Schlettwein rebuts FIM Bill concerns

By Hilary Mare

FINANCE Minister Calle Schlettwein has diffused concerns around the adequacy of the stakeholder consultation process in the formulation of the Financial Institutions and Markets (FIM) Bill, revealing that considerable consultations, spanning a period of about ten years, had been undertaken.

Re-tabling the Bill in Parliament last week, Schlettwein also highlighted that some of the latest drafting inputs which are inconsistent with the draft Bill and policy rationale will be considered for floor amendments during the discussion stage of the Bill.

The FIM Bill modernizes the regulatory framework of the non-banking financial sector and consolidates the various standalone laws under the purview of the Namibia Financial Institutions Supervisory Authority (Namfisa).

“I wish to state that the process of the regulatory revamp for the non-banking financial sector legal framework was initiated in 2008 and underpinned by extensive and reiterative consultation process. The formulation and the reconsideration of the amendments were in consultation over a period of ten years, with specific consultation fora for industry sub-sectors.

“Industry consultations were integrated at the various stages of the drafting process, since 2008. The Draft Bill, which included the FIM, Namfisa and the Financial Adjudicator, underwent considerable redrafting process in 2011 and 2012 resulting in unbundling of the Draft Bill into the three separate Bills which I am tabling today, which each Bill having been subjected to stakeholder scrutiny,” said the Minister.

Schlettwein further noted that the drafting process also benefited from best international experience and consistency with global standards with input provided by the International Monetary Fund (IMF), through technical assistance to the Namfisa.

“The non-banking financial sector, whose asset base is about twice the size the Gross Domestic Product, plays a key role in the Namibian economy and the stability of the financial system. The laws governing this interconnected sector are not only discrete but archaic in the context rapid developments in the industry at home, regionally and globally.

“The new supervision architecture addresses the deficiencies of the existing legislation through modernization, policy cohesion and alignment to national objectives. The Bill brings forth the legislative framework which balances among the imperative of business growth, domestic economic and financial markets development as well as the risk-based supervision framework for this systematically important industry valued at about twice the size of the Gross Domestic Product (GDP).”

The Financial Institutions and Markets Bill primary function is to address and strengthen the weaknesses of the current legislative framework.  The Bill will considerably enhance the credibility of the non-banking financial services industry and will strengthen the ability to enforce compliance with operational requirements and fair conduct.

“Regulation incurs both direct and indirect costs. However, it is accepted that the benefits outweigh the cost. Such benefits lie in greater alignment to best practices and enabling domestic financial markets and economic development,” Schlettwein explained.