{"id":280443,"date":"2019-10-04T07:19:00","date_gmt":"2019-10-04T05:19:00","guid":{"rendered":"https:\/\/informante.web.na\/?p=280443"},"modified":"2019-10-04T07:19:02","modified_gmt":"2019-10-04T05:19:02","slug":"proposed-reforms-of-the-financial-sector-discussed","status":"publish","type":"post","link":"https:\/\/informante.web.na\/?p=280443","title":{"rendered":"Proposed reforms of the financial sector discussed"},"content":{"rendered":"\n<div id=\"js_2\" class=\"_5pbx userContent _3576\" data-testid=\"post_message\" data-ft=\"{&quot;tn&quot;:&quot;K&quot;}\">\n<p>Staff Reporter<\/p>\n<p>THE non-banking financial services industry is set for regulatory and policy reforms because it is of particular significance to the national economy and seen against the current adverse economic situation has given rise to the opportunity for the industry to rise to the occasion to assist the government to regain economic recovery and sustainable inclusive growth. <br \/>The Minister of Fianace, Calle Schlettwein, said at a stakeholder engagement breakfast ceremony in Windhoek on Thursday that the sector has an asset base which is about twice the size of the Gross Domestic Product that can be applied to regain economic growth.<br \/>\u201cThe sector is, by and large, the lifeblood of the domestic market liquidity and financial intermediation through the banking sector. It is the sector which is home to investible funds which could finance productive investment opportunities in the real and services sectors of the economy, thus plugging the savings-investment gap and contributing to economic growth and job creation at home.\u201d<br \/>The financial services industry has committed itself to supporting the national development goals engendered in the Harambee Prosperity Plan, National Development Plans and Vision 2030 through targeted sector commitments in the Financial Sector Strategy and the Sector Charter. <br \/>\u201cI wish to take this opportunity to thank the industry for the collective understanding and support for the proposed Bills to proceed as planned.\u201d <br \/>The proposed reforms would position the industry to better contribute to domestic economic development objectives. <br \/>The minister said the policy object is not to overregulate the industry, but to bring the regulatory framework up to date, encourage innovation and foster operational efficiency and confidence in the financial system.<\/p>\n<p><strong>Minister Schlettwein\u2019s full address at the stakeholder breakfast reads as follows:<\/strong><\/p>\n<p>Thank you for your kind invitation to join you at this stakeholder engagement event, which provides a platform for interaction on policy and latest developments in the industry. Indeed, this event is an opportunity for the industry and the regulator to look ahead as we anticipate the passing of the Bills for the non-banking financial sector and the developmental opportunities such reforms present. <br \/><img loading=\"lazy\" decoding=\"async\" class=\"alignright size-medium wp-image-280444\" src=\"https:\/\/informante.web.na\/wp-content\/uploads\/2019\/10\/71206633_2489528081114137_5845879522729132032_n-e1570166319132-195x300.jpg\" alt=\"\" width=\"195\" height=\"300\" srcset=\"https:\/\/informante.web.na\/wp-content\/uploads\/2019\/10\/71206633_2489528081114137_5845879522729132032_n-e1570166319132-195x300.jpg 195w, https:\/\/informante.web.na\/wp-content\/uploads\/2019\/10\/71206633_2489528081114137_5845879522729132032_n-e1570166319132.jpg 267w\" sizes=\"auto, (max-width: 195px) 100vw, 195px\" \/>I wish to take this opportunity to thank the industry for the collective understanding and support for the proposed Bills to proceed as planned. We have had fruitful engagements on how best to clarify certain provisions in the proposed legislation and the reasonable time required to consult on the regulations and standards.<br \/>The non-banking financial services industry is of particular significance to the national economy. With an asset base which is about twice the size of the Gross Domestic Product, the sector is, by and large, the lifeblood of the domestic market liquidity and financial intermediation through the banking sector. It is the sector which is home to investible funds which could finance productive investment opportunities in the real and services sectors of the economy, thus plugging the savings-investment gap and contributing to economic growth and job creation at home. <br \/>The financial services industry has committed itself to supporting the national development goals engendered in the Harambee Prosperity Plan, NDPs and Vision 2030 through targeted sector commitments in the Financial Sector Strategy and the Sector Charter. <br \/>The opportunity to rise to this occasion at this juncture in our economy is particularly important as we