By: Nghiinomenwa Erastus
Despite the country’s savings growing substantially quarterly and annually, less is channelled in unlisted companies.
Despite the trend, less is stated on why, as the Namibia Financial Institutions Supervisory Authority (Namfisa) barely gives a reason why capital is not channelled to companies and assets that are not listed.
According to Namfisa’s first three months of 2021 report, it indicated that the country has various savings worth N$N$357,6 billion, which has been collected from Namibian monthly.
Out of that amount retirement funds investments (including insurance policies) amount to N$190,7 billion- increased by 7,7% quarter-on-quarter and by 27% year-on-year by March 2021.
Investments of retirement funds are subject to the provisions of Regulation 13, which specifies the minimum and maximum investment limits applicable across asset classes.
Going through how the pension savings has been invested, only 1% of the billions committed to those companies and projects that are not listed in the stock exchange by March 2021.
This is despite pension funds committing more than 1% of capital to the specific asset class since the third quarter of last year- however, money drawn for real investment has never exceeded 1% for the three quarters observed.
The unwell undocumented status quo is made worse by the fact that the regulator of the country’s savings still maintains that only 3,5% of it should go to unlisted companies and assets.
At the same time experts, NGOs, and the government are driving initiatives to support entrepreneurship in the country, and in many cases, capital has been cited as the main impediment.
Comment received from a former asset manager, highlighted that viable projects are currently missing in the country, as a result, money can be committed but less is drawn.
The expert added that the funding gap is at the developmental stage which can provide viable projects for asset managers – however, pension savings are not much mandated to go to that level.
According to Namfisa report, the pension industry has finally complied with the 45%
domestic asset requirement for the first time since the requirement came into effect on 31 March 2019 as per Regulation 13.
The industry reported that 46% of its assets were held domestically as of 31 March 2021, which was higher than the 44,5% reported as of 31 December 2020.
“This is an indication that previously non-compliant retirement funds have moved more of their investments into the Namibian market” Namfisa reported.
Despite the achievement, observing the asset allocation, the pension funds have not increased their acquisition of unlisted companies.
Observations by The Villager show that capital/savings committed to being deployed to the unlisted space remain below the 3,5%.
At the end of March 2021, those pension savings/industry made available 2,4% of their total savings to be invested in the companies/projects in the unlisted space.
However, the Namfisa report indicated that from the third quarter of 2020 to March this year, only a 1% draw-down was recorded.
Draw-down can be shallowly explained as a situation in which someone takes an amount of money that has been made available.
Namfisa did not offer an explanation on their report why committed funds are below the prescribed threshold for the unlisted space and why draw-down are stuck at 1%.
By the end of the first quarter of 2021, pension savings-investment into listed shares has stood at 49,7% of the total funds
In addition, 5,9% of the pension assets were invested in dual-listed shares during the review period- companies that are listed elsewhere and able to get more capital.
The second highest where pension savings are invested locally, are Namibian government bonds with an investment holding of 14,3%.
The same patterns are observed in the medical aid sector, which are required to hold a minimum of 45% of their investment assets in Namibia.
At the same time, their investments are subject to the provisions which specify the minimum and maximum investment limits applicable across asset classes.
The medical aid’s total investments increased by 5,9% quarter-on-quarter and by 21,4%percent year-on-year to N$2,1 billion.
Observation shows that the medical aid sector did not channel anything to the unlisted space from the third quarter of 2020 to the first quarter of 2021.
The industry continues to hold the majority of its investments in liquid assets such as unit trusts and cash and cash equivalents in order to have sufficient cash to settle unexpected healthcare expenses.
The Namibian Stock Exchange (NSX) had 51 securities listed on the Exchange as of 31 March 2021.
The companies include 32 listings on the Main Board (of which 11 are primary
listings), 7 on the Development Capital Board, and 11 exchange-traded funds (ETFs) listed on the exchange, while 1 company is quoted on the Over the Counter (OTC) Board. Email: erastus@the villager.com.na
