The Windhoek Observer’s Business Journalist, Chamwe Kaira (CK) sat down with NamPost CEO, Festus Hangula (FH), for an interview that focused on NamPost Savings Bank, a unit of Nampost Limited.
Hangula said the company is ready to turn NamPost Bank into a fully-fledged commercial bank once government gives them the go ahead, including amending the NamPost Act.
NamPost’s focus is on low income earners, with close to 60,000 government grant recipients receiving their money via the Post Office.
CK: What is the current financial performance of NamPost Savings Bank and how is the company doing given the current tough economic environment?
FH: The bank is doing fairly well. Of course the economic situation has been very difficult in the past two years. But we have done well. If we look at the deposits, that has been growing and currently stand at N$4,6 billion.
The capital adequacy ratio, although we are not obliged to keep that since we are not a fully-fledged bank, we keep it at 10 percent, more or less in line with other banks.
The bank is a department of Namibia Post Limited. The revenue of NamPost Limited in the 2017 financial year stood at N$1 billion, which is fairly good. The profit for NamPost was just above N$30 million in the last financial year.
CK: When will NamPost Savings Bank become a fully-fledged licenced commercial bank?
FH: There is an intention from our side as an institution to become a fully-fledged bank, but we can’t make the final decision. That decision has to be made by the government. As an institution, we are ready. We have the necessary infrastructure in place.
We have sufficient capital (N$263 million) to run as a bank, but the roll out can only start if government makes the decision. I have no idea when this could happen. They could say it anytime.
There is a process to be followed because we are a legal entity and laws will need to be changed before we can convert from a department into a commercial bank. But we are prepared if a decision is made; we will go through the steps.
CK: What are the future growth prospects of NamPost Bank?
FH: The prospects are very good. In banking there are four areas that are very important, these are deposit taking, the ability to use those deposits for transacting, credit extension and financial advice. We are already taking deposits, providing transacting facilities, so the only item, we need to bring in is credit extension.
This implies that all the necessary infrastructure in terms of treasury managing the deposits, in terms of making money out of those deposits and we already have smart cards in place.
We already have staff all over the country and customers, about 500,000 of them. We also have insurance products, last year alone we signed 41,000 customers. We only need to bring in the credit extension component, which then utilises the deposits to lend. The structures are set.
CK: What are you doing to push the government to make NamPost a fully-fledged bank?
FH: We understand the circumstances. We are doing what is within our scope of responsibility currently. There is no one else better positioned than the Post Office to address financial inclusion because we are in all the areas of the country.
CK: The banking industry is very competitive in Namibia. In what niche market do you see NamPost Savings Bank playing?
FH: If one looks at it from the standpoint of the original work of the Post Office, it was set up to address specific needs for the whole population.
The financial services that are offered by the Post Office are built on infrastructure that is also meant to serve other needs. We offer financial services where nobody else is.
We have 54 Post Offices in areas where NamPost is the only financial service provider.
This outlines that there is a specific group of customers that we will be catering for and these are low income people. The average customer of NamPost is a low income earner, especially when it comes to financial services. And that is the market that we want to cater for.
CK: What are some of the challenges that you are facing at the moment?
FH: The current economic situation is a serious challenge, but this is a cycle, we will get through it. The availability of skills is also a challenge. The skills in the market are limited and fairly expensive and within the environment of government-owned institutions there are significant limitations.
Then there are legal limitations when it comes to the bank. The banking equation is not complete because credit extension is not there. Then there is competition. It is rough out there.
CK: What are your final thoughts on what we have been talking about?
FH: We will remain focused on carrying out our mandate. We will continue to provide postal services; we will continue to provide basics on financial services and courier services. Our focus will be on affordability.
We will also improve on our offering, particularly the financial services. We are looking forward to enhancing the insurance offering during the course of the year.
We are also looking at upgrading our smart cards by modernising them. In a few months, we want to make sure that our cards are compatible with the rest of the market, which is an issue in the Fifth National Development Plan. If you are out there in areas with a Post Office, it should not matter who you bank with, you will be able to access facilities via NamPost.