seek to regain economic recovery and sustainable inclusive growth. <br \/>A day ago, we had to contend with a further credit rating downgrade of the non-Rand long-term currency bonds by Fitch Ratings. The domestic or Rand-denominated bonds are still investment grade. <br \/>The main factors for the ratings change is the prolonged recession for the domestic economy and vulnerabilities it presents in regard to gaining faster traction on revenue generation and the deduction of public debt. <br \/>We, however, note that discernible progress was made since 2017. We have: <br \/>\u2022 aligned public expenditure to revenue. <br \/>\u2022 reduced expenditure as a proportion of GDP from 42 percent to 34.9 percent over four years, <br \/>\u2022 nearly halved the budget deficit from 8.1 percent to 4.4 percent over the last three years. <br \/>\u2022 slowed the pace of debt growth to an annual average of 11.2 percent, compared to an average of 30.1 percent three years ago, <br \/>\u2022 narrowed the current account deficit from 15.6 percent of GDP in 2016 to 1.8 percent this year, and <br \/>\u2022 witnessed the increase in the stock of international reserves from 2.1 months of import cover in 2014 to about 4.6 months of by September this year, <br \/>Clearly, achieving economic growth and, quality and sustainable growth for that matter, is an important objective going forward. <br \/>Credit rating changes are not only pertaining to Namibia. Fitch Ratings downgrades have not spared rated sovereigns in Sub-Saharan African region. No any other country in the Sub-region carries Fitch\u2019s investment grade rating at the moment, South Africa and Namibia are still the best rated countries by Fitch, but both are below investment grade. <br \/>Our main objective as a sector must be to bring about sustainable economic recovery and the non-banking financial services industry can play a catalytic role in many respects, including the following: <br \/>\u2022 First, financing of growth enhancing infrastructure in such niche areas as renewable energy, water generation, horticulture, domestic productive capacity and agronomy. Several bankable projects seeking for funds were brought to the market as an offspring of the 2019 Economic Summit, <br \/>\u2022 Second, supporting the implementation of fiscal consolidation through commensurate participation in public bond programmes, thus allowing the domestic capital market development as the main source through which Government achieves the reduction of the budget deficit targets and developmental objectives. <br \/>\u2022 Third, financing SME and entrepreneurship development as key growth points in line with financial sector Strategy and Charter commitments. The financial services industry has made joint commitments to support financing and governance of SME financing instruments of Credit Guarantee Scheme, Venture Capital Fund and Mentorship and Training Fund. <br \/>\u2022 Fourth, supporting Public, Private Partnership opportunities in renewable energy, water desalination, housing, provision of specialized public services and efficient management of public service infrastructure. <br \/>\u2022 Fifth, the various players in the non-banking financial services sector has the financial wherewithal to make a distinct difference in funding skills development in the financial sector and the economy in general, through targeted skills development programs with institutions of higher learning at home and abroad, <br \/>\u2022 Last, but not least, local procurement spend is catalytic in creating local financial flows and productive capacity. This is one of the objective areas of the Financial Sector Charter. The industry can also support the undertaking of objective research on policy tools and their impact in relation to objectives. <br \/>It is, therefore, not the lack of investment opportunities, but how best the private and public sector can work together to bring potential opportunities to the market. It is for this reason that domestic asset requirements were increased from 35 percent of total assets to 45 percent. This local requirement must be seen to make impactful investment in the real and services sectors as opposed to the traditional offshore investment flows. <br \/>Likewise, we are seeking to create a market in the reinsurance subsector so as to create value and unlock economic opportunities locally.