The Bank of Namibia (BoN), in collaboration with the Ministry of Finance, NAMFISA and financial institutions, is set to launch a coordinated forum aimed at advocating for sustainability within the sector.
BoN Governor Johannes !Gawaxab said the platform, set to be launched in the coming weeks, will foster coordination and collaboration on sustainability matters.
He said the platform will enable financial institutions to mitigate climate risks and seize opportunities presented by the green transition.
“Together, the Bank of Namibia, the Ministry of Finance, the Namibia Financial Institutions Supervisory Authority (NAMFISA) and the entire financial sector have taken initial steps to establish a coordinated forum to speak with one voice on these issues and advocate for sustainability within the financial sector and the economy,” !Gawaxab announced.
This comes as the central bank also launched its Sustainability Framework as both a monetary authority and a custodian of financial stability.
“This framework will offer guidance on how to incorporate climate-related risks into our operational frameworks, policy decisions and regulatory functions,” !Gawaxab said at the Bank’s Thought Leadership session on “Leveraging Innovation for Green Finance” on Thursday.
He said the framework is part of a broader strategy to reshape the financial system in line with the national goals of fostering resilience and sustainability.
“When environmental degradation and extreme weather events disrupt the resilience and stability of banks, insurance companies, and other key players within the financial system, it triggers the need for regulatory and supervisory interventions,” he said.
As a result, the Bank of Namibia and NAMFISA are increasingly focused not only on the financial health of individual institutions but also on safeguarding the stability of the broader financial system, especially in the face of potential systemic shocks.
“Our timing could not be more critical. On top of our regulatory mandates, we need to reflect what type of financial system we should evolve that can best deliver the aspiration of future-proofing the economy,” he noted.
According to the World Bank, climate finance accounts for less than 5% of the lending portfolios of nearly 60% of banks in emerging markets and developing economies.
The Governor said this is despite the fact that banks dominate the financial sector in these regions, controlling over 80% of financial assets.
“The transition to a low-carbon economy will require substantial investment. The International Energy Agency (IEA) estimates that an additional US$2.5 trillion per year in clean energy investments will be needed by 2030 to achieve global climate targets,” he said.
In 2023, African nations faced $85 billion in external debt payments, nearly three times the climate finance they received. By 2024, debt servicing will consume at least 18.5% of their budgets.
“With limited government funds, private capital and innovative approaches, such as blended finance, are essential to close the climate finance gap, especially in vulnerable economies like Namibia, which contributes little to global emissions yet faces significant climate risks,” he added.
Moreover, the central bank’s Technical Expert on International Relations & Sustainability, Strategic Communications and International Relations, Naufiku Hamunime, said the framework sets a vision across seven focal areas, ensuring the stability and resilience of the banking sector and wider economy.
This includes exploring how traditional monetary policy tools can support sustainable growth and resilience, including stress testing for climate-related shocks.
She said promoting responsible investment through reserves management and policy framework encourages banks to adopt sustainability criteria in lending practices.
“Fostering innovation in financial technology to support sustainable finance, promoting financial inclusion to enhance social welfare, and establishing an industry body for sharing best practices and expertise on sustainability within Namibia’s financial sector,” she added.
She highlighted the importance of reducing the environmental footprint, including measuring and reporting carbon emissions.
