ArR720S: applied regional and RURAL economic development Financial instruments and tools in regional and rural economic development ArR720S: applied regional and RURAL economic development

outline Weaknesses in financial sector Namibia’s Financial Sector Strategy: purpose, vision, reform areas and strategies

objectives To examine the instruments and tools contained in Namibia’s Financial Sector Strategy To engage students and assess their understanding through interactive discussions

Introduction: Namibia’s economic performance Satisfactory and sustained growth rate: average of 3% Financial stability during 2007 global financial crisis Structural weaknesses in financial sector and need for Namibia Financial Sector Strategy

existing weaknesses in financial sector Shallow financial markets Limited competition Poor financial safety nets Underdeveloped capital markets Poor regulation

existing weaknesses in financial sector (cont’d) Limited access to financial services Low financial literacy Poor consumer protection and activism Limited skills Low citizen participation

Namibia financial sector strategy (NFSS) Spans the period 2011-2021 Background: a response to address structural weaknesses in financial sector Purpose/rationale/objective: to guide the future of the financial system in order to ensure its effectiveness, competitiveness and resilience A sector development strategy towards realising Vision 2030

Nfss vision: 2021 Deepened, efficient and well-developed financial system Reliable and effective financial regulatory system Competitive financial sector Local ownership of financial institutions Inclusive financial strategy Financial literacy and consumer protection

Unpacking nfss vision: 2021 Vision 2030: Namibian economy expected to grow by 6.2% per annum Projected growth of financial sector: 6.3% Efficiency: wide range of financial products at low cost Effectiveness: innovation, product differentiation, customer-centric orientation Stability: prudential regulations, robust financial institutions, infrastructure

Current status of Namibia's financial system Commercial banks Other specialised financial institutions Non-bank financial institutions: insurance, pension funds, investment managers, unit trusts, microfinance institutions, stock exchange and stockbrokers

NFSS focus: reform areas Deepening and developing financial markets Providing financial safety nets Financial inclusion Localisation of financial sector Skills development

Deepening and developing financial markets: strategies Cost-benefit analysis New instruments: exchange traded funds, securities and derivatives Corporate papers Public-private partnerships Stock exchange Enabling regulatory environment

Providing financial safety nets: strategy Appropriate deposit insurance and resolution scheme for Namibia

Financial inclusion: consumer protection strategies Market conduct principles and oversight Establishment of financial services complaints adjudicator Consumer education

Financial inclusion: financial literacy strategies Clear policy framework National baseline data Financial and consumer education Monitoring and evaluation

Financial inclusion: Access to financial services strategies Survey: FinScope 2011 Credit Agreements Act Review of usury rate thresholds Regulation on electronic money Action plans: National Payment System Vision 2015

Financial inclusion: Access to financial services’ strategies (cont’d) Improved financial access Amendment of Banking Institutions Act National venture capital fund Micro-insurance products Balance between financial integrity and access

Financial inclusion: institutional support strategies Revision of 1997 SME Development Policy Credit Guarantee Scheme Credit bureau Specialised SME bank Coordination of existing initiatives SME advisory services Mandate review: NAMPOST Bank

Localisation of financial sector: strategies Issuing appropriate level of Namibian ownership of financial institutions Monitoring implementation of various initiatives

Skills development: strategies Financial Sector Skills Enrichment Programme Review of courses at tertiary institutions Strengthening of professional institutions Short-term measure: employing foreign workers with critical skills

Discussion questions Assess the background and existing weaknesses in the financial sector which necessitated the birthing of Namibia’s Financial Sector Strategy (NFSS). What is the purpose and vision of the NFSS document? Discuss the current status of Namibia’s financial system. What are the five main reform areas associated with the NFSS? Examine the strategies for attaining the five main reform areas under NFSS.

Open debate and discussion The reform of Namibia’s financial sector is the primary responsibility of the government, rather than the private sector.

review Sub-themes Details Namibia’s economic performance Satisfactory and sustained growth rate: average of 3% Financial stability during 2007 global financial crisis Structural weaknesses in financial sector and need for NFSS Existing weaknesses in financial sector Shallow financial markets; limited competition; poor financial safety nets; underdeveloped capital markets; poor regulation; limited access to financial services; low financial literacy; poor consumer protection and activism; limited skills; low citizen participation Namibia Financial Service Strategy (NFSS) Spans the period 2011-2021 Background: a response to address structural weaknesses in financial sector Purpose/rationale/objective: to guide the future of the financial system in order to ensure its effectiveness, competitiveness and resilience A sector development strategy towards realising Vision 2030 NFSS Vision: 2021 Deepened, efficient and well-developed financial system Reliable and effective financial regulatory system Competitive financial sector Local ownership of financial institutions Inclusive financial strategy Financial literacy and consumer protection Current status of Namibia’s financial system Commercial banks Other specialised financial institutions Non-bank financial institutions NFSS focus: reform areas Deepening and developing financial markets Providing financial safety nets Financial inclusion Localisation of financial sector Skills development

reference Republic of Namibia: Ministry of Finance. (n. d.). Namibia Financial Sector Strategy, 2011-2021, towards achieving Vision 2030.