The recent changes to the Domestic Asset Requirements are not meant to undermine the country’s asset management industry, Permanent Secretary in the Ministry of Finance, Calle Schlettwein, said this week. The promulgation of the Act was completed last month. Schlettwein told the Economist that there is a demand for capital locally, but the money flows outwards.

“We save a lot of money but we are not able to use it locally. The money we save has a lot of potential to help expand the economy,” he said.
Following the promulgation of the first changes to the Act, pension funds and life insurance companies will now have to invest 5% of their assets in unlisted companies.
While the government contends that billions of Namibian dollars are invested abroad by asset management companies that ignore the local market, the companies in turn say returns from investing in Namibia are minute when compared to South African returns.
“The government wants the money to be used to fund capital projects in Namibia. Under no circumstances are we trying to undermine the pension industry,” said Schlettwein.
The changes also apply to the state pension fund, the Government Institutions Pension Fund (GIPF), which has total assets exceeding N$33 billion. Private pension funds operating in Namibia have assets worth N$13 billion, according to figures from the regulatory body, the Namibia Financial Institutions Supervisory Authority.
According to an analysis done late last year by Old Mutual, Namibia’s national savings and investments are widening, while the sharp drop in the country’s ranking on the 2007 Global Competitiveness Report can be attributed to low access to financial services, poor infrastructure, crime and corruption as contributory factors.
For the period 1990 to 2000, the country's savings averaged around N$600 million, and increased to N$1.8 million in by 2005, Old Mutual said. At the end of 2006, savings were said to be at N$5.2 billion.
Aggregate growth in savings has greatly exceeded investments and the surplus of funds looking for a return locally has grown faster than investor demand, resulting in Namibia becoming a net exporter of capital.
According to Old Mutual, the total policyholder and pension fund assets were estimated around N$50 billion at the end of 2006. Requiring contractual savers to invest a minimum of 5% in unlisted investments equates to funding bankable projects to the tune of N$2.5 billion, according to Old Mutual.
About 35% of all pension fund and life insurance assets, worth N$50 billion, is invested in Namibia, mostly in dual listed shares on the Namibian Stock Exchange, government bonds, properties and as deposits with local commercial banks.
15 to 20% of the assets is invested in Europe, USA and Asia, while the remainder is largely invested in South Africa and more specifically, in shares listed on the JSE Securities Exchange, South African government bonds, paper issued by corporates, property and with commercial banks, according to figures by Old Mutual