Windhoek - Banks have a critical role to play in making sure that the African dream of achieving a continental free trade area is achieved.
This is according to Bank of Namibia Governor Mr Johannes !Gawaxab, who asserts that financial institutions should lubricate trade.
Mr !Gawaxab was speaking at the recent Bank of Namibia 21st Annual Symposium, which was held under the theme “Positioning Namibia to reap the benefits of the African Continental Free Trade Area (AfCFTA)”.
The main objectives of the AfCFTA are to create a single market for goods and services with free movement of people and capital across the continent.
The agreement establishing the AfCFTA has been signed by 54 of 55 African Union member states, making it the largest free trade agreement outside of the World Trade Organisation. AfCFTA brings together 1,2 billion people and creates a US$3 trillion economy.
The trade bloc becomes operational in January 2021.
Mr !Gawaxab said AfCFTA’s success relied heavily on the financial services industry’s ability to support commerce.
“Banks must play an active role in the trade facilitation process through trade finance. In this regard, banks are not only expected to mobilise savings and allocate capital funds required to finance productive investments, they need to step up their participation in trade finance. Innovation and development in trade finance must be undertaken if Namibia is to take advantage of the opportunities offered by the AfCFTA,” he said.
The BoN chief said the institution he headed was ready to play its part in ensuring cross-border transactions were done safely and efficiently.
Mr !Gawaxab said, “These are some of the shortcomings that we need to urgently find solutions to. Regional initiatives such as the SADC Real-Time Gross Settlement System (SADC-RTGS) – in line with the SADC Finance and Investment Protocol – could be consolidated and replicated at a continental level.”
At the symposium, Industry and Trade Minister Lucia Iipumbu said the COVID-19 pandemic revealed the urgency with which Africa should work collectively for mutual benefit.
The IMF projects Africa’s economy to contract three percent this year, and AfCFTA is touted as a means of quickly recovering.