should be tailored to suit their balance sheets. it is very important that banks should pursue a policy of maintaining a most appropriate asset - liability structure. in other words, there should be a consistency between the asset structure and liability structure in terms of maturity and yield structure. these requirements very often constrain banks in fulfilling the medium and long - term requirements of financing or in extending loans to deserving sections of the society even - though their requirements are genuine. the widening of the financing gaps : options open and the way out it needs no emphasis that all identified viable projects need be encouraged and financed. for the reasons outlined above and based on a host of other considerations, the encouragement of the growth of other financial intermediaries outside the banking system is imperative. a case in hand is the plan to establish a development bank. later, we deal with the need for creation of other financial institutions. the development bank there are currently two main options available to the authorities in re - organizing developmental financial institutions in namibia. the first option is to create a development bank and make the development fund of namibia ( dfn ) part of it and leave out namibia development corporation ( ndc ) to remain as the government - implementing agency for industrial and other development projects. the second option is to create a development bank by consolidating or converting the ndc and the dfn into one strong, well capitalized, and well structured development financial institution to be called a “ development bank ” or “ industrial development bank ”, the name does not matter. in my view, the first option is sub - optimal. it is an expensive and unaffordable option for the size of our economy and given the limited resources at our disposal. the second option is much more realistic and optimal in my view. it means consolidation of available expertise under one roof. consolidations of funding streams and resources. it also means savings on bureaucracy. the consolidation of these two institutions into a viable development bank will help to channel resources to well - targeted developmental priorities and supply the missing link between bank finance and long - term capital requirements. it is in this regard, that one views the on - going attempt at establishing a development bank as a step in the right direction. my view on the development bank i believe that, the institution should be developmental oriented but run on business principle where possible. as a leading agency of the government it should trigger medium and long - term projects for developmental purposes. it should be charged with the responsibility of

ls ipangelwa : does the banking industry play a developmental role in namibia? address by mr ls ipangelwa, deputy governor of the bank of namibia, to the namibian economic society, held in windhoek, 13 march 2001. * * * mr chairman, members of the panel, ladies and gentlemen, i ’ m delighted to take part in this well - directed and well - timed discussion. as a central banker i am glad to see so much attention being paid to this important topic - “ does the banking industry play a developmental role? ” i compliment the namibian economic society in choosing this coveted theme as a topic for discussion. central bankers are often tipped as conservative in their approach. let me see how i would be able to breach this barricade by indulging in fresh thinking on the subject. role of finance in economic development before we initiate a well articulated and meaningful discussion on the subject, it would, in my view be befitting to clearly understand the theoretical underpinnings underlying the role of finance in the process of growth. views of economists on this important issue viz. the inter - relationship between finance and growth, however, diverge. while some economists feel that finance drives the wheels of economic growth, others opine that the process of economic growth itself induces financial development. the available evidence seems to strongly suggest a bi - directional relationship between finance and development. in other words, growth drives the evolution of the financial super structure and the financial super structure, by meeting the financing requirements of the economy, facilitate the process of growth. in the latter case, it is well appreciated that if the financing requirements of the economy are not adequately met and in time, it would affect the growth process adversely. against this backdrop, a brief digression on my part, in elaborating on the role of finance in economic development may not be out of place. as you know, the financial institutions, of which the banking system is an integral part, play the major role of financial inter - mediation. in this regard, their traditional role consists of mobilizing resources from the sectors generating surpluses and channeling them to the sectors that need them. thus, by meeting the investment requirements of the economy, they facilitate the process of capital formation. when domestic savings fall short of the investment requirements of the economy, the gap is closed through net capital inflow i. e. ; the gap is met by way of borrowing