Was There a Credit Crunch in Namibia Between 1996-2000?

Commercial bank credit is a useful tool for promoting economic growth especially at the early stages of development. It has been observed that between 1996 and the early part of 2000, the growth rate of real credit to the private sector declined significantly in Namibia. This period coincided with observed strong demand for commercial bank loans. There has therefore been public discourse on the possibility of a restriction in the supply of credit by commercial banks and hence the occurrence of a credit crunch in the economy since commercial bank lending capacity did not fall. This paper attempts to provide some evidence in this regard by examining the main determinants of commercial bank credit in the economy and ascertaining if credit has been demand or supply constrained. This has been done through a survey of disaggregated data in the banking industry and an estimation of a switching regression model to identify regimes of excess supply and demand. Although it is difficult to determine in the face of obvious demand factors the extent to which the credit slowdown can be attributed to credit supply factors, our results show that supply factors did play a major role.Africa, Namibia, credit crunch, asymmetric information, economic growth

Institutional Reforms and the Role of Multilateral Aid Agencies

foreign aid, institutions, development aid

Transmission Channels of Remittance to Tradable and Non-Tradable Sectors in Nigeria

This study investigated transmission channels of remittances to tradable and non-tradable sectors in Nigeria using annual data ranging from 1981 to 2013. The study relied on VECM technique, with focus on variance decomposition. The basic findings were that the channels of remittance impact on tradable and non-tradable sectors in Nigeria is through demand or consumption and labour supply channels. While there was ample evidence to reject Dutch disease, phenomenon relating remittances to exchange rate, there should be conscious effort to encourage investing remittance spending rather than spending the remittances on consumption as noticed in the case of Nigeria. Keywords: Dutch disease, Remittances and Exchange rate JEL Classification: F40, F41, O1

Constraints to financing agriculture in Namibia

Financial constraints to farmers in Africa have been a long-standing problem, but most of the literature on this topic in Namibia and elsewhere has been descriptive. The aim of this paper is to explain the causes of financing constraints. It does so by focusing on agricultural Small and Medium-scale Enterprises (SMEs) in Namibia. The research employs a qualitative research methodology made up of the purposive-judgement sampling and the Noticing, Collecting and Thinking approach in analysing the data. The study shows that there is a lack of collateral and poor loan recovery on the supply-side while on the demand-side, the provision of insufficient capital and bureaucracy are the biggest constraints preventing a number of agricultural SMEs from accessing finance from formal financial institutions. These findings have major implications for the role of the state in financing agriculture in Africa.Keywords: Agriculture financing; Namibia; Small and Medium Enterprise

Institutional reforms and the role of multilateral aid agencies

This paper reviews the role of the multilateral aid agencies in the delivery of aid. The role of these institutions is as old as the debate on the role of aid in economic development. Aid is effective in a good policy environment. However, effective aid delivery is equally crucial. This is why the need to reform the institutions involved in the process of delivering aid is crucial. Among others, the paper concluded that there is a need for redefining the roles and the establishment of a well articulated network among the various institutions involved in the aid process. More importantly, given the different actors and motives at play in the transfer of resources to recipient countries, the role of a supranational institution to coordinate and give direction is indispensable

Financing and financial sustainability of microfinance institutions (MFIs): a conceptual view

Recent evidence shows that MFI financing continues to evolve with an increased inclination towards commercial financing. Taking stock on MFI financing and refocusing on the relationship between financing options and financial sustainability (FS) is unavoidable. The authors consummated a literature review based on complementing the little evidence on the subject with both theoretical and implied evidence from related studies in unpacking the relationship. Though donations are losing grip as a popular MFI financing option, review of literature recommends smart subsidies to spur FS and counter inefficiency, mis-targetting, dependency and distortions. As much as debt addresses agency problems and endorses FS, it has to be kept within limits to curb liquidation and mission drift. Deposit attraction augments FS and outreach, though MFIs must prepare to foot licensing costs, otherwise, mission drift ensues. Equity, though scarce in microfinance, is cheap and additive to FS. The authors suggest that MFIs should consider commercial funding, whilst keeping a check on the downside of each commercial financing option to augment FS and multiply outreac

Determinants Of Savings In The SADC Region: The Role Of Foreign Capital And Financial Development

The study examines the determinants of savings in the SADC region, mainly focusing on the roles played by external financial flows and financial development in mobilising domestic savings utilising panel cointegration method and the Dynamic ordinary Least Squares (DOLS) approach from 1980 to 2009. Following the review of literature, the empirical model adopted established that there is a long-run relationship between the variables of interest. The results indicate that income, proxied with GDP, financial sector development and foreign capital have a positive relationship with savings. The results also suggest that financial sector development has played a very important role in influencing savings in the region. However on the other hand the results indicate that interest rate and dependency ratio have influenced savings negatively. The empirical results support the hypothesis that foreign savings bridges the gap between domestic demand and supply of finance in the SADC countries. There is need to attract more foreign capital given that it compliments domestic savings. At the same time policies aimed at financial deepening should still be pursued to further deepen the financial system in the SADC countries to further enhance savings.

Was There a Credit Crunch in Namibia Between 1996-2000?

Commercial bank credit is a useful tool for promoting economic growth especially at the early stages of development. It has been observed that between 1996 and the early part of 2000, the growth rate of real credit to the private sector declined significantly in Namibia. This period coincided with observed strong demand for commercial bank loans. There has therefore been public discourse on the possibility of a restriction in the supply of credit by commercial banks and hence the occurrence of a credit crunch in the economy since commercial bank lending capacity did not fall. This paper attempts to provide some evidence in this regard by examining the main determinants of commercial bank credit in the economy and ascertaining if credit has been demand or supply constrained. This has been done through a survey of disaggregated data in the banking industry and an estimation of a switching regression model to identify regimes of excess supply and demand. Although it is difficult to determine in the face of obvious demand factors the extent to which the credit slowdown can be attributed to credit supply factors, our results show that supply factors did play a major role