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Presentation on the Namibian Financial Sector by Governor Ipumbu Shiimi at the Namibia Investment Forum 29 November 2

Presentation on the Namibian Financial Sector by Governor Ipumbu Shiimi at the Namibia Investment Forum 29 November 2011 . Road Map. Salient features of the Namibian Financial System Current Landscape Sector Performance Financial Sector Regulation Exchange Control Regulations

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Presentation on the Namibian Financial Sector by Governor Ipumbu Shiimi at the Namibia Investment Forum 29 November 2

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  1. Presentation on the Namibian Financial Sector by Governor Ipumbu Shiimi at the Namibia Investment Forum 29 November 2011

  2. Road Map • Salient features of the Namibian Financial System • Current Landscape • Sector Performance • Financial Sector Regulation • Exchange Control Regulations • Sector Investment Potential • National Aspirations for Financial Sector • Conclusion

  3. Salient Features of the Namibian Financial System • Relatively well developed, sound, well functioning & stable, • Banking industry mature & well-established, • Good financial infrastructure, • Sector fairly integrated with South Africa, • Relatively free capital flows with the rest of the world, subject to exchange controls, • Sector has remained fairly insulated from recent global financial crisis.

  4. Current Landscape • The financial system comprises: • 2 regulators, • 5 commercial banks (including one specialised microfinance bank), • A range of non-bank financial institutions (insurance companies, pension funds, investment managers, unit trusts, microlenders), • Smaller financial intermediaries in the form of stockbrokers & money market funds, • A stock exchange, and • Other specialised financial institutions (DBN, AgriBank, NamPost Savings Bank, NHE).

  5. Value addition growth averaged 10.7% over the past 10 years Sector performance Financial intermediation – (Annual growth)

  6. Banking industry assets increased by average 3% over the past 18 quarters. Sector performance Cont.: Banking Industry Assets & Growth

  7. Banking industry generally profitable Sector performance Cont.: Banking Industry Post-tax Return on Assets & Equity

  8. Sector performance Cont.: • NSX total market capitalisation of N$1.179 trn at end of 2010. • Listing & trading still a challenge, but measures being put in place continuously to improve the situation NSX Performance

  9. Financial Sector Regulation • Regulation generally sound & aligned to international standards, • Prudential requirements imposed to limit risk taking & ensure stability, • Country has in recent years embarked upon reforming certain laws, passing new laws & adopting standards similar to ones adopted globally: • Financial Institutions & Markets Bill, • Introduction of Financial Intelligence Act (& creation of FIC), • Prevention of Organised Crime Act & Combating of Financing of Terrorism Bill, • Implementation of Basel II, • Enactment of amendments to Banking Institutions Act

  10. Exchange Controls Applicable to FDI • No restriction on borrowing in domestic market for financing bona fide operations & domestic working capital, • Repatriation of earnings & paying of dividends to shareholders abroad allowed after meeting tax obligations, • Raising of third party loans offshore allowed - interest rate not to exceed Libor plus margin of 2%, • Borrowing from parent company abroad – subject to thin capitalisation ratio of 3:1 of shareholders loan to share capital, • Manufactured exports should result in accrual of foreign currency proceeds within 90-days from date of exports, • EPZ companies exempted from aforesaid requirements.

  11. Sector Investment Potential • Though sector performance has been good, there is room for improvement & accommodating more: • Financial intermediation uneven across the country - (i.e. there are gaps to be filled), • Scarce access to credit & banking services discourages entrepreneurial activity - (i.e. existence of potential niche markets), • Insufficient instruments in money market, • Bonds market is Government dominated - (i.e. private sector presence needed), • Secondary market is illiquid, • Less trading at NSX, • Vision 2030 requires economy to grow at 7% & hence increased demand for finance.

  12. National Aspirations for the Sector (2021) • Namibia Financial Sector Strategy being developed & envisages: • A more resilient, competitive & dynamic financial system to support sustainable economic growth, • An active capital market characterised by high turnover, liquidity & immediacy, • NSX market capitalisation of 75% of GDP, • An inclusive financial system.

  13. Conclusion • Namibia small market but with a lot of potential, • Financial sector generally profitable, • Developmental projects aimed at achieving Vision 2030 requires financing, • Country’s laws (including those regulating financial sector) have created conducive environment for investment, • We welcome all to share in what our country has to offer.

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