Financial Environment:
Namibia has a well-established banking system, which is controlled by legislation and by state agencies working through the Bank of Namibia. The new Banking Institutions Act passed into law in 1998 provides the legal framework for banking operations in Namibia and is designed to ensure international acceptability. To deepen the range of financial services in Namibia, an Offshore Banking Act as well as legislations governing the conduct of other offshore financial services are being prepared and were passed into law in 2002.
As a member of the Rand Common Monetary Area (CMA), however, Namibia continues to be subjected to CMA foreign exchange regulations as are South Africa, Lesotho and Swaziland.
Commercial Banks:
Commercial banks in Namibia operate through a nationwide network of branches and offer a comprehensive range of banking services, including current account and overdraft facilities, term deposits, discounting of bills, foreign exchange and a variety of loan products. General banking facilities such as hire purchase and leasing packages are also available and most of the commercial banks are capable of providing specialised merchant banking facilities. Branches of banks can be found in most towns in Namibia with agencies in the smaller centres. International services are available through interbank arrangements while electronic banking and teller services are available in all major centres.
Namibia has five major commercial banks:
- Bank Windhoek Limited
- City Savings and Investment Bank
- Commercial Bank of Namibia
- First National Bank of Namibia Ltd
- Standard Bank of Namibia
Foreign Exchange Control
Foreign currency transactions in Namibia have to conform to operating Exchange Control requirements. In an effort to demonstrate the Government's commitment towards the free flow of currency, people and goods, recent changes have been effected to the rules governing foreign exchange transactions to allow dividends, profits and disinvestment proceeds to be transferred by an authorised dealer without Bank of Namibia involvement. Transfers in excess of the established limits under Exchange Control Rules require authorised dealers to lodge an application on behalf of their client with the Bank of Namibia giving full details of the purpose for the remittance.
Remittance of Dividends
The remittance of dividends to non-resident shareholders is allowed without Bank of Namibia approval, except in the case of a company availing itself of local loans.
Repatriation of Capital
The local sale or redemption proceeds on non-resident owned assets in Namibia may be regarded as freely remittable or be used freely by non-residents for investment purposes within the CMA.
Export Processing Zone (EPZ) Enterprises
EPZ enterprises operate outside the normal foreign exchange regime in Namibia. To address their foreign exchange and operational requirements, two types of banking accounts have been tailor-made to the needs of enterprises operating in the Namibia EPZ. These are:
- EPZ Customer Foreign Currency Account: To facilitate the foreign currency disbursements of EPZ enterprises. This account is kept in foreign currency in a local bank.
- EPZ Non-resident Account: This is a Namibia dollar account funded with foreign currency and used for the normal operational requirements / expenditure of EPZ enterprises. Balances on this account are freely convertible.
Other Benefits of Liberalisation
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Free repatriation of income/dividends earned on such investments. - Institutional investors, i.e., pension funds, insurance companies and unit trusts may engage in asset swap transactions.
- Corporations may invest directly abroad.
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Virtually all quantitative limits on current account transactions in line with Article VIII of the IMF have been abolished. Freedom of movement for capital transactions of non-residents.
The Namibian Stock Exchange (NSX) is Africa’s second exchange in terms of market capitalisation, with total market capitalisation of N$286 billion, with 41 companies listed by the end of November 1999. The market capitalisation of Namibian companies had reached a new record at N$3.8 billion, with 14 companies listed by end-November that year.
The NSX is also among the continent’s most technically advanced bourses. A shared trading platform with the Johannesburg Stock Exchange (JSE) points a road forward for Southern African markets. Since November 1998, the NSX has used the Chicago-designed Johannesburg Equity Trading (JET) system, operated by the JSE. The NSX also uses the JSE’s Broker Deal Accounting (BDA) system, which enables surveillance and detailed client protection.
The NSX is working with South Africa's STRATE project to move to paperless trading through a central securities depository as part of moves to integrate clearing and settlement through the region. A World Economic Forum summit in July 1999 praised this sharing of resources as an example of possible Southern African integration.
In February 1999, the stock exchanges of the Southern African Development Community (SADC) agreed to work towards a goal of linked or shared trading systems, with the ultimate aim that all securities markets in the region should be accessible from one desktop trader work station. In addition, three Government bonds with a total value of more than N$1.8 billion and two parastatal bonds are listed. The NSX is working with the (central) Bank of Namibia to make bond trading more effective.
It operates under the auspices of the Ministry of Finance, and it has no profit motive. Its operations are fully financed through imposition of levies, registration and penalty fees on financial institutions under its regulation.
How to Trade
Investors approach a stockbroker who is qualified to give advice and can place orders to buy or sell shares or bonds on the NSX computer screen.
Trading hours are Monday-Friday from 09:00-16:00 except for winter time (first Sunday in April to first Sunday in September) when it is 08:00-15:00.
There is five minutes variation at open and close. The NSX is closed on Namibian and South African public holidays. The NSX and the stockbrokers each have N$10 million insurance policies to protect investors and a Guarantee Fund.
The charges for dealing vary by the deal amount from 1.1% on deals up to N$10,000 to 0.35% on the portion of the deal amount above N$5 million, with much lower rates on bonds. Brokerage rates include a transaction levy of 10% of brokerage paid to the NSX.
Foreign Investment on the NSX
There are no capital gains or marketable securities taxes or stamp duty on deals. The only special tax for foreigners is Non-Resident Shareholders Tax at 10% of dividends. There are no restrictions on foreign investment on the NSX. Foreign exchange regulations are related to those in South Africa through the Common Monetary Area treaties and the Namibia Dollar is linked 1:1 with the Rand.