Bankers'  Conference 2001

Preface and Overview

 Preface

 The Third Annual Bankers Conference took place on August 9, 2001 in Windhoek, and deliberated on the theme “Optimal Financial Structure in Namibia”. The main objectives of the conference were

(a) to understand the inter-relationship between finance and growth particularly against the backdrop of global experience

(b) to review Namibia’s financial structure as it evolved over the years with emphasis on major parameters of performance like efficiency, and contribution towards the process of economic growth

(c) to identify the financing gaps in the economy against the backdrop of growth imperatives and finally (d) to come up with suggestions towards putting in place an optional financial structure. It was for this reason that the central bank invited eminent speakers to address the conference and share their experiences on the optimality of the financial structure in Namibia that could enhance growth. 

Overview and Reflections  

Mr. Tom K. Alweendo, the Governor of the Bank of Namibia in his opening speech shed light on the need for putting in place a more robust, efficient and effective financial superstructure that could effectively contain systematic risks and conducive to growth.

The paper of the “Role of Financial in Economic Growth” presented by Dr. Norman Loayza of the World Bank reflects the role of the exogenous component of financial development on economic growth. It also presents evidence concerning the legal, regulatory, and policy determinants of financial development. The results of the regression analysis in his analytical framework produced very consistent findings that confirm that exogenous component of financial intermediary development is positively and robustly linked to economic growth. The regression results are also consistent with the theoretical models that predict that better functioning financial intermediaries accelerate economic growth. However, the results do not favour models that emphasise the potentially growth-retarding impact of financial development.  

The paper from the Research Department of the Bank of Namibia essentially reviews the Namibian financial structure. It shows that the financial structure in Namibia is dominated by the banking industry. It further pointed out that the financial services are urban-based. The paper suggests that if the economy has to succeed in mobilizing economic resources for investment optimally, financial services should be extended to the rural areas.

In the paper tittles “Imperatives of growth and development: The emerging financial gaps” presented by Dr. Tekaligne Godana, an analogy of irrigation system is used to illustrate the credit system in any economy. A good financial system is likened to a complete irrigation system with a dam at a site suitable to harness all the water resources in the catchment area, an effective channel system with minimal water leakage and effective distribution, in particular to the most productive site. The irrigation system illustrates two core issues in this paper. First, efficient operation of the existing irrigation system and second, construction of a new complementary irrigation system.  

Dr. Jaafar bin Ahmad presented a paper that attempt to evaluate the role of banking institutions in the development of Namibia since independence. The paper finds it disturbing that the direction of bank credit has not shifted much over the last decade in favour of the productive sectors. The paper also indicates that the issue of access to credit facilities by the small and medium scale enterprises, including agriculture, while of concern, contains two facets. On the one hand the financial institutions need to address the inherently higher risks which they have to absorb by comparison to their normal credit risks. A better mechanism to minimise or lower these risks is however absent. In conclusion, he argued that a change of a paradigm may not be required, but more in terms of the tinkering of the current system.