ipumbu shiimi : enhancing access to finance in namibia through an improved land tenure system annual address by mr ipumbu shiimi, governor of the bank of namibia, windhoek, 27 october 2011. * * * director of ceremonies honourable dr theo ben gurirab, speaker of the national assembly, honourable ministers and members of parliament members of the diplomatic corps, members of the bank of namibia board distinguished ladies and gentlemen, members of the media fraternity good evening let me express my gratitude to you all for taking time to be with us this evening. the annual address has not only become one of the key highlights on the bank ’ s calendar, but has also proven to be an important forum to share views on issues of national importance to our economy with our key stakeholders. at last year ’ s address, i spoke about financial inclusion as an imperative for inclusive economic development. as the bank, we put forward a four points ’ agenda, in the areas of regulatory intervention, consumer literacy and protection, access to financial and payment services and local ownership of commercial banks as our intervention strategy to ensure enhanced access to finance to those currently excluded. tonight, i would like to expound on the same issue, albeit from a different angle. that is, to share with you some thoughts on how an appropriate land tenure system in an economy like namibia can be used as a conduit for improving access to finance. but before i do so, let me provide you with an update on what we promised to do at last year ’ s annual address. i am pleased to report to you that we have made considerable progress in that regard. the namibian financial sector strategy 2011 – 2021, which was endorsed by cabinet will be launched before the end of december. under the leadership of the minister of finance, the bank of namibia and namfisa, in consultation with the relevant stakeholders, have drafted this document in a manner that is reflective of the four points ’ agenda. furthermore, one chapter in the financial sector strategy is dedicated to financial inclusion. in addition, a white paper on local ownership of commercial banks has been drafted and the relevant stakeholders are being consulted to provide their comments. however, we have realised that our present approach to improved access to finance and poverty reduction though meaningful, will only take us half way unless additional measures and reforms to improve access to finance in the communal areas are undertaken. it is for this reason that tonight, we chose this theme : “ enhancing access to finance in namibia through an

improved land tenure system ”. we believe this reform would serve as a key conduit for the poor to be successfully integrated into the mainstream economy. the key question then is how should we enhance access to finance as a channel to eliminate the divide between the urban and rural areas, with the view to reduce poverty? director of ceremonies, poverty in namibia is more acute in the rural areas, and this is where land rights cannot be used to produce capital. the latest household income and expenditure survey of 2003 / 04 shows that a high number of namibian households remain bis central bankers ’ speeches poor and poverty largely depends on where you live. the incidence of poverty amongst rural households is about 38 per cent compared to 12 per cent for urban households. in other words, our fellow namibians in the rural areas are more than three times poor than their counterparts in the urban centres. moreover, about 19 per cent of households in rural areas are severely poor compared to only 6 per cent in urban areas. this, ladies and gentlemen, clearly demonstrates that the disparity and level of exclusion of the majority of the people from the formal sector of the economy, especially the rural poor, remain a serious concern. moreover, most farmers in the communal areas remain poor and depend largely on old age government pension and remittances from family members. we strongly believe that in order to reduce poverty in the rural areas, we need to improve the productivity of the land in these areas and move away from subsistence farming towards commercial activities. this can only happen if those who want to transform to commercial activities are able to attract finance to modernise their farming practices by being able to buy farming equipment, fertilisers, livestock and labour, but also to engage in other economic activities. in this regard, the need to ponder and reflect on what could be done to ensure that the divide and level of exclusion between the rural and urban areas are minimised and, eventually, eliminated becomes rather urgent. director of ceremonies, ladies and gentlemen, the answer lies in what is already in the possession of the poor. the answer is land. history has demonstrated time and again, that land remains one of the most important conduits for access to finance. and, this is what i want to present to you this evening. by way of background, namibia covers over 825 thousand square kilometres of land. about 38 per cent of this land falls under the communal land tenure, where approximately over 50 per cent of the population lives.