War over alternative Namibian bourse

By Timo Shihepo

The Namibia Financial Institutions Supervisory Authority is accused of protecting ‘white capital’ after it refused to grant indigenous-owned Namibia Financial Exchange a licence to trade as an alternative to the existing Namibia Stock Exchange (NSX).

The Namibia Financial Exchange (NamFinX) has been left with no choice but to drag the Namibia Financial Institutions Supervisory Authority (Namfisa) to court for refusing it permission to operate as a stock exchange in the country since 2014. Namfisa regulates the non-banking financial sector in Namibia.

In court documents seen by The Southern Times, NamFinX accuses the regulator of bias because its officials have had a very close relationship with the NSX. NamFinX also claims that Namfisa officials have been benefiting financially from the NSX, hence the regulator’s apparent reluctance to open the doors for competition against the NSX.

As part of their case, NamFinX co-founder and ruling party, Swapo information secretary, Helmut Angula, spells out how he thinks Namfisa has been in collusion with the NSX.

Angula states, in an affidavit, that Namfisa chief executive officer, Kenneth Matomola (first respondent) as well as his deputy, assistant chief executive officer Boni Paulino, have received money from the NSX while serving on the NSX’s board. Angula states that Paulino alone received R136,326 from 2006 to 2010 while Matomola allegedly received R38,000 between 2011 and 2013.

Although Namfisa and Matomola did not respond to detailed questions at the time of going to print, The Southern Times has learnt that Namfisa officials seat on the NSX board as part of their regulatory duties and to observe that proceedings are in line with the law.

“At the outset, I point out to the honourable court that the current assistant CEO of the second respondent, Mr Bonifatius Paulino has had a long association with the NSX for at least a decade, having attended meetings of the board of directors and major sub-committees of the board of NSX. The current Deputy Chairperson of the board of the second respondent Gerson Katjimune has also served on the board and subcommittees of the NSX for a long period of time,” reads Angula’s affidavit.

Angula’s accusation does not only end with the three but he also added that retired former senior Namfisa official Lily Brandt also served on the NSX’s Audit and Risk Committee while Paulino and Matomola had served on the Remuneration Committee of the NSX. While Matomola and Brandt also served on the NSX listings panel.

Angula says that NamFinX’s battle to get certification dates back to September 2012, adding that then finance minister and current Prime Minister Saara Kuugongelwa-Amadhila gave her blessing for the country to have a second stock exchange in line with Section 7 (1) of the Stock Exchanges Control Act.

Kuugongelwa-Amadhila told The Southern Times that as finance minister at the time, she had no part to play in licensing NamFinX but rather to ensure that the law allows for a second stock exchange, however, the licensing remains Namfisa’s responsibility. “My then office has, in this regard, prepared an amendment to the law to provide for this, and the bill was with our colleagues at Justice for legal review. Approval for setting up and operating a stock exchange is granted by Namfisa, not Ministry of Finance. Mine was only to authorise that a group of people in a specific number, as proposed, may set up an exchange, and that I did. Whether they are actually licensed to do so is for Namfisa to determine,” said Kuugongelwa-Amadhila.

NamFinX says that a decision to deny it a stock exchange licence is not just illegal but it is also leading to the marginalisaiton of indigenous entrepreneurs by the current stock exchange and markets.

“The founders and promoters of the applicant identified a gap in the money and capital markets of Namibia, causing indigenous Namibians to be marginalised, as the vast majority of Namibian entrepreneurs had no access to or [had] limited access to capital. Indigenous entrepreneurs who could afford it had to borrow capital for their business from local banks at the bank’s highest interest rates in almost every case,” says Angula in the court documents.

Angula also says there has not been any meaningful objection by members of the public to NamFinX’s object of establishing and operating the second stock exchange in Namibia.

He further says another reason why himself and Swapo liberation icon Andimba Toivo ya Toivo, assisted by businessman Anthony de Silva, decided to establish a stock exchange was because the existing financial institutions were paying lip service to government’s plan to reform the financial services sector. He says the financial sector’s efforts, to assist government’s reform plans, were slow and not sufficiently motivated, involved, and/or failed to introduce significant change and reform to ensure all Namibians were brought in from the periphery of the economy of their own country.

Angula maintains that Namfisa and, in particular Matomola, has delayed their licence application without any genuine or plausible justification. He adds that the application process has been characterised by Matomola’s lack of appreciation of his statutory powers and obligations to properly consider that application. Instead of dealing with that application speedily, he has raised all manner of “extraneous obstacles to delay that application”.

“The establishment of that stock exchange is in the public interest and will benefit local entrepreneurs in Namibia. It appears an unprecedented practice was established whereby the annual application for the renewal of the NSX stock exchange licence was a formality and it was issued automatically without having to go through the review process prescribed in terms of sections 7, 9 and 10 of the Act.”

NamFinX is asking the courts to declare Namfisa’s decision not to grant them a licence invalid and for the regulator to explain to the courts how it arrived at its decision.

Other respondents include the Minister of Finance (third respondent), the Attorney General (fourth respondent) and the Prime Minister (fifth respondent).