The importance of the financial sector to the general economic growth of a country is well documented, especially through the intermediation channel. Where financial services are supplied broadly and efficiently, they accelerate economic growth, increase the efficiency of resource allocation and improve the distribution of wealth.
A review of Namibia’s financial system showed that although the system is sound and well-functioning, there are structural weaknesses that need investment to enable the financial sector to contribute meaningfully to the overall performance of the country’s economy.
A ten-year strategy has been developed by government to address the weaknesses in the Namibian financial system, covering the period 2011-2021, which will enable the country’s financial sector to transform and contribute meaningfully to the developmental objectives of the country.
The purpose of the Strategy is to chart the future direction of the financial system over the next 10 years that will ensure its effectiveness, competitiveness and resilience.
The overall objective of the Namibian Financial Sector Strategy (NFSS) is therefore to develop a more resilient, competitive and dynamic financial system with best practices in order for the sector to realise its full potential in respect of its contribution to the growth of the economy and the achievements of socio-economic objectives of poverty reduction and wealth creation.
Further, the strategy envisions the emergence of strong and innovative domestic financial institutions that are more technology driven and ready to face the challenges of globalisation. Threats of the global marketplace are becoming more intensive, as global players and technological advancement are having an unprecedented impact on the business approach of financial institutions. Against this background, it is vital for the financial sector, to prepare and ensure that it remains effective and responsive in the face of a more globalised, liberalised, diversified and sophisticated domestic economy.
Thus, the development of the Namibian Financial Sector Strategy is a national response to address the structural weaknesses in the sector in order to achieve the above-stated national and sector-specific objectives. The Strategy constitutes a single reference document that guides the development of the country’s financial sector despite existing national policy documents (e.g., Vision 2030, NDP3 and the NFSS).
In particular, it provides the strategic policy guidance for the achievement of goals, including the NFSC The financial sector plays an important role in the economy. Weaknesses have been identified in the financial system and these necessitated the development of the Strategy Implementation and will result in the sector realising its full potential Strategy aims to guide the development of the financial sector towards Achieving Vision 2030, Namibia Financial Sector Strategy: 2011-2021 initiatives, within the context of overall national development policies, i.e. the NFSS is in actual fact part of the Strategy.
In this regard, the Strategy consolidates and articulates the strategic initiatives contemplated in the sector development and transformation policies. Once fully implemented, the initiatives shall result in a developed and modern financial system for Namibia.
To this end, the Strategy entails an Action Plan to implement, monitor and evaluate progress towards the achievement of the outcomes. The development of the Strategy has become more urgent in view of threats posed by advances in technology that enables financial institutions to develop products that are inherently more risky and can destabilise the financial system.
The Strategy focuses on reforms in the following key areas:
- Financial markets deepening and development
- Financial safety net
- Financial inclusion: Consumer financial literacy and protection Access to financial services and products
- Localisation of the Namibian financial sector
- Skills development in the financial sect