By Arney Tjaronda
Namibia’s capital markets are about to get far more interesting, and there has rarely been a better time to be invested in them.
Drawing on more than five years of industry experience, researching local and foreign asset classes, their performance and the mechanics of the instruments behind them, I expect that the coming five years will be a genuine turning point.
This will not be driven by the oil and gas discoveries alone. It will equally be driven by the financial inclusion agenda that regulators, banks and asset managers are advancing to ensure that every Namibian is actively involved and invested in our capital markets.
This article builds on the thought leadership piece by Mr. Imanuel Hawanga, General Manager: Capital Markets at NAMFISA, titled “Capital Markets in Namibia: From Savings to Sustainable Growth.”
Mr. Hawanga is right: our capital market stands at the brink of transformation, poised to become an important engine for economic growth, infrastructure financing, wealth creation and financial inclusion.
What follows is my attempt to articulate how we will get there, and which instruments will take us there.
The central idea of this piece stems from research I have been compiling, sharpened by a recent visit to the Namibia Securities Exchange (NSX) and by last month’s dematerialisation of the first Bank Windhoek sustainability-linked bond through the Central Securities Depository (CSD), which went live in December 2025 as a joint initiative of the NSX and the Bank of Namibia.
The CSD replaces Namibia’s old paper-based system of share certificates and manual registration with a fully electronic one.
Its core functions include the dematerialisation of securities (converting paper certificates into electronic records), the clearing and settlement of NSX transactions, secure electronic custody, corporate action processing such as dividends and rights issues, and the maintenance of beneficial ownership records.
Critically, it integrates with the Namibia Inter-bank Settlement System (NISS) at the Bank of Namibia to enable delivery-versus-payment (DVP) settlement, meaning securities and cash change hands simultaneously, which sharply reduces counterparty risk.
Settlement payments flow through the Bank of Namibia in line with the CPMI-IOSCO Principles for Financial Market Infrastructures.
This is where it gets exciting. Mr. Hawanga’s article highlights a vital truth: Namibia has capital; the challenge now is to put it to work. John-Morgan Bezuidenhout, Portfolio Manager at Momentum Investments in Namibia, added an important qualification to this sentiment in a Citywire South Africa article titled “Namibia has capital.
Its problem is a shortage of investable assets”, observing that success should ultimately be measured not by how much capital stays at home, but by whether localisation creates deeper capital markets, stronger institutions and better outcomes for retirement fund members.
The question is: how? I think of three instruments that can help deepen our capital markets over the next five years: STRIPS, floating-rate notes, and sustainability-linked bonds.
STRIPS stands for Separate Trading of Registered Interest and Principal of Securities. Stripping separates an ordinary coupon-bearing bond into its individual payments so that each payment can be held and traded on its own.
Every coupon becomes a coupon strip (C-strip), and the principal repayment becomes a principal strip (P-strip). Each strip is a zero-coupon security: it makes exactly one payment, on one date, and trades today at a discount to that face value.
Crucially, stripping creates no new government debt. The state’s cash flows are unchanged; they are simply re-registered in the CSD as separate instruments.
Reconstitution is the reverse: deliver the full set of strips back to the register and receive the original bond.
Consider N$1,000,000 nominal of GC35, carrying a 9.50% coupon and yielding 10.26% at the time of writing, maturing on 15 July 2035. It pays N$47,500 every six months (9.50% divided by two on N$1 million) plus the N$1 million principal at maturity (ceteris paribus).
Stripped today, that single bond becomes 19 separate securities: 18 coupon strips of N$47,500 falling due each January and July from January 2027 to July 2035, and one principal strip of N$1,000,000 maturing in 2035.
The sum of the parts equals the whole, which is precisely why arbitrage keeps strip prices honest.
Stripping also frees the investor from the maturities the sovereign has chosen to issue. Between GC35 and GC37 there is no fixed-rate GC36, yet the C-strips of GC37 and of longer bonds such as GC40 that fall due in 2036 are, in effect, 2036 maturities.
A pension fund that needs cash in 2036 simply buys those strips. Moreover, where coupon dates are aligned across bonds, and Namibian GC bonds pay semi-annually on standardised mid-month dates in two clusters (15 January/15 July and 15 April/15 October), the C-strips of GC30, GC35 and GC37 falling on the same January and July dates are fungible: interchangeable instruments pooled into one line of liquidity.
South Africa applied exactly this rule, making coupon strips fungible across bonds with aligned coupon dates while principal strips remain distinct to protect the integrity of each bond’s issue size. STRIPS also allow maturity transformation.
An investor holding GC35 who wants a shorter profile sells the final-year strips; one who wants to extend towards GC37 swaps intermediate C-strips for longer-dated ones. A single bond becomes a menu.
Why would this product work in Namibia? First, optionality and precision: investors choose exactly which dates they are paid on, extracting more choice from the same underlying debt.
Second, no reinvestment risk: a zero-coupon strip pays once, at maturity, at a yield locked in on day one, making it ideal for education savings, retirement lump sums and annuity pricing.
