Chamwe Kaira
Namibia’s grey listing has had no material impact on the economy, supported by stable macroeconomic conditions and feedback from financial sector stakeholders, according to the Bank of Namibia (BoN).
Authorities and market participants say the designation has not disrupted financial flows.
Commercial banks reported no major challenges, while international institutions, including the International Monetary Fund (IMF), indicated the greylisting was unlikely to place significant pressure on the economy.
At the time of the grey listing, Namibia’s macroeconomic position remained steady, helping to cushion potential effects.
Similar conclusions were reached by Arysteq Asset Management, which found no significant changes in local or regional capital markets or in the performance of the Namibian dollar following the greylisting of Namibia and South Africa. During its 2024 Article IV consultations, the IMF also noted limited economic risk linked to the designation.
Global correspondent institutions, according to banks, have increased due diligence, but they have largely absorbed the impact.
Some banks reported no immediate operational effects, particularly subsidiaries of South African banks, which said the impact of South Africa’s earlier greylisting had already been factored into their systems.
Banks also flagged potential risks. These include tighter scrutiny of anti-money laundering, counter-terrorism financing and counter-proliferation financing controls, higher compliance costs, more frequent inspections by the central bank, reputational risks, and the risk of de-risking by correspondent banks. Other concerns include closer checks on cross-border remittances, investor know-your-customer requirements, and possible restrictions on money service providers and bureaux de change.
To manage these risks, banks have committed to closer engagement with correspondent banks, tighter monitoring of financial flows, and regular updates to stakeholders. Internal review processes have also been updated to handle added information requests linked to cross-border transactions.
The Bank of Namibia engaged with banks in mid-2024 to assess the effects of the greylisting and review safeguards in place.
No major issues have been reported so far, apart from higher costs and delays in cross-border payments within the Common Monetary Area. These are being addressed through work on a supranational framework.
International experience often links greylisting to capital outflows and pressure on foreign exchange reserves. Namibia has not seen these outcomes. Capital flows between Namibia and South Africa have remained stable, and South Africa’s own slowdown and greylisting have reduced the risk of unusual outflows. High domestic liquidity has also helped limit pressure.
Preliminary feedback from the Financial Action Task Force shows Namibia continues to address the strategic gaps in its action plan, with no further economic impact expected.
Caption
The Financial Action Task Force grey-listed Namibia in February 2024 due to gaps in its anti-money laundering and counter-terrorism financing framework.
- Photo: Contributed
