100 – Namibia

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dos Tigres g Z o Ponta da� PLAINES� am Marca SILOWANA bè Ondjiva� z Cunene e Population (mn) 2.0 � K K une e w n a C n S u do Katima Mulilo� D Enana� i 1700 m Ombalantu to C ngo � Livingston K � uba E Oshakati E OVAMBOLAND K Opuwa Rundu� w S a n Kasane L � d D L E V O K O A K O o Population Growth (annual %) ka 1.0 v E a ZIMBABWE E n g Cap Fria COLLINES� o T R Etosha Pan TSODILO DEPRESSION� 1375 m O DELTA DE� T Tsumeb DE MABABE N L'OKAVANGO D Official Language KAUKAU VELD COLLINES AHA English C 1070 m U Outjo O Maun

A N Otjiwarongo S Makgadikgadi A Etjo� D E S E R T � T 2085 m Omatako� Brandberg� Currency Namibian Dollar (NAD) 2286 m M 2574 m Omaruru Ombutosu� ERONGO I 1916 m Kranzberg� B 2305 m Karibib Ghanzi Bla ck N oss DAMARALAND 1966 m ob

D N GDP (Current US$ bn) Swakopmund LA Gobabis D U � 6.2 H O C Walvis Bay S H 2479 m M A KHO Walvis Bay�

D Rehoboth Sandwich Bay � 2393 m BOTSWANA Ilhea Point N O o s E li s f o a n b t Conception Bay s

GDP Growth (annual %) 4.8 S KALAHARI 1988 m Mochudi Meobbaai E Molepolole R Mariental Maltahöhe N os o Gaborone p T NAMAQUALAND A u D o o N b Kanye c 1014 m A N i r

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p E A r HUNSBERGE Karasburg o a G L External Debt (US$ mn) B H l 1,600 a R P a E V B P E A G A N K H A a ge L O ran r tb Kimberley e Ri e et M o External Debt/GDP (%) 24.9 NAMIBIE s dder

GEOATLAS - Copyright1998 Graphi-Ogre CPI Inflation (annual %) 5.0 0 km 100 200 300 400 km Exports of goods and services (% of GDP) 48.9 Sovereign Ratings Gross official Reserves (In months of imports) 2.1 Long Local Foreign Term Currency Currency Gross Official Reserves (US$ bn) 0.44 UNDP HDI Ranking 125 Fitch BBB BBB Source: AfDB, IMF, UNCTAD, UNDP, UN Population Division

1. overview of Financial System Africa and is one of the most sophisticated and well The Common Monetary Area (CMA) replaced the established financial systems in Africa. The banking Rand Monetary Area in 1986, accommodating sector is very active and mature, with four commercial changes in the position of Swaziland. The CMA as at end-2006, all characterized by varying comprises South Africa, Namibia, Swaziland and degrees of foreign ownership. The two largest banks Lesotho. While South Africa effectively formulates are owned by South African banks, while the remaining the for the region, each member two include a Swiss-owned and one that is has its own , is responsible for its own jointly owned by Namibian and South African firms. monetary policy, and controls its financial institutions. There is one investment bank and four specialised The South African Rand serves as legal tender in all banks including Agribank, Nampost Savings Bank countries of the area, except for Swaziland. Each and Development Bank of Namibia. The combined member state has the right to issue its own currency assets of commercial banks are approximately USD which serves as legal tender in the issuing country 4 bn (June 2005). The banking sector is regulated N only. All the national currencies are pegged to the by the Bank of Namibia, the Central Bank. Namibia Rand. Public and private sector institutions, subject is in the early stages of developing the legislation to to relevant financial laws and policies applicable to establish a two-tiered banking system. counterparts, have the right to access the South As of December 2006, the Namibian insurance African capital market. The CMA provides for free sector consisted of 28 insurance companies flow of capital within the area. and two re-insurers. The market for non-banking financial institutions (NBFI) is regulated by the Bank and Non-Bank Financial Sector Namibia Financial Institutions Supervisory Authority Namibia’s financial sector is closely tied to South (NAMFISA) which was created in 2001. The NBFI is  Namibia – 101 made up of some 500 pension funds, a number of asset African companies that are cross-listed on the management and unit trust management companies, Johannesburg Stock Exchange. The NSX is regulated several specialised lending institutions, and a large by the Stock Exchange Association and the Executive number of micro-lending institutions. Most of these Committee of the NSX. This is the custodian of the institutions are private, with strong ownership links to licence to operate the stock exchange. It is made up South Africa. of 43 associate members (banks, listed companies, investment institutions, etc) and each year the Capital Markets members elect an Executive Committee of nine The Namibian capital market is also closely linked to members plus one outsider, to oversee the activities South Africa. The Namibian Stock Exchange (NSX), of the exchange. The NSX is regulated by the Stock which opened in 1992, has 28 listed companies, Exchanges Act of 1985 (amended in 1992) and across various sectors including financial, mining, overseen by the Registrar of Financial Institutions. industrial retail and fishing. The majority are South

2 Fixed Income Markets Government Securities The Bank of Namibia issues treasury bills and Internally Registered Stock (IRS) by open tender. Unlike treasury bills, IRS are capital market instruments issued for maturities exceeding 12 months. The Republic of Namibia has also issued government bonds maturing in 2007, 2010, 2015 and 2024. Government papers take up a large proportion, some 85%, in the long-term securities market in Namibia. This has come about as a result of a long-standing government policy to fund its deficit in the local market as a way of facilitating the development of the local financial markets. The first Namibian bonds were issued in 1992 with maturities not exceeding six years. By 1998, 13 IRS with various maturities had been issued, but the secondary market remained limited. The Government decided in 1998 to consolidate the bonds in issue into three categories (GC02, GC05 and GC10 maturing in 2002, 2005 and 2010 respectively) in order to lengthen their maturity structure, enhance their liquidity and create local benchmark instruments. The amount outstanding in government IRS has been increasing steadily since the first stock was issued in 1992. IRS increased from NAD 50 mn in 1992 to NAD 4.1 bn in June 2004.

