Unpacking Namibia's Fintech ecosystem

As a lawyer, most of my work is based on solving problems that are related to historical facts. As a fintech enthusiast, the futurist in me is using this column to unpack Namibia’s fintech ecosystem from a legal and regulatory perspective.

I also have a keen interest in how innovation will transform digital payment systems locally and internationally.

In today’s article, I will be positioning the role of Namibian fintech under the framework of the African Continental Free Trade Area (AfCFTA) agreement as well as applying the Bank of Namibia’s (BoN) definition of fintech to various fintech activities in our daily lives.

The role of Namibian fintech within the framework of AfCFTA

Africa is predicted to lead in fintech adoption and within this narrative, I believe that Namibia is well placed to position itself in that conversation.

How, you might ask?

With a population of nearly three million people, you might wonder whether fintech is a relevant topic in Namibia. But what we lack in numbers is mitigated by Namibia’s membership in AfCFTA, which, according to the World Economic Forum, gives Namibia access to the “largest free trade area in the world.... [with a] population of 1.3 billion and combined GDP of about $3.4 trillion.”

With 55 African countries as potential trade partners, this presents a unique opportunity for Namibian fintech companies to facilitate e-commerce and digital trade. I am mindful of the fact that we would need to craft a robust and responsive regulatory framework for fintech in Namibia as well as within the framework of the AfCFTA.

I wish to note that the AfCFTA Secretariat, together with the African Export-Import Bank and the African Union, developed and launched for commercial use on 13 January 2022, the pan-African payment settlement system (PAPSS) to support instant payments, pre-funding, and net settlement.

This means that intra-African trade will not be done through third-party currencies like the US dollar, but through innovation, which will allow consumers to make payments in their local currencies while sellers receive payments in their local currencies – regardless of the geographical location. Thus far, 10 central banks and some commercial banks in Africa have signed up to use the PAPPS under the AfCFTA, and I’m curious to see whether Namibia will sign up as well.

For Namibian fintech's, the AfCFTA, especially through the PAPPS, creates a framework for cross-border financial transactions to be made faster, cheaper, and more conveniently, as well as to draw more people into the world of digital finance.

Applying BoN's definition of fintech

I previously mentioned that the international definition of financial technology (fintech) is not settled because of the versatile nature of fintech, but locally, the Bank of Namibia (BoN) has defined fintech in its Financial Technology (Fintech) Innovations Regulatory Framework (September 2022) as:

“Technology-enabled innovation in financial services that could result in new business models, applications, processes, or products with an associated material effect on financial markets and institutions and the provision of financial services.”

BoN’s definition of fintech was adopted from the Financial Stability Board and is premised on looking at how technology-enabled innovation disrupts and transforms the provision of financial services.

In my first article, I highlighted that if, like most people, you have a mobile phone that you use to send or receive money, i.e., through electronic wallets (ewallet, bluewallet, easywallet, etc.), make cellphone or online payments (including buying electricity, airtime, paying for DSTV, etc.), or swipe with your ATM card in a shop, then you are part of the fintech ecosystem and perform a key role as a consumer of financial services that are driven by digital technology.

The above examples reveal how fintech disrupted and transformed the provision of financial services in Namibia – for the benefit of even those who don’t have bank accounts.

You might wonder whether there is an actual fintech company that’s operating in Namibia. I’ll touch on that in the next article.

DISCLAIMER: I’m no expert on the topic of fintech. I’m writing this column for people who, like myself, have heard of the term fintech and want to learn more about the topic. So, let’s continue to learn together. Overall, I welcome your views, comments, queries, concerns, and inputs. You can reach me at [email protected]. The views expressed in this column are entirely my own and not those of the Office of the Attorney-General.