WINDHOEK – Despite a challenging and prevailing low interest rate global environment during 2013, the Bank of Namibia (BoN) last week announced that it remained profitable, though at lower levels compared to 2012.
At the release of its 2013 Annual Report on Thursday, BoN Governor Ipumbu Shiimi said the continued profitability of the central bank was brought about in part by stringent measures taken to manage and control its operational expenditure during 2013. Shiimi added that the bank was able to realise increases in revenue, as a result of new investment strategies pursued and as a result declared N$ 9.7 million in dividends to the state, which is significantly lower than the N$25 million in dividends declared last year. According to Shiimi the Namibian economy continued to grow at a healthy pace during 2013, although growth slowed marginally, partly due to the impact of the drought. The economy is estimated to have slowed to a growth of 4.3 percent in 2013, compared to a 5.0 percent growth rate in 2012. “Protracted drought conditions adversely affected the agriculture and the electricity generation sectors during the year. The estimated growth is accredited to the construction sector along large private sector projects in the mining sector and business facilities, coupled with a large public works programme. Wholesale and retail trade also grew at relatively high rates, suggesting some resilient growth in private consumption,” explained Shiimi.
On the monetary policy front, Shiimi said the BoN maintained its accommodative monetary stance in support of the domestic economy. “The bank’s Monetary Policy Committee (MPC) kept the repo rate unchanged at 5.50 percent throughout 2013 to support the domestic economy in light of the fragile global environment and moderate inflation levels that remained in the lower single digits. However, the MPC has been concerned about the impact of an accommodative monetary stance on growth in non-productive credit, which has been monitored closely. Targeted intervention measures are being pursued to address this concern,” noted Shiimi. The bank’s annual report also shows that the absolute level of Namibia’s foreign reserves was higher in 2013 compared to the preceding year. The foreign currency reserves under the management of the bank increased by 6.8 percent, rising from N$14.7 billion as at the end of December 2012 to N$15.7 billion as at the end of December 2013. However, Shiimi pointed out that the reserve level by the months of import cover was slightly lower in 2012 compared to last year, which is largely due to the fact that imports increased faster than reserves. “Nevertheless, overall reserve levels have remained more than sufficient to support the fixed exchange rate peg and to meet international obligations. Further, in ensuring a balance between the country’s foreign liabilities and assets, the bank adopted the Chinese Renminbi (RMB) as one of the reserve currencies, in addition to the Rand, US dollar and Euro,” remarked Shiimi.
According to Shiimi the overall financial system in Namibia has remained sound. The banking system, in particular, continues to be stable and adequately capitalised, though its assets remain highly concentrated in long-term mortgage loans. The quality of banking assets remained generally healthy, with the proportion of Non-Performing Loans (NPLs) to Total Loans remaining almost unchanged at 1.3 percent at the end of December 2013. “Further, the sector remains well-capitalised, with all the banking institutions reporting capital in excess of minimum regulatory requirements, and conforming to all other regulatory limits,” said Shiimi. He added that BoN continued to streamline its operational efficiency and service delivery based on cost effectiveness. As such, in 2013, the bank embarked on the “Do More With Less” project, which intends to maximise the bank’s operational efficiency and cost effectiveness, based on best practices, to achieve the bank’s mandate. “The initiative involves a review of the bank’s various business processes, as well as its enabling/supporting operations (financial, technological, human capital) and how they are linked to one another. It also involves crafting strategies that can improve efficiencies and contain or reduce costs. The project commenced in 2013 and is envisaged to be concluded in 2016,” noted Shiimi.
By Staff Reporter