Maihapa Ndjavera
WINDHOEK – Non-bank financial institutions (NBFIs) continue to grow their asset base, despite domestic recessionary economic conditions. This was revealed in the annual report of the Namibia Financial Institutions Supervisory Authority (Namfisa) for 2018 that it this week submitted to Parliament.
Total industry assets grew by 18 percent to N$287.5 billion. The growth was mainly driven by a general increase in investment income due to improved market returns. Following the global economic trends, the financial markets generally rebounded in 2017, partly due to the anticipated impact of expected tax cuts in the United States, and partly reflecting stronger global economic activity. These buoyant financial market performances had a positive impact on the performance of investment portfolios of NBFIs, therefore reducing risks to financial stability.
Pension fund assets increased by 11.2 percent to N$152.9 billion in 2017. Current liabilities increased by 88 percent to N$4.1 billion. The significant increase was because of other liabilities that comprised unallocated reserves. With regard to liabilities, the active members share account decreased by 0.5 percent to N$82.6 billion, while the pensioner accounts increased (as more members reached retirement age) by 14.3 percent to N$14.2 billion at the end 2017.
Nonetheless, Namfisa cautioned that there is a greater risk that imbalances have built up, in part through assets that are overvalued due to investors’ search for returns with a potential of market corrections. Such imbalances could amplify future strains in the financial system, due to uncertainty of how the financial markets will react when the central banks reverse their current monetary policy trajectory. Moreover, risks due to protectionist regimes in recent periods could lead to a fall in asset prices. In this regard, global financial markets have been volatile in recent times, with potential impact on investment portfolios of NBFIs going forward.
Kenneth Simataa, the chief executive officer of Namfisa, said even during the reported financial period the Namibian economy continued to face challenging conditions. Although, the NBFIs have been largely isolated from these adverse conditions, as a regulatory authority Namfisa continues to remain vigilant and enhance its regulatory and supervisory tools to be able to mitigate any risks.
Simataa thanked the NBFIs for their continued engagement during the review period. “Without your insightful observations and engagements we will not be able to attain a safe, stable and fair financial system contributing to the economic development of Namibia. I remain confident that we can pursue our goal to transform the financial sector landscape for the benefit of all Namibians,” said Simataa.