NAMFISA advocates for financial stability amidst a decline in loan book value

Martin Endjala

The Namibia Financial Institutions Supervisory Authority (NAMFISA) has announced a year-on-year decline of 7.8 percent in the value of its loan book at the end of 2022, amounting to N$6.7 billion.

This is largely attributed to the value of the loan book being dominated by the stock for term lenders, which accounted for nearly 96 percent of the total share, standing at N$6.5 billion.

However, Kenneth Matomola, the Chief Executive Officer of NAMFISA, explains that the non-bank financial institutions sector remains financially sound and stable despite these fluctuations.

“NAMFISA is committed to ensuring the stability and financial soundness of the non-bank financial institutions (NBFIs) sector. This is evident from the funding position that continues to surpass prudential requirements,” he said.

Compared to 2022, some risks to the stability of Namibia’s financial system have eased, while others have escalated.

According to Matomola, these heightened risks are primarily associated with developments in the macroeconomic environment, impacting household and corporate debt, the banking sector, and NBFIs.

This rise in risks is largely due to a significant slowdown in global output, increased global financial turmoil, depreciation of the Namibian dollar against major currencies, and sovereign credit rating downgrade.

Independent Banking Researcher and Economist Josef Sheehama noted that NAMFISA assets contracted by 1.2 percent to N$366.2 billion during the 2022 financial year, predominantly due to the poor market performance of equity markets both domestically and internationally.
Life insurance companies faced the brunt of this contraction due to unprecedented death claims at levels unanticipated by the sector.

Most licensed insurers, providing funeral products, found their businesses significantly impacted by a combination of death claims.

“The systemically important insurers have remained resilient during this period. However, they have experienced significant rundowns on their reserves and capital ratios. The payment of Business Interruption Cover emerged as a major development during the pandemic,” Sheehama elaborated.

He also said that some insurance companies underwent mergers, and brokers ceased to operate, leading to prolonged claim processing times for individuals.

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