Third, liability-driven investing: pension funds, life insurers and medical schemes can cash-flow-match long liabilities with P-strips instead of approximating with coupon bonds, an advantage of particular value given Regulation 13’s 45% minimum domestic asset requirement.
Fourth, higher duration and convexity: a 2035 P-strip has duration near its full maturity of roughly nine years, versus a modified duration of about 5.8 for GC35 itself, making it the cleanest instrument for expressing a view that rates will fall.
Finally, retail access: small denominations, as South Africa’s framework demonstrated by setting minimum strippable amounts of only a few thousand rand, let individuals buy “a payment on a date”: the simplest bond product there is.
The second instrumentare the floating-rate notes. A floating rate note (FRN) pays a coupon that resets periodically as a reference rate plus a fixed spread.
If the reference rate rises, the next coupon rises; because the coupon continually catches up with the market, the price stays close to par and the instrument is far less sensitive to interest rate movements than a fixed-coupon bond (credit-spread risk remains).
The spread is set once, at auction, and reflects the issuer’s credit and the tenor.
A FRN is only as credible as its reference rate, and this is where the timing is acute. Namibian floating-rate instruments have historically priced off three-month JIBAR, but the South African Reserve Bank has announced that JIBAR will be permanently discontinued immediately after its final publication on 31 December 2026, replaced by the overnight benchmark ZARONIA.
Meanwhile, the Bank of Namibia has signalled that Namibia will likewise move away from WIBAR, with the successor still under industry consultation. Three candidate anchors exist for a Namibian central banks FRNs.
The first is the 91-day Treasury bill auction yield, following the US Treasury model, whose two-year FRNs reset off the 13-week bill auction.
It is transparent, market-determined and already produced regularly by Bank of Namibia auctions, making it the natural first choice.
The second is the Bank of Namibia repo rate, currently 6.75%, which is administratively simple and well understood but policy-set rather than market-set.
The third is a future Namibian overnight index average, a “NAMONIA” mirroring ZARONIA, which represents the long-run destination once the WIBAR replacement is finalised.
The case for FRNs is compelling across the market. For investors, they offer protection in hiking cycles: when yields rise, fixed-coupon GC bonds lose price while an FRN’s coupon simply resets higher.
For government, auction demand holds up in volatile rate environments when investors refuse duration; FRNs diversify the funding mix and typically price inside fixed-rate issues in such conditions.
For banks and corporates, whose balance sheets are floating rate by nature, FRN issuance matches their liabilities and builds the NSX credit market.
One caveat is non-negotiable: every instrument must carry robust fallback language, the enduring lesson of JIBAR, specifying what replaces the reference rate if it ceases to exist.
The third product the market needs more of is the sustainability-linked bond (SLB), which differs fundamentally from a green bond.
A green bond ring-fences its proceeds for eligible projects such as solar plants or water infrastructure; the issuer’s cost of funding does not depend on outcomes.
An SLB inverts this: proceeds are general-purpose, but the coupon is contractually tied to the issuer hitting entity-level sustainability targets.
Miss the target and the coupon steps up, typically by 25 basis points; some structures also step down when targets are beaten.
The instrument therefore suits issuers with credible transition plans but without a pipeline of ring-fenceable projects, a description that fits most Namibian corporates and state-owned enterprises.
Namibia stands at a rare and promising inflection point. The infrastructure is in place, with the CSD live and settlement aligned with international best practice.
The capital is here, patiently accumulated in our pension funds, insurers and household savings. And the ideas, from STRIPS to floating-rate notes to sustainability-linked bonds, are proven, practical and ready for our market.
Few emerging markets can claim this alignment of infrastructure, capital and opportunity at the same moment. If the next five years unfold as I expect, Namibia will not merely deepen its capital markets; it will build a financial system in which every Namibian, from the institutional investor to the first-time retail saver, holds a genuine stake in the nation’s growth story.
That optimism is shared at the very highest level of our country. As Her Excellency President Dr. Netumbo Nandi-Ndaitwah declared in her inaugural address: “I am optimistic that as a nation, we can make a success of our country.
We must work together, as a united people with one heart and one mind.” Deep, inclusive capital markets are exactly how a nation works together: they pool our savings, fund our infrastructure and share our prosperity.
The tools are on the table and the moment is ours. So the question I leave with you is this: when the history of Namibia’s capital market transformation is written five years from now, will you have been a spectator, or a shareholder?
Disclaimer: The views expressed in this article are entirely my own and are written in my personal capacity. They do not represent, and should not be attributed to, the views of my employer or any organisation with which I am affiliated. Nothing in this article constitutes financial, investment, legal or tax advice, nor a recommendation, offer or solicitation to buy or sell any security or financial instrument. The instruments discussed carry risk, including possible loss of capital, and past performance is not a reliable indicator of future results. Market data, including yields and rates, reflect publicly available information at the time of writing and are subject to change. Readers should conduct their own research and consult a licensed financial adviser before making any investment decision.
