Foreign banks fleece Nam’s poor . . . Rake in billions of dollars in service charges

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Timo Shihepo

Windhoek – At a time when almost all the sectors are battling tough economic conditions, foreign banks in Namibia and the entire financial services sector continue to withstand economic shocks, thanks largely to the country’s poor majority.

Despite hard-hitting economic headwinds that the Namibian economy has been battling with, which have led to budget cuts and job losses in many sectors, foreign financial services providers in Namibia, largely South Africa-owned commercial banks, remain profitable.

The Bank of Namibia (BoN), in its recently released 2018 Financial Stability report for the Namibian financial sector, has described the financial sector as “sound, safe and resilient”. 

The financial stability report, a joint effort by BoN and the Namibia Financial Institutions Supervisory Authority (Namfisa), comprises information on the Namibian financial services sector, which is made up of banks, and non-banking financial institutions.

While BoN’s governor, Iipumbu Shiimi, and Namfisa’s deputy Chief Executive Officer, Erna Motinga, said the sector continued to be “financially sound, safe and resilient, with no disorderly functioning of financial markets or infrastructure”, what they failed to say was that this is largely due to the banks exploiting the poor through exorbitant bank charges.

Hence, The Southern Times looked beyond the astonishing figures that the banks continue making in profits from the poor.

To put this in context, Namibia’s largest bank, First National Bank (FNB) Namibia in 2017 made over R1 billion in bank charges alone, up from R976 million in 2016, according to the bank’s financial statement in 2017.

In 2017, the three foreign-owned banks in Namibia, that is, FNB, Standard Bank Namibia and Nedbank Namibia, made a combined profit of R1.9 billion from a population of just over 2.3 million people, up from R1.7 billion the banks made in the 2015/2016 financial year.

While there are no readily available statistics in the Southern African Development Community region on which to draw comparisons with Namibian banks, it has been established that between R4 and R100 are knocked off consumers’ accounts with every transaction, depending on the type of transaction and where it is done.

The charges are so high that FNB charges R16 per page for a printed statement. For printing or viewing a receipt at an FNB ATM, consumers are charged R4.20, while a stop order costs R22 per transaction. These are just some of the charges that customers have to endure but many people, especially those in remote areas and the financially illiterate, are not aware of them.  

With Standard Bank Namibia, an ATM withdrawal attracts R2.10 per R100 for a personal (savings) current account. A provisional statement reprint in a branch costs R24. It is such charges that have driven Standard Bank’s growth in profitability from R362 million in 2014 to R549 million in 2017, a 51% growth over the three years, while the country’s economy has been in turmoil during the same period.

At Nedbank, the clients are even charged R46 as subscription fees for using internet banking, as well as R10.25 per internet payment. However, Nedbank charges are lower compared to Standard Bank and FNB. For example, Nedbank does not charge a customer for requesting a mini statement at an ATM or for making an account balance enquiry.  

Besides, the foreign-owned banks in Namibia appear to be having it easy. In 2009, the country adopted a Financial Sector Charter, which compels commercial banks to spend 1% of their estimated after-tax income or, if not taxable, of their estimated income on corporate social investment (CSI). The charter also compels the banks to spend 0.2% of after-tax profit on consumer education. But the charter is powerless, and by its own admission, there will be no penalty if the banks do not adhere to the charter.

Standard Bank says it pledges 1% of its net profit after tax to CSI initiatives. It says this is four times the amount required by the Namibian Financial Sector Charter. Standard Bank is currently involved in 11 CSI projects in education, health and community wellness. The total budget for 2017 was R5.7 million.

FNB also said it commits 1% of its profit to CSI. However, these commitments do not translate into much money. In 2017, The Southern Times reported that Standard Bank, FNB and Nedbank invested less than R20 million in corporate social responsibility in the 2015/16 financial year, despite making a combined profit of R1.7 billion.

“Commercial banks, like other corporate citizens, are morally obliged to invest back in the communities that provide them the opportunity to succeed in their business operations. However, this is a voluntary exercise and there is no legal requirement compelling banks to do so,” Bank of Namibia’s Director of Strategic Communications and Financial Sector Development, Emma Haiyambo, told The Southern Times last year.

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