Problems affecting the growth of microfinance institutions in Namibia : an operational, regulatory and legislative perspective.
Tshoopara, Leevi Jordan.
MetadataShow full item record
The study aims to examine problems that hinder the creation of a sustainable Microfinance industry in Namibia. It looks into the assertion that certain Microfinance Institutions (MFIs) have problems that hinder them from being able to service clients and still be able to remain profitable. A Microfinance Institution (MFI) is defined as an institution that provides financial services to people and small and micro enterprises that do not have access to commercial bank loans. Categories are a credit union, savings and credit co-operatives (SACCOs), non- Governmental Organizations (NGOs), self-help organizations or specialized banks (Mushendami, Kaakunga, Amuthenu-Iyambo, Ndalikokule & Steytler, 2004). The study looks at three critical aspects of operational, regulatory and legislative framework. The current regulations that are in place are administered by the Namibia Financial Institutions Supervisory Authority (NAMFISA) and the Bank of Namibia, for the protection of clients against unscrupulous practices by MFIs. Out of 347 MFIs, a purposeful sample population was drawn and 34 Questionnaires administered due to time and financial constraints. The Questionnaires were distributed to MFIs and individuals in the industry. From these 25 responses were received during the survey. A descriptive statistical analysis was used in deciphering the data. The results are that the Namibian MFIs are new, but out of 11 factors, four were outliers, being the challenges of fraud, consumer education, lack of resources and high costs. The main recommendation is that the MFI industry must establish a fund through charging levies for client education and to look at the transparency of operations and costs to encourage both MFIs and clients to better understand the terms of engagement. Further recommendations include ensuring that MFIs develop products which meet the needs of clients in urban and rural context. Also to address the issue of lack of funding in the form of a strategy to arrange for exit strategies after donor withdrawal, in order for MFIs to survive based on their internal revenue base. Lastly, the regulatory environment in Namibia needs to be improved with the government introducing clearer principles for market participants. The government needs to become an enabler for the provision of financial services.