<\/p>\n<p><strong>Look for Regulatory Reforms<\/strong> <br \/>As we converse here today, it is also appropriate to reflect on the way forward for the regulatory reform in the sector. <br \/>\u2022 In the banking sector, we anticipate the Bank of Namibia Bill, which embodies latest regional developments such as the alignment to the SADC Model Law to be enacted. The Bill also accords macroprudential supervision to the Bank of Namibia in coordination with NAMFISA in a bid for coordinated stewardship for financial stability. <br \/>\u2022 At the same time, legal drafting of the Banking Institutions Bill has also commenced to, among others, strengthen the protection of depositors, provide for microfinance institutions and a more robust bank resolution framework. <br \/>Such amendments dovetail well with the regulatory modernization for the non-banking financial sector, given the high level of interconnectedness. <br \/>As for the non-banking financial services sector, I call on the industry to embrace the regulatory reforms as we upgrade the legislation towards international best practices and a more-risk based regulatory regime. <br \/>This would position the industry to better contribute to domestic economic development objectives. The policy object is not to overregulate the industry, but to bring the regulatory framework up to date, encourage innovation and foster operational efficiency and confidence in the financial system. <\/p>\n<p><strong>The Bills provide for checks and balances through:<\/strong><br \/>\u2022 an integrated approach to regulation and supervision of the non-banking financial sector, in particular uniformity and consistency of rules and provisions, resulting in elimination of silos and conflicting provisions and regulatory arbitrage; <br \/>\u2022 greater regulatory responsiveness, that is, flexibility in adapting standards and regulations to market movements under the risk-based approach; <br \/>\u2022 preserving Parliamentary powers to set the overriding framework for the financial sector, especially on the policy issues which do not change regularly as a guarantor of policy certainty; <br \/>\u2022 enabling the Minister to issue regulations on variable policy on issues that are likely to change in line with sector dynamics; and <br \/>\u2022 greater consumer awareness and protection. <br \/>We recognize the need to achieve policy cohesion as a result of this reform. As such, the Ministry would work collaboratively with the Ministry of Heal and Social Services to address concerns raised by NAMAF on the need for a designate legislation to address the clinical issues envisaged in the Medical Aid Funds Act of 1995. <br \/>I am also conscious of the expressed need to have the macro-critical regulations and standards drafted and consulted upon well in advance of the gazetting of the envisaged laws. The work to draft the remaining regulations and critical standards must, therefore, commence during the intervening period as the Bills are on the floor of Parliament to allow for adequate consultation. <br \/>Equally important, is the readiness for the implementation of the regulatory reforms, both for NAMFISA and the industry at large. The Ministry is aware that sufficient time is needed for consultation on the subsidiary legislation before the law takes effect. Reasonable time will be provided prior to the commencement of the envisaged laws. However, we should already start to work towards the new paradigm of doing business.<\/p>\n<p><strong>Conclusion<\/strong> <br \/>Let me conclude by thanking you for this interaction which should continue well into the future. A substantial lot of proposals have been put forth on how best the financial services industry could support the inclusive growth and job creation agenda. <br \/>We have committed to work in partnership and trust to bring about the smooth progression and implementation of the regulatory reforms. <br \/>At this juncture, there is no doubt that action speaks louder than words. I look forward to the takeaways and conclusions of this platform.<\/p>\n<\/div>\n\n\n\n<div class=\"alignnormal\"><!-- MetaSlider 271797 not found --><\/div>\n","protected":false},"excerpt":{"rendered":"","protected":false},"author":10,"featured_media":280445,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[27,24],"tags":[],"class_list":["post-280443","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","category-news"],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v28.8 - https:\/\/yoast.com\/product\/yoast-seo-wordpress\/ -->\n<title>Proposed reforms of the financial sector discussed - Informant\u00e9<\/title>\n<meta name=\"description\" content=\"THE non-banking financial services industry is set for regulatory and policy reforms because it is of particular significance to the national economy and seen against the current adverse economic situation has given rise to the opportunity for the industry to rise to the occasion to assist the government to regain economic recovery and sustainable inclusive growth.\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/informante.web.na\/?p=280443\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Proposed reforms of the financial sector discussed - 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