The Financial System Stability Committee (FSSC) says while Namibia’s financial system is generally stable, risks posed by climate change, cybersecurity and the Financial Action Task Force (FATF) greylisting remain significant.
Bank of Namibia Governor Johannes !Gawaxab said Namibia’s progress in addressing FATF/Eastern and Southern Africa Anti-Money Laundering Group (ESAAMLG) recommendations has improved risks from the FATF grey listing.
“The potential risks emanating from the FATF grey listing has somewhat improved, given the progress made by Namibia in addressing the findings of the FATF/ESAAMLG Mutual Evaluation recommendations and the FATF Action Plan to enhance Anti-Money Laundering and Combating the Financing of Terrorism and Proliferation measures,” he said.
The Governor noted that other key risks to the financial system include climate change and cybersecurity. The FSSC held a meeting on 3 October 2024, to assess the resilience of the Namibian financial system to potential risks emanating from both global and domestic fronts.
“Based on a thorough assessment of global and domestic macro-financial developments, the Committee found the domestic financial system to be stable, sound, and resilient. The Committee took note of the risks to financial system stability and remains committed to maintaining vigilance and steering the course to address any emerging risks appropriately,” !Gawaxab said.
This comes as the domestic economic activity demonstrated consistent growth in the first half of 2024, fuelled by increased activity in all industries.
The Governor noted that the mining sector as well as livestock marketing, contributed positively to growth in the primary industry.
“A moderate year-on-year decline in local electricity generation in the second quarter of 2024 hindered growth in the secondary industry, which was worsened by a decline in the diamond cutting and polishing activity,” he said.
He said GDP growth is projected to slow to 3.1% in 2024, mainly due to drought, low diamond prices, and weak global demand.
!Gawaxab said risks to the domestic economy remained tilted to the downside, mainly reflecting global factors.
Meanwhile, the financial system in Namibia remained sound and resilient amid the moderation in global and domestic economic conditions.
“The financial system continued to function efficiently during the first half of 2024, and all statutory requirements were met, despite concerns about household indebtedness. The banking sector remained liquid, profitable, and well capitalised supported by growth in the banking sector’s balance sheets, mainly due to net loans and advances,” he said.
Similarly, the Non-Bank Financial Institutions (NBFIs) were financially sound and stable during the first half of 2024, attributable to developments in global financial markets, coupled with a stable demand for NBFI products on the back of moderating inflation and increased government spending.
The Namibia Interbank Settlement System continued to maintain high system availability during the first half of 2024.
“In comparison with 2023, there has been a substantial decrease in the total value of fraud across all payment streams during the period under review. In this regard, the payment system and infrastructure remained safe and contributed efficiently to ensuring reliability in payment transactions, thus facilitating stability within the financial system,” !Gawaxab said.
He said the assessment concluded that the financial system in Namibia remained sound and resilient, with no major disruptions or disorderly functioning of key financial services, despite prevailing risks.
“Based on the assessment of risks and threats to the financial system, the FSSC concluded that no specific stability and resilience policy recommendations and actions are deemed necessary,” said !Gawaxab.
