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Namibia Procurement Fund faces closure

This week, the Namibia Procurement Fund reimbursed the Government Institutions Pension Fund with a very significant dividend amounting to N$7.7 million. The Procurement Fund has for the past two years delivered investment returns that outstrip drawdowns provided by the GIPF. Despite setting an ambitious target to far exceed the investment return in the next financial year and aiming to deliver double the investment amount provided to the fund, imminent closure may become a possibility in the near future. Present at the dividend hand-over are Derek Wright (left), Kauna Ndilula, David Nuyoma and Mihe Gaomab II. (Photograph by Ogone Tlhage)

The Namibia Procurement Fund faces closure should the Namibia Financial Institutions Supervisory Authority (Namfisa) not change its stance with regard to close corporations. This apparent paradox was revealed by the fund’s Chairman, Derek Wright at a dividend handover this week.

Lambasting the regulatory authority, a visibly emotional Wright said, “NAMFISA refuses to recognise the Namibia Procurement Fund as a special purpose vehicle and as a result the fund will cease to exist.”
The Namibia Procurement Fund provides small and medium enterprises registered as close corporations with finance.
According to Wright, the Namibia Procurement Fund is the only viable financier with an assessment model and risk appetite in place to provide close corporations with finance. He added, “Close corporations are not seen as secure investments.
The Government Institutions Pension Fund has appointed the Namibia Procurement Fund as a special purpose vehicle as part of its Unlisted Investment Portfolio. Under Regulation 29 to the Pension fund Act, the GIPF, like any other pension fund, is mandated to invest a maximum of 3.5% of its total assets in unlisted investments, through so-called Special Purpose Vehicles.
Wright charged, “You do not have to be a proprietary limited to remove risk. As long as there is a system in place, there is no risk involved.
There is no risk whatsoever with regards to investing in close corporations.
Our controls are there as a security blanket. We have a fiduciary responsibility to invest on behalf of the GIPF. There is a screw lose somewhere in NAMFISA.”
Highlighting the successes of the Namibia Procurement Fund, Wright said that in the past four and a half years, the fund has been able to financially support more than 100 small and medium enterprises, funding transactions in excess of N$450 million, thus creating 200 new jobs and retaining over 1000 jobs.
When approached for comment, Wright said that the Namibia Procurement Fund had engaged the Namibia Financial Institutions Supervisory Authority, calling on it to change its stance with regard to close corporations.
“Namfisa needs to get off its bureaucratic stool,” said Wright. Asked what lay ahead Wright sounded optimistic saying that the fund was looking to increase the dividend hand-over by double the amount generated at the close of the 2013-2014 financial year which amounted to N$7.8 million.

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