GOVERNMENT is considering compelling all banking institutions to list on the Local Index of the Namibian Stock Exchange (NSX).
The move is in line with the recently launched Namibia Financial Sector Strategy (NFSS), which aims for the local market capitalisation of the NSX to be 75 per cent of the country's gross domestic product (GDP) by 2021.
In 2009, the NSX's local market capitalisation was only about 9 per cent of Namibia's GDP.
When he launched the NFSS, Bank of Namibia (BoN) Governor Ipumbu Shiimi admitted that the 2021 target was a "very audacious goal".
So far, only FNB Namibia has a primary listing on the NSX.
"There is envisaged to be a regulation that would prescribe mandatory listing [of banking institutions]," the NFSS states.
In addition, all Namibian incorporated financial institutions with an embedded value of a certain amount, as well as their foreign holding companies, will be "encouraged" to list on the NSX, the NFSS states. The amount of the embedded value must still be determined.
The NFSS says that the NSX has been faced with a "challenge of a lack of liquidity as not much trading has been taking place".
This, the NFSS says, is partly ascribed to the "buy-and-hold strategy adopted by most investors in Namibia, partly due to a lack of sufficient instruments".
"The reason for holding on to trading instruments has often been cited to be the need to comply with local investment requirements." Long-term insurance companies and pension funds have to invest a minimum of 35 per cent in Namibia.
The NFSS states that there is "definitely a case for improving the liquidity on the local exchange".