Over 90% of depositors covered under Deposit Guarantee Scheme

By Hilary Mare

THE Deposit Guarantee Scheme administered by the recently launched Namibia Deposit Guarantee Authority (NDGA) already covers over 90 percent of current depositors, head of the authority, Dr Emma Haiyambo has said.
The NDGA was established in terms of the Namibia Deposit Guarantee Act, 2018 (No. 16 of 2018). The main objective of the institution is to administer the Deposit Guarantee Scheme. The scheme aims to provide protection to depositors against the loss of their deposits, by providing compensation in the unlikely event of a commercial bank failure. This ultimately contributes broadly to consumer protection while enhancing financial stability.
“All banking institutions registered in Namibian as well as branches of foreign banks and building societies are required to be members of the Deposit Guarantee Scheme and are required to pay annual premiums to the Scheme. The scheme has a guarantee coverage limit, currently set at N$25 000,” Haiyambo said.
The need to establish a Namibian Deposit Guarantee Scheme emanated from the Namibia Financial Sector Strategy (NFSS). The strategy was adopted in 2012 with the aim of transforming the financial sector into a more competitive, resilient and inclusive sector that would enable the economy to attain its highest potential. The NFSS advocates for, among others, an appropriate financial safety net to be put in place to ensure depositors’ protection.
“The existence of the Deposit Guarantee Scheme ensures that depositors have access to all or part of their funds in the event of a bank failure. It also guards against panic withdrawals by assuring depositors of the safety of their deposits even in the event of a bank failure, thereby reducing the likelihood and scale of a financial systemic crisis,” Haiyambo further stated adding that the NDGA aspires to be a credible institution, committed to ensure protection of depositors against the risk of losing their deposits.
“Although it resorts under the Bank of Namibia for day-to-day administrative functions, the policy formulation function and oversight of the Authority resort under an independent board of directors appointed by the Bank of Namibia with the approval of the Minister of Finance.
“Its mandate and powers are provided in the Act, enabling the institution to execute its roles such as, providing insurance against the loss of deposits; collecting premiums from member institutions; managing and administering the Deposit Guarantee Fund; assessing claims made against the fund by depositors and determining the eligibility and entitlement of claimants in accordance with the provisions of the Act; as well as engaging in public-awareness programmes aimed at increasing financial literacy in the country,” explained Haiyambo.