The market value of the Deposit Guarantee Fund stood at N$16.2 million in 2022, representing a significant increase from N$10.3 million the year before, Head of the Namibia Deposit Guarantee Authority, Florette Nakusera revealed this week.
The high returns for 2022 are attributed primarily to N$5.2 million received in premiums, as well as interest earnings of N$790 963 during 2022.
The Authority was established in terms of the Deposit Guarantee Act, with the main objective of providing depositors, particularly small depositors, with the required safety net and protection.
The Authority is mandated to manage a deposit guarantee scheme that provides compensation when a member institution fails.
Nakusera noted that the banking industry remained profitable, liquid and well capitalised.
“Despite the unprecedented shocks over the last few years occasioned by a contractionary environment, the banking sector has maintained adequate capital positions above prudential requirements. Total risk weighted assets stood at 17 percent at the end of December 2022, higher than the statutory minimum risk weighted capital requirement. Profitability also improved, with both return on assets and return on equity edging upwards. Moreover, asset quality continues to improve owing to a combination of repayments, write-offs and debt restructuring measures.”
The Authority continued to strengthen and enhance its operations and to grow as an institution during the reporting year.
Nakusera said the development of the Authority’s first strategic plan was one of the key achievements in 2022.
Board chairperson Ebson Uanguta said since its establishment in 2020, the Authority has continued to grow in terms of organisational management and operations, despite having come into existence during the most challenging times, which were characterised by sluggish economic developments as well as the devastating effects of the COVID-19 pandemic.
He said the development of the strategic plan (2023–2025) constituted a key milestone reached during 2022.
“The Strategic Plan, crafted in the most cost-effective way possible, provides the NDGA with guided direction and sharp focus for the next three years.”
Deposit insurance or deposit protection systems have gained popularity in recent years, but especially in the aftermath of the 2008 global financial crisis. Such schemes have been implemented in many countries to protect bank depositors either fully or in part from losses caused by a bank’s failure.
Deposit insurance systems are one component of a financial system safety net that promotes consumer protection while safeguarding financial stability. Such institutions are also meant to prevent panic withdrawals by assuring depositors of the safety of their deposits even in the event of such failures, thereby reducing the likelihood and scale of a systemic crisis.
