No second bourse yet for Nam

 

Windhoek – NamFin-X, a consortium of Namibian and international investors, is resubmitting an application to establish a new securities exchange in the country this week, after an initial one was returned due to lack of adequate information on “shareholding structure and proposed capitalisation”.

The granting of a licence for a second bourse in Namibia was delayed after regulator Namibia Financial Institutions Supervisory Authority (NAMFISA) requested “more technical information and a detailed analysis” of the proposed securities exchange, Helmut Angula, one of the founders of NamFin-X, said in an interview.

A revised application would be handed in this week and once regulatory approval is granted, NamFin-X would start recruiting staff to run the exchange, Angula, a former finance minister, who retired from government in 2010, said.

Angula would not say when Namibia’s second securities exchange is expected to be operational.

“For us it’s a matter of how soon they can process the application and grant the license, we know it’s quite a lengthy process but we hope it will not be too long,” Angula said.

The new securities exchange “would broaden and deepen Namibia’s financial and capital markets” and could provide a platform to “ensure Namibian savings stay in the country”, Angula said.

“There is a narrow focus when it comes to the capital markets, most local companies do not have capital not because there is a lack of it in Namibia.

 It is because they do not have anywhere to go to raise capital,” Angula said.

NamFin-X is made up of Namibian and unnamed foreign investors, who hold the majority shareholding in the company.

The identities of international investors into NamFin-X would be revealed once the regulatory approval is secured, Angula said.

“Most of Namibia’s savings are outside the country, our thrust is to ensure that at least a sizeable chunk of capital stays within the country and is used to finance development on the domestic market,” Angula said.

Limited depth of the country’s financial sector and a lack of local investment opportunities are leading to capital outflows of R4.5 billion in 2012, to neighbouring South Africa, Namibia’s central bank said last October.

Capital outflows from 2008 to 2010 totalled R13.7b, the central bank says.

“Over the years, Namibia generated large private savings which continues to be largely invested abroad, particularly in South Africa,” central bank Governor, Ipumbu Shiimi, said on September 25, at the bank’s annual symposium.

There are increasing calls for Namibia to rein in capital outflows and encourage pension funds to invest Namibian savings in local instruments and infrastructure projects. 

This resulted in government coming up with regulatory interventions such as Regulation 28, which compel pension fund managers to invest at least 1.75 percent of their savings in local, unlisted instruments.

Namibia’s pension fund industry has grown to R105 billion from R25 billion in 2005, Saara Kuugongelwa-Amadhila, Namibia’s Finance Minister said on October 6.

“What is even more remarkable is that the value of pension fund assets in 2005 was 11 percent less than the assets of banking institutions, but in 2013 the value was 36, 7 percent more than that of banking institutions,” Kuugongelwa-Amadhila said.

It is now an established “tradition of capital flowing out of the country starving the domestic market” of capital for projects such as in infrastructure finance, Angula said.

“It’s a tradition that those who have been controlling the capital market would much like to invest it outside the country. 

They have no feelings about what can be done to bring prosperity into Namibia. 

This is starving a lot of companies of capital while Namibian savings are financing development elsewhere,” Angula bemoaned.

Kuugongelwa-Amadhila, whose tenure at finance, has seen the introduction of a raft of changes in the financial sector, is also pushing for locally based financial institutions such as banks, to sell 25 percent of their equity to locals by 2025.

The minister has also made a clarion call for Namibian investors to start buying up equity in publicly listed companies.

“We are looking at a threshold of 25 percent by 2025 (for commercial banks) and we are now making it a licensing condition to compel banks to have local shareholding,” Kuugongelwa-Amadhila said on August 28.

October 2014
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