The Namibian financial sector demonstrated notable resilience in 2024, with retirement funds and long-term insurers emerging as pivotal players in sustaining fiscal stability. According to the April 2025 Financial Stability Report (FSR) jointly released by the Bank of Namibia (BoN) and the Namibia Financial Institutions Supervisory Authority (NAMFISA), these non-banking financial institutions (NBFIs) collectively held 30% of the government’s total outstanding debt, amounting to N$48.4 billion. This substantial investment underscores their critical role in financing public expenditure while ensuring stable returns for policyholders and retirees amid a challenging global economic landscape.
The NBFI sector, which includes retirement funds, long-term insurers, and other institutional investors, expanded its aggregate assets by 14.3% to N$474.1 billion in 2024, outpacing the prevailing inflation rate. This growth was attributed to favorable financial market conditions, moderating inflation, and improved consumer purchasing power. By channeling funds into government securities, these institutions provided the state with a reliable source of domestic financing, reducing reliance on volatile external borrowing and strengthening the country’s fiscal buffers. Government bonds, known for their low-risk profile and steady returns, align with the long-term investment strategies of retirement funds and insurers, which prioritize capital preservation to meet future liabilities.
The FSR highlighted Namibia’s broader economic context, where GDP growth moderated to 3.7% in 2024 from 4.4% in 2023, driven by weak performance in the primary sector. Lower diamond production and adverse weather affecting agricultural output tempered growth, though secondary and tertiary sectors—notably manufacturing, construction, and retail trade—partially offset these declines. Against this backdrop, the stability of the NBFI sector proved instrumental in maintaining confidence in the financial system. Retirement funds and insurers not only supported government debt markets but also facilitated capital allocation to productive sectors, contributing to economic diversification and job creation.
The report emphasized that the NBFI sector’s investment in government debt reflects a symbiotic relationship. For the government, domestic borrowing from these institutions reduces exposure to foreign currency risks and aligns with efforts to deepen local capital markets. For retirement funds and insurers, holding government securities ensures liquidity and aligns with regulatory requirements to invest in low-risk assets. This dynamic has become increasingly vital as global uncertainties—such as trade tensions, geopolitical conflicts, and inflationary pressures—pose risks to Namibia’s export-dependent economy. Notably, the FSR flagged potential vulnerabilities, including depressed diamond prices due to competition from lab-grown alternatives and reduced Southern African Customs Union (SACU) receipts, which could strain public finances.
Regulatory interventions by the BoN and NAMFISA further bolstered financial stability. Key measures included the introduction of a framework for microfinance banking institutions to enhance financial inclusion and drought relief provisions allowing banks to restructure loans for affected borrowers. The Macroprudential Oversight Committee (MOC) also advanced preparations for a countercyclical capital buffer framework and adopted a “growth-at-risk” model to strengthen systemic risk monitoring. These steps aim to mitigate shocks and ensure the NBFI sector remains resilient amid evolving macroeconomic challenges.
Despite these safeguards, the FSR cautioned that geopolitical tensions and potential disruptions to global supply chains could alter inflation and interest rate trajectories, impacting investment returns for retirement funds and insurers. Cyber risks were also cited as a persistent threat to financial stability, requiring heightened vigilance. Nevertheless, the sector is projected to maintain its resilience in 2025, supported by stable demand for financial products and alignment with anticipated economic growth.
The prominence of retirement funds and long-term insurers in Namibia’s debt market underscores their dual role as custodians of public savings and enablers of national development. By anchoring government borrowing, these institutions help stabilize interest rates and reduce fiscal volatility, creating a conducive environment for private sector growth. Their ability to mobilize long-term savings and channel them into productive investments remains a cornerstone of Namibia’s financial intermediation framework.
Looking ahead, the BoN and NAMFISA reiterated their commitment to continuous monitoring of systemic risks, ensuring that regulatory frameworks adapt to emerging challenges. The full Financial Stability Report, accessible on the BoN and NAMFISA websites, provides detailed insights into sectoral performance, risk assessments, and policy recommendations. As Namibia navigates global headwinds and domestic structural reforms, the steadfast role of retirement funds and insurers in underpinning fiscal stability will remain critical to achieving sustainable economic progress.