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The Bank of Namibia (BoN) and Namibia Financial Institutions Supervisory Authority (NAMFISA)'s Financial Stability Report (FSR) for 2023 indicates that the Namibian financial system remained sound and resilient in 2022.

Projected vulnerabilities in the global financial system could, however, potentially impact the domestic financial system.

Domestic economic growth improved from 3.5% in 2021 to 4.6% in 2022.

This is attributed to the primary and secondary industries, which recorded growth rates of 12.9% and 3.3%, respectively.

Since the last Financial Stability Report, growth in household debt has slowed while corporate debt has increased significantly, owing to an increase in foreign debt.

Namibia's economic growth is projected to slow by 3% in 2023 due to anticipated weaker global demand and reduced spending power as inflationary pressures persist.

Risks to domestic growth are predominantly in the form of global tightening of monetary policy and high costs of key import items.

Other domestic risks include water supply interruptions, potential spillovers to Namibia from electricity cuts in South Africa, and uncertainty about the effects of climate change going forward.

The Financial Stability Report further indicates that the banking sector remained financially resilient during 2022, reporting higher profits, improved asset quality, a healthy liquidity position, and capital adequacy well above prudential requirements.

Banking sector assets grew at a rate higher than the prevailing inflation rate, but it is not sustainable to maintain asset growth given slowed economic activity.

The National Payment System and infrastructure remained stable while efficiently contributing towards reliability in payments in order to facilitate financial stability.

Global growth is expected to shrink amid a severe tightening of financial conditions in which corporate and sovereign spreads widen, stock prices fall, and the currencies of most emerging market economies depreciate.

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Bank of Namibia

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Author
Celma Ndhikwa