Business chamber appeals to central bank to allow banks to carry their clients longer without compliance risk
The Namibia Chamber of Commerce and Industry earlier this week requested the Bank of Namibia to relax certain Determinations and accounting rules, to allow banks to support and carry businesses that are in dire financial straits.
Chamber delegates met the Deputy Bank of Namibia Governor, Ebson Uanguta on Tuesday to intercede on behalf of members, requesting the central bank to relax temporarily the so-called Determination 2 (BID 2), and the enforcement of International Financial Reporting Standards 9 (IFRS 9).
Both instruments pertain to the definitions and conditions for non-performing loans, and commercial banks’ obligations when reporting these to the central bank. In essence, the chamber is asking the central bank to relax prudential requirements, in the process helping banks to help their customers to get back to profitability, or to restructure their liabilities.
NCCI Director, Robby Amadhila from Ondangwa said “One of the most productive meetings I have participated in for ages. Not a talk shop, but a gathering of high-level representation from government, the central bank, commercial banks and the NCCI, [all] meeting to find solutions to challenges besetting entrepreneurs that is placing Namibia’s economy at risk.”
He added that the chamber could not stand by idly and observe how Namibian owned and managed enterprises are experiencing challenges in servicing debt, given the prevailing tough economic conditions. “Difficulties experienced by local enterprises are not a secret,” he said.
Financial institutions are repossessing business assets that were committed as collateral against loans for expansion and start-ups at an unprecedented rate never seen before in post-independent Namibia.
The chamber’s Chief Executive, Charity Mwiya, commented that lenders follow the prescribed legal recourse and this in turn is leading to the closure of enterprises at an alarming rate resulting in a worrisome number of job losses.
The meeting was spurred by the NCCI’s call for a relaxation of Bank of Namibia Determination 2, as a strategy to give struggling entrepreneurs a chance to survive the economic downturn.
“In this way the rate of business failure will reduced and the country’s economy helped to recover, preventing more job losses,” said Mwiya.
The commercial banks present pledged to be more accommodative of entrepreneurs who are finding it difficult to meet loan commitments, saying they would do all possible to help entrepreneurs who borrowed to invest in plant, machinery and property. At the same time, the banks’ representatives said they want to see distressed entrepreneurs commit to realistic business turnaround strategies.
The Bank of Namibia promised to continue this consultative engagement process as a business rescue strategy.