The Namibia Deposit Guarantee Fund grew to N$23.1 million during the 2023 financial year, up from N$16.2 million by the end of December 2022.
Meanwhile, the value of total qualifying deposits now stands at N$70.9 billion.
Of this amount, 95.1% are partially covered, while 91.2% are fully covered.
The total number of qualifying depositors covered by the Namibia Deposit Guarantee Fund now totals 1.5 million, of which 91.2% are fully covered.
The Scheme adopts a guaranteed coverage limit of N$25,000 which is currently in effect, and covers more than 90% of the existing depositors.
Florette Nakusera, the Head of NDGA, said he fund’s accelerated growth in relation to the preceding year, anchored on the premiums received from member institutions, in addition to the investment performance amid the favourable interest environment.
“Accordingly, member institutions’ annual premiums received totalled N$5.2 million, while the market value of the Fund closed off the year at N$23.1 million. In the same vein, the Fund outperformed its benchmark by 66.8 basis points during the reporting year. This was achieved by the portfolio generating an annual return of 8.5 per cent relative to the benchmark (South African three-month STeFNI Index) annual return of 7.8 per cent,” she said while launching to 2023 financial year audit report.
“The outperformance is attributed to the high interest rate environment, whereby the Fund strategically capitalised on the peak in interest rates and benefited from locking in high coupons, particularly on negotiable certificates of deposit relative to the benchmark,” said Nakusera.
She added that the NDGA’s assets remained safe and secured as invested, in line with approved investment policy and guidelines.
The Namibian banking sector and the entire financial sector remained stable during the review period.
“The Namibian financial system remained sound and well capitalised, with no disruptions in financial infrastructures and services. The financial sector demonstrated resilience through maintaining adequate capital and liquidity buffers to absorb the impact of shocks, while simultaneously ensuring that the payment infrastructure operated efficiently,”
Nakusera said this was achieved despite prevailing economic challenges, although noting that there exist key risks to financial stability such as inflationary pressures, high interest rates, and slow domestic and global economic recovery.
Established in 2020, the NDGA is administered by the Bank of Namibia. It safeguards depositors’ money by compensating them in case a member bank fails. This not only protects individual depositors but also promotes financial stability within the banking sector and the country as a whole by insuring a portion of bank deposits.
The NDGA’s purpose is to further that depositors have access to all or a portion of their funds in the event of a bank failure within a specified time period. It also protects against panic withdrawals by assuring depositors of the safety of their deposits even if a bank fails, reducing the likelihood and scale of such a failure culminating into a crisis for the entire financial system.
According to Nakusera, the report is presented at a time when economic developments, both globally and domestically, weakened somewhat. The global Gross Domestic Product (GDP) growth is estimated to have slowed from 3.5 percent in 2022, to 3.1% in 2023.
“The estimated weaker growth was influenced by the effects of tight monetary policies in which interest rates remained elevated, restrictive financial conditions, and weak global trade growth. It is anticipated that growth in most advanced economies and several emerging markets decelerated in 2023, with the exception of the United States, where estimated growth remained stable. Economies such as China, Japan, and Russia on the other hand, experienced an upturn in growth during the period under review,” she explained.
