested that local banking fees were “notably” higher in Namibia than they are globally based on an examination of the profitability of Namibia’s four commercial banks as generated from interest and non-interest sources.
According to Romé Mostert, Head of Research at a local stock brokerage called IJG, these fees had a considerable impact on the profitability of Namibian banks.
The top banks in Namibia report annual profits of about N$1 billion, according to statistics.