Windhoek - Namibia's central bank plans to allow foreign banks to set up branches in the country as a way of stemming excessive profiteering by Namibian banks.
The Bank of Namibia, in its latest Quarterly Report released this week, said commercial banks in Namibia were making higher profits than those in South Africa, to the detriment of consumers.
Most Namibian commercial banks are subsidiaries of South African banks. However, Namibian banks' interest rates and other bank charges are higher than those of South African banks.
The central bank now wanted foreign banks to be allowed to establish branches in Namibia to improve competition. "The spread between lending and deposit rates in Namibia is high compared with that of South African banks," it said in its report.
The commercial banks have traditionally said that this was so because they had to concentrate more on retail banking, where costs were higher.
In March 2003, the report says, prime lending rates were 17.5 percent in Namibia and 17 percent in South Africa. Rates on savings were, on average, 9.37 percent in Namibia and 11.2 percent in South Africa. - Tabby Moyo, IFS