Namfisa Geared for New Regulations

AT the end of this year, all pension funds and insurance companies in Namibia are set to have complied with government requirements by investing a certain percentage of the market value of their investments in unlisted investment inside Namibia.

This must be done in unlisted investments via registered Special Purpose Vehicles (SPVs), to be established by 31 December this year.

Non-compliance with the specially drawn up regulations particularly, Regulations 28 and 29, will draw hefty fines up to N$1 000 per day.

The Namibia Financial Institutions Regulatory Authority (Namfisa) will oversee the implementation exercise.

Certain regulations of the Long-term Insurance Act and of the Pension Funds Act were amended to prescribe to insurance companies and pension funds that they must invest a minimum of 1,75% and a maximum of 3,5% of the market value of their investments locally in unlisted entities.

This is a new asset class that was introduced by Regulations 15 and 28 since exposure to this asset class was not regulated, although some pension funds had direct or indirect exposure to these alternative assets class, according to Namfisa.

In general, Regulations 15 and 28 require long-term insurance companies and pension funds operating in Namibia to invest 35% of subscriptions in domestic assets within Namibia. These requirements were introduced in 1994 under Regulations 15 and 28 governing the maximum exposure levels to different asset classes. Regulation 29 stipulates how pension funds can invest in unlisted investments, being the 1,75% to 3,5%.

“Investment in property companies is not recognised as an unlisted investment,” according to Namfisa. “Unlisted investment means an investment that takes the form of prescribed equity or debt capital in a company incorporated in Namibia and not listed on any stock exchange.”

“Investments can be made in government bonds, corporate bonds as well as in State-owned entity (SOE) bonds, local authority and regional council bonds but these do not qualify as unlisted investments,” says Namfisa.

“The regulations will encourage investment in local entities, including private companies, on order to stimulate economic growth in Namibia.”

Pension funds however cannot invest directly special purpose vehicles (SPVs) will be established and managed by directors or trustees of which the majority of the directors or trustees are independent directors or trustees and not affiliated, directly or indirectly to the unlisted investment fund managers (UIM). The SPV may be a company or a trust. Pension funds are also to purchase securities issued by the SPVs.

The unlisted investment managers must apply and register with Namfisa. The chief executive officer of Namfisa, Philip Shiimi will act as the registrar.

The required investment percentage from pension funds and insurance companies will be pooled in the SPVs and the unlisted investment managers will decide where to invest. This must be done in terms of the investment plan and the management agreement with the SPV.

Some local investment companies have so far applied to Namfisa to become unlisted investment fund managers.

Namfisa has set up a new department to provide regulatory oversight and to supervise the unlisted investments. The re-organisation is aimed at creating an effective and efficient manner of exercising supervision on unlisted investments in the interests of investor protection.

“We only appointed one expert from outside, the other four staff members in the new department are our own staff,” Kenneth Matomola, assistant CEO at Namfisa told The Namibian.

“With the implementation of Regulations 28 and 29 we envisage investments in both viable Greenfield projects and existing business ventures that require capital, which existing financial institutions are not willing to fund due to the risks associated with such ventures,” Matomola added.

“We required an implementation framework for Regulation 28 in terms of unlisted investment and thus Regulation 29 was drawn up, complementing Regulation 28. Regulation 28 was re-issued and published with Regulation 29 in the Government Gazette on 31 December 2013, ready for this year,” says Matomola.


Long-term insurance companies and pension funds in Namibia must further reduce their dual-listed stocks over the next few years.

Regulations 15 and 28 also stipulate the amount of dual listed stocks that qualify as domestic assets.

The percentage of a fund’s total assets acquired in a company incorporated outside Namibia that qualifies as domestic assets (dual listed) must be gradually reduced from 30% of the market value of the company’s total assets.

Starting in January this year, the reduction must be lowered by 5% annually until it reaches 10% in four years by January 2018. This applies to domestic assets consisting of shares acquired in a company incorporated outside Namibia.

Pension funds were given 12 months, starting January this year to comply with this provision related to unlisted investment.

Source : The Namibian