Namibians Are Only Allowed To Invest $ 410k Per Year Abroad — Bank of Namibia

There is a limit to how much Namibians can invest abroad. According to the Bank of Namibia Namibian residents 18 years of age and older are only entitled to an investment allowance of N$6 million (about US$410k) per year for investment purposes abroad. However, BoN emphasised that the utilisation of this allowance can only be done through an authorised dealer.

“Additionally, public members are entitled to a single discretionary allowance of N$1 million per year for any foreign exchange transaction through authorised dealers and authorised dealers with limited authority. It should be borne in mind that the abovementioned transactions can only be done with the individual’s own money,” read the statement issued by BoN’s Deputy Director for Corporate Communications, Kazembire Zemburuka.

Here Is All You Need To Know

  • Forex trading in Namibia was recently brought into the spotlight by the arrest of self-proclaimed forex traders, Michael Amushelelo (28) and Gregory Cloete (28); the specialised trade is advertised all over the internet including on social media as an additional source of income.
  • The duo, known for flaunting their lavish lifestyles, were arrested on charges of conducting banking business without authorisation, accepting money from the public for investment without being authorised to do so under the Banking Institutions Act, money laundering, and acquiring, possessing or using property forming part of the proceeds of unlawful activities.
  • In the statement, Zemburuka noted that the choice of foreign investment is up to the discretion of the individual but for this allowance to be processed a certificate of good standing from the Receiver of Revenue is required.

Only Authorised Dealers Are Permitted To Deal In Foreign Exchange

According to BoN, foreign exchange in Namibia is regulated by the Currency and Exchanges Act, 1933 (Act №9 of 1933), the Exchange Control Regulations 1961 and the Rules and Order issued under these laws. Under these laws, only licensed authorised dealers (ADs) such as commercial banks and authorised dealers with limited authority (ADLAs), commonly known as bureaus of exchange, can deal in foreign exchange. As such, all persons and entities that wish to acquire foreign exchange for legitimate reasons must do so via commercial banks or foreign exchange bureaus.

“Thus, any person or entity transacting in foreign exchange without complying with the above applicable laws and the process described above, does so unlawfully. The Bank of Namibia has published a list of all licensed AD and ADLAs on its website. Therefore, individuals making use of these licensed entities to acquire foreign exchange do not need to register with the Bank of Namibia,” Zemburuka stated.

He added that the exchange or conversion of the Namibia Dollar into any foreign currency is regulated to control the use of Namibia’s foreign currency reserves in the best interest of the economy

“Despite the above, the Bank recognises that there may be a legitimate need for individuals to transfer or invest money abroad, hence the law permits the purchasing of foreign exchange under specified conditions,” the statement reads.

How Forex Traders Make Their Money 

Authorised forex traders make their money through arbitrage, which is defined as “the simultaneous buying and selling of securities, currency, or commodities in different markets or in derivative forms in order to take advantage of differing prices for the same asset”. Since currencies are traded in pairs the foreign exchange market does not set a currency’s absolute value but rather determines its relative value by setting the market price of one currency if paid for another; which means using opportunities where there is a huge demand for dollars, and where there is a relatively strong liquid supply in other markets.

The idea in forex trading is to roll cash constantly to make money off the daily variances in change of currency value fluctuations in separate markets. This usually involves an element of trading between banks usually called the “interbank market”, spot changes and currency fluctuations in different markets and the ability to act very quickly on these changes.

All institutional investors, such as Sanlam and Old Mutual, participate in forex trading but these institutions usually hedge their bets using derivative structures such as insurance to only expose their clients or a small portion of their money to it.

These authorised traders also use a natural hedge, which is for instance when the Rand/N$ weakens against the US Dollar, then it makes sense to take some money off-shore to benefit from the stronger US$ and vice versa.

 

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

New Partnership To Enhance Investment Readiness For Startups, Smes Initiated

A new partnership for startups in Namibia is now in place. Business Financial Solutions and Germany-based GreenTec Capital Partners have entered into a strategic partnership to strengthen capacity building, investment readiness, and fund-raising assistance to local start-ups and SMEs in Namibia.

