Why should there be regulation and supervision of financial institutions?
Regulation and supervision of financial institutions are a distinctively different set of activities.
Regulation entails the setting of an appropriate legal framework (laws, regulations, standards, directives); setting the rules of engagement in the sector.
Supervision of financial institution entails the implementation, monitoring and enforcement of regulations.
These activities are a part of the process of ensuring that the financial sector in Namibia is orderly, reliable and delivers quality products and services.
They also ensure that the sector remains fair and transparent, performs its economic intermediary role effectively and efficiently and most importantly regulation and supervision must instil confidence and attract and retain current and prospective local and international participation and investment in Namibia.
Legal Mandate
NAMFISA draws its mandate from the Financial Institution Supervisory Authority Act, Act 3 of 2001).
Importance of Regulation and Supervision in Namibia
The role and quality of regulation and supervision of financial institutions performed by NAMFISA is particularly important in the NAMIBIAN context because it facilitates components to the achievement of our national objectives and aspirations of Vision 2030.
In addition, NAMFISA plays a pivotal role in ensuring the fulfilment of basic human rights for all of our people as enshrined in our constitution.
Thus, it entails among other things, freedom of choice, fair treatment and the right to be heard when aggrieved.
Promoting Financial Inclusion and Economic Development
As far as national objectives are concerned, NAMFISA regulates and supervises the financial institutions in a manner that encourage inclusion and access to financial services by the large number of Namibians who do not have access.
In the same vein, NAMFISA ensures growth and development and ultimately assists in the reduction of the prevailing high unemployment rates in the country.
Building Confidence in the Financial Sector
As far as confidence in the financial sector is concern, NAMFISA ensures that only credible financial institutions are allowed to operate in the economy.
This is done through licencing and prudent regulation and supervision of financial institutions by setting and enforcing regulations aimed at financial soundness with the view to ensure that such entities will be able to honour their financial obligations to the investing public.
Conclusion
In conclusion, NAMFISA’s regulatory and supervisory roles are critical for the achievement of effectiveness and efficiency of the financial sector, alleviation of poverty and reduction of unemployment, protection of consumers, enhancing consumers financial literacy, and attainment of Vision 2030.