Insurance sector plays crucial role in economy

November 15, 2013 11:19 AM

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WINDHOEK – Namibia’s non-banking financial sector holds about twice the assets of the banks, with the assets under management for the sector amounting to about N$130 billion as at June 2012.

About N$70 billion of those assets are in retirement funds, N$30 billion are in life and short term insurance and the remaining N$30 billion in unit trusts, says Johannes !Gawaxab the Managing Director of Old Mutual Africa Operations on the critical role of the Namibian insurance sector and its performance since 2012.

The assets of the non-banking financial sectors compare with the N$67 billion worth of total assets of the four banks operating in the Namibian market, as of June 2012. !Gawaxab also compares the sector with the dollar value of the country’s gross domestic product GDP in June 2012, which was at about N$110 billion. “Non-banking assets thus accounted for 118 percent of GDP, while total bank assets only accounted for 63 percent of nominal GDP in 2012,” says !Gawaxab describing the sector as central in the development of the Namibian economy.

“It forms an integral part of Namibia’s social fabric, meeting the social and financial needs of communities, and advancing the public good by contributing to the welfare and wellbeing of Namibians. Furthermore, the sector fulfils a valuable risk transfer function. It has been a powerful force in mobilising savings and using these to provide capital to the economy for its growth and development,” he says. Old Mutual alone has about 20 percent of all the governments bonds in issue amounting to around N$10 billion.

The insurance sector is also credited for the evolution of the NSX with the sector playing a significant role in the deepening and broadening of capital markets in Namibia. As of November 08 the total market capitalisation of the NSX was N$1.4 trillion, of which the local stocks accounted for about N$18 billion. “The NSX in Namibia, the JSE in SA and Mauritius are the only exchanges in the Southern Africa Development Community (SADC) which are cash positive and need no money/guarantees from their governments,” he says.

!Gawaxab says the crucial factors to ensure the relevance of the sector to the Namibian society is for the individual institution within the sector to constantly challenge themselves on their individual contribution to the society.

“At Old Mutual, we are constantly challenging ourselves regarding our value contribution to society, costs to customers, and real customer needs. We ask ourselves, ‘do we hear the cries of the people around us?’” he says.

“While the insurance business is relatively new to the majority of Namibians, these questions are not new to the industry. I believe the world is healing from the global financial crisis and we need to work hard to regain the trust in the financial sector that has been shaken.

We need to play a role in actively building confidence in the sector. There is a huge unemployment challenge in the country, particularly amongst the youth, and inequality is not abating.

It is estimated that about 35% of Namibians live in squatter camps and only 20 percent of Namibians are covered by retirement funds. We can’t say this is none of our business and keep quiet,” says !Gawaxab.

Source: newera.com.na

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