Thomas Nashongo
The Financial Institutions and Markets Act (FIMA) is a Namibian financial regulation law designed to strengthen oversight of financial institutions, protect clients, and encourage transparency. FIMA was gazetted in 2021 to replace the Pension Fund Act of 1956 it was put on hold owing to public concerns, and is now being evaluated for re-tabling in Parliament.
The FIMA act was scheduled to be enacted on 01 October but subsequently faced societal criticism leading to its postponement. The lack of consultation during the drafting phase also stems as a flaw in the act. The Act contains a pension preservation clause that requires persons who leave their employment before retirement to have access to only 25% of their fund credit, with the remainder retained until they reach the prescribed retirement age of 55 years. The Act is aimed at preventing premature depletion of retirement funds by short term financial needs. Contrastingly various financial institutions and political leaders criticize the act. Critics expressed concern that these additional regulatory requirements would increase operational costs, potentially limiting financial innovation and economic advancement. Additionally placing more compliance duties on financial institutions due to overregulate.
The Namibian Financial Institutions Supervisory Authority (NAMFISA) aims to improve financial regulations. By switching from compliance or rule-based to risk-based supervision (RBS). RBS will allow NAMFISA to focus its limited resources on the areas that pose the most risk to achieving regulatory objectives.
Protecting investors and pension fund members is vital to financial stability, and legislation like the FIMA Act aims to combat fraud and mismanagement. The Dodd-Frank Act in the United States and other worldwide examples demonstrate that rigorous control promotes transparency and protects savings. Namibia’s well-structured financial legislation may help to increase investor trust. However, excessive regulation can stymie economic growth by increasing compliance costs and discouraging investment. A tight framework may limit organizational flexibility, slowing growth. Instead, Namibia should pursue a balanced approach that combines risk-based oversight and staggered deployments.
*Tomas Nashongo is an Unemployed political science graduate, well versed in graphic design and drafting CV’s, essays, speeches and proposals.
