Industry stakeholders in Namibia have called for the recall of the Financial Institutions and Markets Act (FIMA), citing its Canadian origins as the reason for its inability to meet the needs of the local environment.
The proposed law, which requires compulsory 75% preservation of retirement benefits for people who withdraw from their retirement funds before the prescribed early retirement age of 55 years was supposed to take effect on 1st October last year, however, it was put on ice following public outcry.
According to a submission made to the Parliamentary Standing Committee on Economics, Natural Resources, and Public Administration, by a group of concerned industry stakeholders, the FIMA Act was created by a Canadian consultant in collaboration with the Namibia Financial Institutions Supervisory Authority and was not tailored to the unique needs of Namibia's financial sector.
The submission further urged the committee to work towards a comprehensive review of the Act and to engage stakeholders in order to develop legislation that is more responsive to the needs of Namibia's financial industry
FIMA was signed into law by President Hage Geingob in 2021, with an understanding that it will ensure the continued financial stability of the Namibian non-banking financial sector.
Although the stakeholders welcomed the intentions of FIMA to reform the supervision and regulation of the non-banking financial sector, they raised concerns about its impact on the retirement funds industry.
"In a very developed economy, it makes sense and encouraged, however, we don't believe that our economy is deep and diverse enough to take away that choice from members."
The stakeholders highlight several areas of concern, including the relevance of FIMA to Namibia, the risks imposed on employers and trustees, excessive penalties and fines, inconsistency with the Income Tax Act, and the lack of clarity on how certain funds will be governed under FIMA.
Industry players are now calling on the government to recall the Act and engage with local stakeholders to develop a more appropriate regulatory framework.
They argue that a locally developed framework would be better suited to addressing the needs of Namibia's financial sector and would help promote sustainable economic growth.
It remains to be seen how the government will respond to the concerns raised by industry players, however, the Parliamentary Standing Committee concurred with the submission and promised to do all it can to ensure the Act is revisited to respond to the needs of the country and its people.
"FIMA is the product of the Canadian consultant, it is on record, until today they are not calling it a Namibian product, but a Canadian product. It means it does not suit our situation and we must change it."