Bank of Namibia’s provisional licenses signal financial transformation 

By: Hertha Ekandjo

Simonis Storm’s Head of Investment, Max Rix, stated that the Bank of Namibia’s (BON) decision to grant provisional licenses to Fintech Technologies, United Paypoint, Mindex, Virtual Asset, and Landifa Bitcoin marks a pivotal moment for Namibia’s financial sector.

“This move signals Namibia’s commitment to modernising its economy, embracing innovation, and aligning with global financial trends,” Rix said.
However, he emphasised balancing opportunities with potential risks as this transformation unfolds.

Rix’s comment follows a recent announcement by BON on a decision that it has taken to grant provisional licences to the four companies under the 2023 Payment System and Virtual Asset Acts.

Rix said technology continues revolutionising the global financial sector, reducing inefficiencies, lowering transaction costs, and improving access to services.
For Namibia, these advancements hold significant potential to enhance financial inclusion, particularly in underserved rural areas.
Rix compared Europe and South Africa, citing examples such as ING and BBVA’s use of artificial intelligence to optimise client interactions and Time Bank’s efforts to simplify banking access for millions. “Namibia stands to benefit from similar innovations that can bridge gaps and create synergies within the financial ecosystem,” Rix noted.

Fintech’s ability to leverage data for improved decision-making presents immense opportunities. From enhanced credit assessments and fraud reduction to personalised services, data-driven approaches empower businesses and individuals, fostering a dynamic and inclusive economy.

However, Rix cautioned against overlooking potential challenges.
“While technology can create efficiencies and free up resources for

Reinvestment, it also raises concerns about job displacement in a country where employment is a top priority,” he cited JP Morgan’s reduction of equity research roles due to AI as an example of how automation impacts traditional employment models.Moreover, Rix stressed the need for Namibia to strike a balance between embracing technology and ensuring progress remains inclusive and sustainable.

The head of investment emphasised that investing in up-skilling and re-skilling the Namibian workforce is crucial, further pressing on growth areas like cybersecurity, data analytics, and digital product development.Meanwhile, BON’s Principal Analyst Yishi Garises said the Virtual Assets Act 2023 legally mandates the Bank of Namibia to license and supervise virtual asset service providers. “In line with this mandate, the Bank has granted provisional authorisation to two entities intending to provide virtual asset services under the Virtual Assets Act, 2023 (Act No. 10 of 2023).

“This provisional authorisation represents the initial step in a two-phase regulatory process,” she explained. The authorised entities have been given six months to fulfil specific pre-authorisation conditions before full licenses can be issued.

During this provisional period, they are prohibited from offering any services to the public until they meet all regulatory requirements.With the implementation of the VAA, virtual asset services, such as cryptocurrency exchanges, can legally be provided by licensed VASPs.

However, it is essential to note that while these services are permitted, cryptocurrencies are not recognised as legal tender in Namibia.

Garises said the Act does allow for a wide range of virtual asset services to be offered through licensed virtual asset service providers, with each service categorised under specific license classes, including:

Virtual Asset Broker-Dealer: Authorises the exchange of virtual assets for fiat currency, other cryptocurrencies, or vice versa.

Virtual Asset Marketplace: Provides licensed platforms that act as secure exchanges where Namibians can trade cryptocurrencies.

Virtual Asset Wallet Services: Offers secure storage and transfer solutions for virtual assets, ensuring the safekeeping of users’ digital assets.