Namfisa warned about levies
Stakeholders say they hope consumers are not paying for Namfisa's bloated salary bill.
Industry players have suggested that the Namibia Financial Institutions Supervisory Authority (Namfisa) should be managed more prudently to prevent escalation of its operational costs, rather than slapping increased levies on non-banking financial institutions.
Namfisa's new strategy, covering a five-year period from 2017 to 2022, proposes substantial increases in levies and the regulator is currently awaiting approval from the minister of finance, Calle Schlettwein.
As a regulatory authority, Namfisa is funded through levies on pension funds, asset managers, short-term insurers, life insurance, brokers and micro-lenders.
At its inception, the finance ministry provided seed capital of N$7.5 million to Namfisa, while operating capital was derived from levy income.
Because levy income tends to increase as insurance premiums go up annually, it means that the public using these non-banking financial institutions fund Namfisa, and not the institutions themselves.
Losses
By the end of March this year, Namfisa reported a loss of N$44.6 million, which CEO Kenneth Matomola described as “acceptable” since the regulator had anticipated a loss of N$95.2 million.
Industry players preferring anonymity say this is not acceptable, arguing that the losses are to a large part due to the exponential increase in Namfisa's staff.
Namfisa was established in 2001. Before then, the regulation of the non-banking financial sector fell under the finance ministry and was managed by Frans van Rensburg, who became Namfisa's first CEO in December 2001.
Then, it had a staff of 21. When the second CEO, Rainer Ritter, took over in March 2006, the staff grew to 43 and by the end of his term in May 2009 there were 49 employees.
According to Namfisa's last annual report in March this year, the number of employees has grown to 176.
Although staff costs are usually the biggest single operating cost item of any regulatory authority, Namfisa has since its inception only assumed one additional function, which is to see to it that the industry complies with anti-money-laundering regulations.
This, the industry players say, does not necessarily mean a commensurate workload increase, since there has been a decline in the number of entities regulated by Namfisa, from 769 in 2009 to 486 in 2017.
“A decline of 283 entities reflects a consolidation in the industry. On the other hand, there was a regulatory shift towards the regulation of unlisted investment vehicles and managers.
“Given the consolidation in the industry, it is difficult to argue and motivate the increase from nearly 50 staff members in 2009 to the current 176 staff members, an increase of an additional 126 employees,” said one source.
Staff costs
The general consensus is that Namfisa is overstaffed given the size of the non-banking financial sector in Namibia.
The average annual increase in management costs was 55% since 2009 and staff costs increased annually by 54%.
“This is a big cost factor and therefore losses in the last three years could have been avoided. Staff should also not do outside business to enrich themselves since they are already paid above market,” said a source.
At the end of March 2009 the staff costs were N$22.3 million. At the end of March 2017 the costs were N$133.2 million, representing an annual increase of 54% since 2009.
The driving factor was the increased size of the executive management team, from five in 2009 to 13 by 2015. In comparison with the Financial Services Board in South Africa, Namfisa has four more executives.
The total executive pay in 2009 was N$3.2 million. Currently the executive pay is N$18.5 million, which means an average pay increase of 55%.
Governance costs up
While the number of board members remained the same (five), the total board fees have increased from N$22 000 in 2003 to N$794 498 in 2015.
In the 2016/17 financial year the total board fees decreased slightly to N$686 360 due to fewer meetings.
In 2011 Namfisa was exempted under the State-owned Enterprise (SOE) Act and subsequently the fees increased substantially.
Buying property
In the 2014/15 financial year Namfisa bought a plot on Independence Avenue, Windhoek, for N$42 million.
The existing buildings on the plot (Erf 1503, next to Capricorn Asset Management) were demolished and through additional costs the value of the property has risen to N$76.2 million.
The building activity has come to a standstill for more than a year now and the plot lies empty and derelict, affecting profitability.
STAFF REPORTER
Namfisa's new strategy, covering a five-year period from 2017 to 2022, proposes substantial increases in levies and the regulator is currently awaiting approval from the minister of finance, Calle Schlettwein.
As a regulatory authority, Namfisa is funded through levies on pension funds, asset managers, short-term insurers, life insurance, brokers and micro-lenders.
At its inception, the finance ministry provided seed capital of N$7.5 million to Namfisa, while operating capital was derived from levy income.
Because levy income tends to increase as insurance premiums go up annually, it means that the public using these non-banking financial institutions fund Namfisa, and not the institutions themselves.
Losses
By the end of March this year, Namfisa reported a loss of N$44.6 million, which CEO Kenneth Matomola described as “acceptable” since the regulator had anticipated a loss of N$95.2 million.
Industry players preferring anonymity say this is not acceptable, arguing that the losses are to a large part due to the exponential increase in Namfisa's staff.
Namfisa was established in 2001. Before then, the regulation of the non-banking financial sector fell under the finance ministry and was managed by Frans van Rensburg, who became Namfisa's first CEO in December 2001.
Then, it had a staff of 21. When the second CEO, Rainer Ritter, took over in March 2006, the staff grew to 43 and by the end of his term in May 2009 there were 49 employees.
According to Namfisa's last annual report in March this year, the number of employees has grown to 176.
Although staff costs are usually the biggest single operating cost item of any regulatory authority, Namfisa has since its inception only assumed one additional function, which is to see to it that the industry complies with anti-money-laundering regulations.
This, the industry players say, does not necessarily mean a commensurate workload increase, since there has been a decline in the number of entities regulated by Namfisa, from 769 in 2009 to 486 in 2017.
“A decline of 283 entities reflects a consolidation in the industry. On the other hand, there was a regulatory shift towards the regulation of unlisted investment vehicles and managers.
“Given the consolidation in the industry, it is difficult to argue and motivate the increase from nearly 50 staff members in 2009 to the current 176 staff members, an increase of an additional 126 employees,” said one source.
Staff costs
The general consensus is that Namfisa is overstaffed given the size of the non-banking financial sector in Namibia.
The average annual increase in management costs was 55% since 2009 and staff costs increased annually by 54%.
“This is a big cost factor and therefore losses in the last three years could have been avoided. Staff should also not do outside business to enrich themselves since they are already paid above market,” said a source.
At the end of March 2009 the staff costs were N$22.3 million. At the end of March 2017 the costs were N$133.2 million, representing an annual increase of 54% since 2009.
The driving factor was the increased size of the executive management team, from five in 2009 to 13 by 2015. In comparison with the Financial Services Board in South Africa, Namfisa has four more executives.
The total executive pay in 2009 was N$3.2 million. Currently the executive pay is N$18.5 million, which means an average pay increase of 55%.
Governance costs up
While the number of board members remained the same (five), the total board fees have increased from N$22 000 in 2003 to N$794 498 in 2015.
In the 2016/17 financial year the total board fees decreased slightly to N$686 360 due to fewer meetings.
In 2011 Namfisa was exempted under the State-owned Enterprise (SOE) Act and subsequently the fees increased substantially.
Buying property
In the 2014/15 financial year Namfisa bought a plot on Independence Avenue, Windhoek, for N$42 million.
The existing buildings on the plot (Erf 1503, next to Capricorn Asset Management) were demolished and through additional costs the value of the property has risen to N$76.2 million.
The building activity has come to a standstill for more than a year now and the plot lies empty and derelict, affecting profitability.
STAFF REPORTER
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