NAMIBIANS cannot depend on another country's resources for their own sustainable development, says finance minister Calle Schlettwein.
He said this in a speech read on his behalf by his adviser, Penda Ithindi, at the launch of the Namibia Savings and Investment Association (Nasia) in Windhoek last week.
Nasia, a not-for-profit organisation, was formed to be a single voice of investors handling savings for Namibians, and ensuring that the country's savings and investment industry remains relevant and sustainable for the future at government, investor and citizen levels.
Schlettwein said the formation of the organisation resonates well with the national development policy and mobilisation of resources to finance sustainable development.
"Savings are an important component of national income, and a savings culture boosts national investment capacity and resilience to shocks," he noted.
The minister added that the importance of savings and their contribution to sustainable development could only be realised through conducive policies.
"As a conscious policy intention to encourage savings and provision for retirement, a tax incentive aimed at encouraging savings and improved domestic investments by increasing the tax deductibility of retirement and pension fund contributions from N$40 000 to N$150 000 will come into effect after the enactment of the 2019/20 budget tax proposals," he said.
The N$40 000 tax incentive had been in place for the last 13 years.
The minister further stated that the need to increase the domestic asset requirement to 45% was aimed to further leverage domestic savings to local investment.
According to the Namibia financial system stability assessment report issued by the International Monetary Fund (IMF) in February 2018, the IMF said there was a fear that repatriated assets into the local economy will have a large pool of funds chasing few investments.
"The limited potential pipeline for issuance will struggle to absorb all repatriated assets," the IMF had said.
The minister said domestic investments are not only for government securities, but are rather much needed in the goods and services sectors of the economy.
Schlettwein explained that over the past five years, gross national savings stood at 32,2% of GDP, but investments stood at 22,8% of GDP, leaving a savings to investments gap in monetary terms of about N$5 billion to N$8 billion per year.
This, however, needs to change, as such flows constitute leakages from the economy, and become increasingly counterproductive to domestic economic development policy.
"Policies to promote savings and investment, therefore, become important as we seek to support economic activity and resilience to shocks," the minister continued.
He said the government is conscious of the need to implement structural policy reforms to bring about improved national competitiveness, business confidence, and market efficiency.
According to the Namibia Financial Institutions Supervisory Authority, pension funds had assets to the value of N$167 billion as at 31 March 2019, with around N$81 billion of that invested in shares of various companies in Namibia and beyond.
About N$17 billion is invested in government bonds, and N$10 billion in foreign bonds.
The Government Institutions Pension Fund had a N$13 billion government bonds balance at the end of 2018, being 43% of local government bonds, and 76% of all pension assets invested in bonds.
Nasia's chief executive officer, Sybil Somaes, said the organisation is testament to the investment sector's collaborative resolve to deliver research, data and insight on policy-related issues, and advise in steering economic growth in Namibia.
"By putting our heads together, we aspire to embark on a valuable journey to navigate policy and practice, and to spur economic growth for Namibia," she added.
Total pension funds invested in Namibia stood at about N$67 billion in March 2019. Of the N$81 billion invested in shares, N$18 billion was invested in Namibia, N$33 billion most likely in South Africa, as part of the Common Monetary Area (CMA), and N$30 billion outside the CMA.
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