Finance minister sketches legislative amendments to ensure financial stability
“Changes to Regulations on domestic asset requirements to lift the domestic asset thresholds from 35 to 45 percent overtime are now with the legal drafters and are expected to be gazetted by the end of this September” stated the Minister of Finance, Hon Calle Schlettwein last week when addressing the annual conference of the Retirement Funds Institute of Namibia, in Swakopmund.
Regulation 28 of the Pension Fund Act and Regulation 15 of the Long-term Insurance Act are to be amended to raise the so-called Domestic Asset Requirement to 40% by January 2018, 42.5% by April 2018 and 45% by October 2018. “The policy intention is for Namibia as a Developmental State to effectively mobilize domestic resources to fund socio-economic development needs and investment opportunities. Namibia has over the years been experiencing [a] perpetual savings-investment gap, jobless growth, high unemployment and poverty rates as well as high income inequality which are the second highest in the world” said Schlettwein.
On the current condition of the economy, the minister said “Domestic economic prospects have strengthened relative to the past year. We see firm green shoots budding, and there is reasonable optimism that economic activity and outlook for this year is better than a year ago.”
Listing further amendments to legislation to ensure financial stability, he said “the legislative framework governing the non-banking financial sector has now been finalized. This is in respect of the NAMFISA Bill and the Financial Institutions and Markets Bill. As well, the related Bills such as the Financial Services Adjudicator Bill and Microlending Bills are finalized. I intend tabling these Bills during the current session of Parliament, after an elaborate consultation and drafting process. Apart from the modernization of the laws in line with international and market developments, the regulatory focus is on risk-based supervision to ensure that risks are mitigated in favour of financial stability.”
The minister also told the conference that a Financial Sector Assessment programme will be conducted during the remainder of this year in collaboration with the International Monetary Fund and the World Bank Group to identify weak spots in the financial system that need to be strenthened.
Finally, the minister assured the pension fund industry that he has reviewed Namfisa’s intended fee and levy increases to assess the cost of supervision. “I have considered the proposals made and directed that significant increases in the proposed levies be guarded against and that the levy rates be approached in accordance with the cross-subsidization principle and in line with regional benchmarks,” he said.