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Namfisa flags 5 entities for possible risk to financial sector

August 15, 2022
Namfisa flags 5 entities for possible risk to financial sector

The Namibia Financial Institutions Supervisory Authority (Namfisa) has flagged 5 entities operating in the country’s capital markets which could pose a possible risk to the country’s financial sector.

This comes as the entities failed to comply with some regulatory requirements of the non-banking sector regulator.

According to Namfisa’s latest report, of the 59 entities that are primarily invested in listed securities these are the exchanges, investment managers, collective investment schemes (unit trusts), stockbrokers, and Linked Investment Service Provider (LISPs), 55 management companies were classified as posing ‘no significant problems’, while 2 entities were identified for the category of ‘risk to viability or solvency’.

Of the 50 entities licensed to invest in unlisted securities (securities that are not listed on a Stock Exchange), these are the special purpose vehicles SPVs and unlisted investment managers, 44 posed ‘no significant problems’, while 3 displayed early warning signs.

“At this early warning stage, the Authority has identified some deficiencies in policies or procedures or the existence of practices, conditions and circumstances that could lead to the development of problems. However, the situation can be remedied before it deteriorates. The breaches of compliance could be indications of poor control systems or other deficiencies, which in general will raise the risk profile of the regulated entity,” Namfisa Chief Executive Officer Kenneth Matomola told The Brief.

“These are deficiencies or situations which, although not presenting an immediate threat to viability or solvency, could deteriorate and pose a material threat to future viability or solvency if not addressed promptly.”

Matomola said the failure by some unnamed entities to submit their returns and license fees compromised its supervision ability and could lead to their suspension.

“NAMFISA uses the data of returns to monitor their operations, those returns include income statements, bank statements, balance sheet, additional financial information (i.e., assets under management) and non-financial information-i.e., governance. NAMFISA requires this information to effectively supervise regulated entities.Should regulated entities not pay the required levies it will have a negative impact on NAMFISA’s ability to effectively regulate and supervise non-bank financial institutions and intermediaries,” he said.

“Should a registered entity not submit their levy returns or not pay their levies by the due dates it runs the risk of incurring penalties. Outstanding levy returns and levy payments are flagged as a non-compliance matter and thus have an influence on the registered entity’s compliance rating/ ranking in terms of the NAMFISA Ladder of Supervisory Intervention. It could lead to an entity’s license being withdrawn in severe cases.”

Quizzed on measures that Namfisa has implemented to ensure that the public is not disadvantaged when it case the entities fold, Matomola said ,” NAMFISA monitors regulated entities through onsite and offsite inspections and that determines the level of intervention that is required by NAMFISA.” 

According to Namifisa’s latest quarterly report, assets in the country’s Nonbank Financial Institutions (NBFIs) decreased quarterly by 0.5% and increased annually by 8% to N$368.6 billion at the end of the first quarter of 2022.

Investment managers’ assets under management increased by 1.5% on a quarterly basis and by 8.4% on an annual basis to N$211 billion at the end of the first quarter of 2022.

Pension funds continued to be the largest source of funds for investment managers’ assets under management, representing 51.5% of the total assets, an increase of 1.8% to N$108.7 billion.

Assets under management based on geographic allocation indicate that Namibian domiciled assets constituted 54.6% , investments in the CMA constituted 32.7%, investments in the offshore market constituted 11.9%, and the remaining 0.8% was invested in Africa at the end of the quarter under review.

The long-term insurance (LTI) industry’s total assets increased by 0.4% quarter-on-quarter and by 6.7% year-on-year to N$67 billion as at 31 March 2022, attributed to a positive performance in the industry’s investments and cash and cash equivalent mainly contributed to the increase in the value of the total assets for both periods.

The short-term insurance (STI) industry’s total assets declined by 2% quarter-on-quarter and by 6.3% year-on-year to N$7 billion as at 31 March 2022.

The country’s medical aid industry held total assets of N$2.2 billion as at 31 March 2022, a decrease of 4.9% from the previous quarter and a decrease of 8.6% on an annual basis according to the Namfisa report.

The Namfisa Quarterly Report is compiled to provide consolidated statistics and analyses relating to the transactions on services rendered by the Nonbank Financial Institutions (NBFIs) and also provides information regarding NAMFISA’s regulatory and supervisory activities during the quarter under review.

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Last modified on Saturday, 20 August 2022 12:44
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