The Microfinance Gap: Selected Issues for Namibia

This report presents a synthesis of selected issues contributing to the microfinance gap in Namibia and associated solutions. The selected issues include:

• Financial sustainability;
• Affinity toward lending to the public sector;
• Ability to assess credit applications;
• Perceptions;
• Level of formal sector knowledge;
• Legal status;
• Collateral;
• Ability to meet basic necessities;
• Competition.

It highlights the fact that Namibia has show significant microfinance activity over the past few years. The report make the following suggestions to reduce transaction costs:

• Sharing, for a fee, existing distribution networks currently owned by disparate microfinance players to reduce transaction costs;
• Separating financial and non-financial service provision in the auditing of microfinance performance;
• Incorporating strategies to reduce risk exposure from social factors such as HIV/AIDS;
• Embracing technological innovations including credit and risk management systems;
• Developing cost-friendly enabling infrastructure to promote financial sustainability.

In addition, the report suggests that:

• Policy intervention should only be undertaken with a proper understanding of its effect on society.
• Make timely and full reporting of an institution's activities and results, as Namibia must improve the quality of operational information before policy intervention is considered.

Finally, the report concludes that based on reliable information, an accurate picture of microfinance in Namibia can be presented periodically, which will enable the tracking of dynamics over time.