The Absa Africa Financial Markets Index 2023 has ranked Namibia’s pension assets as the highest among 28 African countries, at approximately N$87353.64 per capita.
While other countries saw a decline in pension assets, Namibia’s assets stabilised due to robust policies that ensure that the pension system supports domestic market growth.
“In Namibia, the regulator Namfisa (Namibia Financial Institutions Supervisory Authority) introduced legislation in 2017 to increase minimum domestic investment to 45%,” reads the Absa report.
The report says 2022 was the first year that local pension funds met this threshold. And, this year, 49% of pension fund assets have been invested locally.
The investment community uses the index as a benchmark to gauge African countries.
The index, which is in its seventh year, uses market accessibility, openness and transparency as indicators to evaluate a country’s financial development, with the aim to expose and reduce barriers to investment and boost sustainable growth.
Meanwhile, Namibia maintained its fifth-place ranking as one of the most developed financial markets in Africa, with a score of 63 out of 100, a feat attributed to its incorporation of environmental, social and governance-linked financial policies.
Namibia’s ranking is expected to improve, with the establishment of the Namibian Stock Exchange central securities depository expected to launch in the first quarter of 2024.
The index’s survey uses over 40 indicators considered across six pillars, namely market depth, access to foreign exchange, market transparency, tax and regulatory environment, the capacity of local investors, macroeconomic environment and transparency, and legal standards and enforceability.
“Pillar scores are based on a country’s relative performance for each indicator, which is rebased to fit a harmonised scale from 10-100. Overall scores are calculated as an average of the scores from each pillar,” the report reads.
Progress not uniform
The report says each country experienced a lower score in at least one of the six pillars due to unfavourable global conditions beyond African policymakers’ direct control.
“The underlying message is one of slow progress in building capital markets. In 17 countries, scores are higher this year than when they were first introduced to the index. But there is a wide gap between the highest-scoring countries and the rest. Based on the new methodology, only the top five score above 60,” the report says.
Namibia scored lower in access to foreign exchange from 62 in 2022 to 56 in 2023 and in legal standards and enforceability from 45 in 2022 to 40 in 2023.
