NAMFISA says it expects Namibia’s non-banking financial sector to remain solvent despite recording a contraction of 1.2% in assets to N$366.1 billion in 2022.
The contraction coincided with negative financial market performances over the first three quarters of last year.
NAMFISA Deputy Chief Executive Officer of Market Conduct and Operations, Johannes Smit said the sector’s net assets were expected to robustly absorb adverse asset side shocks in the medium term.
“Risks inherent in non-banking financial institutions (NBFI) include inflation and its impact on the affordability of NBFI services, particularly medical aid funds, long and short-term insurance, and market risk and its impact on the asset side,” Smit said.
He further added that the Authority is migrating from compliance-based supervision to risk-based supervision during its 2023/24 financial year.
“This is to ensure that the authority focuses on allocating resources where most risks lay and this will continue to enhance our supervisory recipe,” he said.
Smit said these remarks at the NAMFISA and Bank of Namibia official launch of the Financial Stability Report for 2022.
Bank of Namibia (BoN) Director of Financial Stability and Macro-prudential Oversight Florette Nakusera said the Namibian financial system, which is made up of the banking and non-banking sectors as well as the payment system and infrastructure, continued to be sound and resilient throughout 2022.
“The banking sector financial soundness indicators remained at comfortable levels during 2022, with the growth in assets outpacing the prevailing inflation rate. Namibia’s financial and banking sector remains sound and profitable despite risks and the economy operating below its potential, however, this is not sustainable given current economic conditions,” she said.
She noted that the sector reported higher profits, improved asset quality, a healthy liquidity position and capital adequacy well above prudential requirements.
This comes as the Namibian economy grew by 4.6% in 2022 and is projected to slow down to 3.0% in 2023.
Romeo Nel, Technical Advisor to the BoN Governor said although the domestic economy recorded improved growth in 2022, it is projected to slow down in 2023.
“Domestic economic growth improved from 3.5% in 2021 to 4.6% in 2022. This improvement was mainly driven by the primary and secondary industries that recorded growth rates of 12.9 and 3.3 percent, respectively. Growth is projected to moderate to 3.0 percent in 2023 on the back of anticipated weaker global demand and reduced spending power, as inflationary pressures persist,” he said.
He added that risks to domestic growth are predominantly in the forms of a global tightening of monetary policy and high costs of key import items.
“Other domestic risks include water supply interruptions, potential spillovers to Namibia of electricity cuts in South Africa, and uncertainty about the effects of climate change going forward.”