Namibian Government Bond Yield Curve (March 2007)

9.4

) 9.2 9 d (% 8.8 el

Yi 8.6 8.4 3 months 1 year 3 years 5 years 8 years 17 years As of March 2007 102 – Namibia

Non-Central Government Issuance Government policy to provide guarantees on papers issued by state-owned entities has had some success, albeit not massive, and at least three quasi-state entities/parastatals have issued notes in the local market. The amount issued in non-government bonds has been growing steadily from 1996, with a sharp increase recorded in 2003 at NAD 700 mn from approximately NAD 140 mn the previous year. Another increase was recorded in 2004 to reach a level of about NAD 750 mn. The non-government paper issues are by far dominated by the Road Fund Administrator which accounts for more than 50% of the entire issue in this category. Bonds in the non-government markets are issued through intermediaries such as stockbrokers and/or issued directly by the parastatals, banks or companies themselves. Settlement and custodian arrangements are agreed upon by parties and are mostly made through settlement agents as appointed by contracting parties. The private sector has also issued some bonds in the market. The first corporate bond to be listed on the Exchange was by Namibia in 2000. The bond was worth NAD 150 mn and is due to mature on 20 November 2011.

Issuer Issue Date Maturity Coupon Coupon Dates Road Fund Administration Feb 2003 Nov 2010 15% 15 Jan & 15 Jul Standard Bank Namibia Nov 2000 Nov 2011 12% 21 May & 21 Nov Bank Windhoek Feb 2004 Feb 2014 11% 4 Feb & 4 Aug Source: IJG, NSX & Issuers

Secondary Market par with the South African Rand. The South African IRS are listed on the NSX where secondary market Rand is legal tender in the country. Namibia follows the trading can take place. Interested participants can exchange rate policy determined by the South African buy and/or sell bonds on the NSX through qualified Reserve Bank. Within the CMA, all member countries and registered stockbrokers. Trading in government apply the same exchange control regulations. Non- stock can also take place over-the-counter (OTC), resident capital flows are generally unrestricted. Capital, that is, legal trading outside the formal market such profits and dividends can be repatriated. Exchange as the NSX. Secondary trading activities on the NSX control limitations apply to resident capital flows. have been increasing in recent years, and currently Foreign exchange earnings by Namibian enterprises represent some 10% of bonds outstanding. have to be brought into the CMA within six months. The Namibian dollar is convertible regionally only Clearing and Settlement into the South African Rand, while it is not convertible Treasury bills are issued in a Book Entry System in internationally. There are virtually no restrictions on which detailed records of ownership are electronically the current account, neither are there any restrictions N registered. Settlements by commercial banks are done on capital from non-residents for equity investments. through the CRISP system (an electronic payment Private individuals are allowed to invest up to system) or clearance vouchers. For institutions and NAD 750,000 outside the CMA. Transfer by local individuals, settlement can be made in the form of companies outside the CMA for bona fide long-term clearance vouchers or bank cheques. investments in specific projects, or for expansion of existing projects owned and/or controlled by Namibian 3. Foreign Exchange residents, are considered on their own merits. Namibia is part of the CMA with South Africa, Swaziland Historically, the NAD has been on a depreciating and Lesotho. The Namibian Dollar (NAD) is pegged at trend, but saw some appreciation between December Namibia – 103

2001 and the first quarter of 2005, from NAD 12.27 / 5. Key Contacts 1 USD to NAD 5.65 – 6 / 1 USD respectively. It has • Bank of Namibia, since weakened slightly and has been trading around Mailing Address: P.O. Box 2882, NAD 7 per USD since December 2006. Windhoek, Namibia Other Address: 71 Robert Mugabe NAD Per Unit of USD (Year End) Ave, Windhoek, Namibia

11 Tel: +264-61-2835111 10 Fax: +264-61-2835151 9 Web: www.bon.com.na 8 • Namibia Stock Exchange, 7 Mailing Address: P.O.Box 2401, 6 2001 2002 2003 2004 2005 2006 Windhoek, Namibia Source: Bloomberg Other Address: Shop 8, Kaiserkrone Centre, Post Street Mall, Windhoek, Namibia Tel: +264-61-227647 4. Participation of Foreign Fax: +264-61-248531 Investors and Issuers E-mail: [email protected] Non resident capital flows are generally unrestricted. Web: www.nsx.com.na • Namibia Financial Systems Supervisory Authority, Mailing Address: P.O. Box 21250, Windhoek, Namibia Other Address: 154 Independence Avenue, Sanlam, Centre, 8th Floor, Windhoek, Namibia Tel: +264-61-2905000 Fax: +264-61-258957/256303 E-mail: [email protected] Web: www.namfisa.com.na