The Bank of Namibia says the country’s financial system remains stable and resilient, with banks and other financial institutions well capitalised and capable of absorbing potential shocks.
Deputy Governor Ebson Uanguta said this following the first 2025 meeting of the Bank’s Macroprudential Oversight Committee (MOC), held on 21 July, which assessed current risks to financial stability.
Uanguta noted that both the banking and non-banking financial sectors “remained sound with sufficient capital and liquidity buffers,” adding that the country’s payment systems had also continued to operate efficiently without any disruptions.
Despite global uncertainty driven by rising geopolitical and trade tensions, Uanguta said financial conditions abroad had remained accommodative, supported by looser monetary policy. However, he cautioned that risks to the global outlook remained tilted to the downside.
“The global economy is projected to slow to 2.8 percent in 2025 and 3.0 percent in 2026,” he said.
Domestically, Namibia’s economy grew by 2.7 percent in the first quarter of 2025, a slowdown from 4.8 percent in the same period last year. Uanguta attributed the growth to strong performances in sectors such as mining, energy, trade, tourism, and transport.
Overall GDP growth for 2025 is now forecast at 3.5 percent, down slightly from 3.7 percent in 2024.
However, Uanguta warned that “risks remain, including global uncertainties, volatile commodity prices, localised water supply disruptions, animal disease outbreaks and delays in implementing the development budget.”
In the banking sector, total assets fell by 2.1 percent to N$182.7 billion during the first quarter, mainly due to dividend payouts. Liquidity improved slightly to 20.9 percent, while profitability declined modestly. Return on equity dropped to 19.6 percent from 21.9 percent, and return on assets fell to 2.5 percent from 2.7 percent.
Nonetheless, Uanguta said capital levels remained comfortably above prudential requirements, and the quality of assets had improved, particularly due to a drop in non-performing mortgage loans.
“The banks remain adequately provisioned and capitalised to absorb any potential credit losses,” he said.
The non-bank financial institutions (NBFI) sector also remained robust, with assets increasing by 12.8 percent year-on-year to N$481.6 billion as of March 2025, largely due to strong investment returns. Retirement funds and long-term insurers recorded returns well above inflation, although benefit payouts continued to exceed contributions in the pension sector.
Uanguta said this reflects the maturing profile of pension liabilities but added that investment income has so far been sufficient to cover the gap.
The property market showed continued vulnerabilities, with muted demand for mortgage credit and high house price-to-rent ratios. However, he said supportive monetary and fiscal policy measures should help stimulate the sector.
On financial infrastructure, Uanguta confirmed that the Namibia Interbank Settlement System (NISS) operated without any disruptions during the review period, and settlement risks remained low.
The MOC also approved a key policy reform with the introduction of a Countercyclical Loan-to-Value (CcLTV) framework, which will eventually replace the current fixed LTV regulation. Uanguta said the CcLTV would offer greater flexibility and help contain risks associated with rapid credit growth.
“The Committee concluded that the financial system remains sound and stable, and no additional macroprudential policy measures are required at this stage,” he said. “We will, however, continue to monitor developments closely and are ready to act if needed.”
