Corruption in Namibia’s Financial Sector: A Growing Concern
Namibia has been grappling with a significant rise in fraud cases, resulting in substantial losses. According to finance and public enterprises deputy minister Maureen Hinda-Mbuende, there were 357 fraud cases reported in 2023, with an estimated loss of N$26.3 million.
Alarming Trend Revealed
During the presentation of the Bank of Namibia’s annual results in Windhoek on Tuesday, Hinda-Mbuende expressed grave concern over the matter, citing internal and external negligence as contributing factors to the rampant fraud. She questioned whether adequate relief measures or strategies are in place to compensate individual clients for their losses.
Preliminary Estimates Reveal Worrying Figures
Preliminary estimates from United Nations studies reveal inward illicit financial flows of N$19.6 billion and outward illicit financial flows of $4.7 billion between 2018 and 2020. This raises serious concerns about the integrity of Namibia’s financial system.
Banking Sector Remains Profitable Despite Challenges
Despite these challenges, the banking sector remains profitable, with a net income after tax increase of 24.5% to N$3.7 billion. However, asset quality has deteriorated slightly due to an increase in non-performing loans.
Significant Risks Facing the Sector
The Bank of Namibia’s central bank spokesperson, Kazemburuka Zemburuka, cautioned that the sector faces significant risks, including:
- Climate change
- Greylisting
- Cybersecurity threats
Non-Banking Financial Institutions (NBFIs) See Positive Investments
Meanwhile, people and businesses continued to seek out products and services offered by NBFIs, with investments managed by NBFIs performing positively in 2023.
Warning Against Raising Interest Rates
However, Hinda-Mbuende warned against raising interest rates, which could lead to borrowers defaulting on loans, particularly mortgages. With a large portion of commercial banks’ loans being mortgages, Namibian banks are highly exposed to mortgage risk.
Credit Risk Remains a Key Financial Risk Factor
The credit risk remains a key financial risk factor, with non-performing loans increasing by N$456 million to N$6.5 billion, with over 50% of this increase attributed to the mortgage loan category.
Call for Collaboration and Action
To address these concerns and implement effective measures to curb corruption and safeguard the integrity of the financial system, the Namibian government and financial sector must work together.