The Namibian court system played a major role in the achievement of Independence from South African rule and the protection of fundamental rights of every Namibian. The second phase of the struggle is one of economic emancipation for Namibians. This time however, a world-renowned constitution together with the Namibian High Court will be asked to review key pieces of economic legislation as Trustco Group and Trustco Bank question its constitutionality.
In the aftermath of two years of correspondence and threats between Trustco Bank Namibia Ltd (TBN), Trustco Group Holdings Ltd (TGH), and Bank of Namibia (BON) to enable TBN to enter full commercial banking operations, and after TGH offered to capitalize TBN’s balance sheet by a further NAD 1 billion and was denied, TBN and TGH unfortunately had no choice but to file a Notice of Motion to Review several directives and decisions issued by BON against TBN since 25 July 2022 in the High Court of Namibia, in Windhoek on Friday 23 September 2022.
Since Independence, Namibian depositors have loaned capital daily to South African banks. This deprives Namibian businesses and individuals of the capital required to grow the Namibian economy, which in turn should create jobs and decent living conditions as envisaged in Article 98 of the Namibian Constitution. The Article reads as follows:
“(1) The economic order of Namibia shall be based on the principles of a mixed economy with the objective of securing economic growth, prosperity and a life of human dignity for all Namibians.”
Namibia remains a net exporter of capital to South African banks. Over the past 12 months a total of N$6.97 billion or 63% of total debt issued was to the non-resident private sector. In the case of the SME Bank, millions of such exported capital were lost in SA banks.
In terms of the notice, TGH and TBN claim that the directives and decisions issued by BON were unconstitutional on several grounds. Firstly, that sections 72A and 73B of the Banking Institutions Act 2 of 1998 (the Act) are unconstitutional, as they violate Article 10(1) of the Namibian Constitution, practicing unfair discrimination, as it only allows certain orders to be reviewed. Secondly, that section 58(4) of the Act is unconstitutional, as it serves to restrict TBN’s Article 21(1)(j) fundamental freedom to carry on its business. Finally, both the Act as well as the Bank of Namibia Act was passed without compliance to Articles 98 and 101 of the Constitution.
Dr Quinton van Rooyen, Group MD of Trustco Group, notes, “Article 101 of the constitution compelled Parliament to take into consideration economic growth when it enacted the legislation under discussion. Not once, not even a single time, did Parliament use the concept of economic growth in any of these Acts. In fact, the long title of the Banking Institutions Act emphasizes only ‘control, supervision and regulations.’ The ‘developmental mindset’ is detrimental to economic growth as well as wealth creation for all Namibians and our constitutional writers had exactly that in mind when article 98 was adopted from the ruling parties’ Constitution.”
“The hiatus created by failing Namibian banks established after Namibia’s Independence, has left the majority of the Namibian banking sector under foreign control. This results in a significant barrier of entry for a 100% Namibian owned start-up bank like Trustco Bank to successfully enter the banking industry. Such a barrier to entry results in a loss of control for Namibia over its own local economy. Namibian Banks that disappeared since independence are City Savings and Investment Bank, Swabou Bank, E-Bank, and SME Bank whilst banks established pre-independence went from strength to strength,” he added.
Trustco Group’s current investment in Trustco Bank represents 1% of its Net Assets of NAD 6.5 billion. Trustco Bank is a small 100% percent Namibian owned bank with limited deposits and a small loan book, but with immense potential. Over the last 30 years, Trustco’s compounded annual growth rate (CAGR) averaged 84%.