Here Is All You Need To Know

  • The newly formed partnership comes as Germany plans to invest about N$2 billion in Namibia over the next 2 years.
  • By applying a unique Venture Building model, the partners aim to tackle the maturity, infrastructure, and funding gaps that young SMEs and start-ups are facing in Namibia, while at the same time de-risking them for investors by applying their support and expertise.
  • Jointly, Business Financial Solutions and GreenTec will support high potential local start-ups and SMEs in their growth from the proof-of-concept stage to market fit and sustainability by providing customised operational support, company formation and building, investment readiness, and go-to-market strategies and execution.

How To Apply For The Fund

The partners are launching a Call for Applications addressed to entrepreneurs that are interested in receiving support through the venture building model – check www.bfs.com.na for more details as well as the application form.

Ventures will be selected based on their impact, the value they can add, and their economic sustainability.

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world

Namibia Is The Easiest Country In Africa For Small Businesses To Get Bank Loan

Namibia Businesses

If you think that it is harder for small and medium-sized businesses to get loans from banks in Namibia, this is a chance to think again. A new report is saying Namibia is the best place in Africa for small scale businesses to get credit facilities from banks.

The 2019 Small and Medium-sized Enterprises (SME) Competitiveness outlook developed by the International Trade Centre (ITC) indicates that banks in Namibia are providing a high degree of investment relative to more than two-fifths of the countries examined in the survey.

Namibia Businesses

A Look At The Report

  • The report presents what it calls an “SME Competitiveness Grid” which allocates scores to the various sizes of enterprises in Namibia— small, medium and large — for various aspects of business services available to them using key indicators such as a country’s Gross Domestic Products (GDP) per capita, current account surplus, deficit and share of GDP, Tariff preference margin and many others.

Small Businesses

In Namibia, small businesses are scored at 76.6 percent with regards to investment financed by banks which is well above the threshold score of 22.4 percent below which the availability of a business service is assessed as weak. This is the highest in Africa, closely followed by Kenya at 65.2 percent. Botswana is third at 62.5 percent. Following Botswana is Mali which is fourth at 61.9 percent. Africa’s largest economy, Nigeria was scored 15.8%. At this rate, it is hardest for small businesses to get a loan in Congo DR at 4.1% or in Sierra Leone at 4.7%

This figure means that small enterprises have far more access to bank financing in Namibia compared to other African countries and also compared to Namibian medium and large-sized counterparts. The survey regards any score over 67.3 percent as strong and in Namibia, only large-sized firms are assessed to have strong access to finance, although medium-sized enterprises come close.

Central and South American countries scored the highest in this regard with Chile scoring 85.6 percent, Dominican Republic 86.0 percent, Nicaragua 68.7 percent, and Guatemala 61.7 percent as prime examples.

Conversely, sub-Saharan African countries fared poorly. Surprisingly, Liberia scored a relatively high 46.6 percent but neighboring Nigeria recorded a low 15.8 percent.

Read Also: There Are Now Over 41.543 Million Micro, Small & Medium Enterprises In Nigeria

Medium and large

It is easiest for medium scale businesses in Kenya at 70.6% to get bank loans compared to their counterparts in Africa. In this regard, Namibia scored 56.3 percent. It is also easiest for large scale companies in Burundi at 83.5% to get loans compared to their counterparts across Africa. 

This indicates that activities in Namibia’s banking sector gravitate heavily towards the financing of small scale businesses making it increasingly possible for small, medium and larger businesses to attract the needed investments from various banks.

It is deemed that SMEs contribute to the Sustainable Development Goals (SDGs) through the jobs and wages they provide to their respective employees; their business practices; the sector in which they operate as well as their contribution to the national economy.

Financial institutions in most cases do not extend substantial credit facility to SMEs, most especially in the developing countries to either expand their business or make direct investment owing to the lack of information on SME creditworthiness which in turn leads to high perceived risks.

This recent outlook is, therefore, making a strong case on the need to encourage continuous investments in the country’s small business sector in order to realize the SDGs.

It is in this regard that the ITC is advocating that local financial institutions namely banks, insurance providers and microcredit agencies playing an effective role by providing information on SMEs such as credit history, that is necessary to accurately assess performance risk.

 

Charles Rapulu Udoh

Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world.

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