Namibia progresses to address greylisting

Namibia has submitted an early report on strategies to address the country’s greylisting.

Namibia was greylisted in February by the Financial Action Task Force (FATF), with 72 recommended actions to be addressed in a 12-month period.

“The country was found to have effectively addressed 59 recommended actions, while the remaining 13 required improvement,” said Financial Intelligence Centre director Bryan Eiseb.

Eiseb noted that despite the greylisting, investor perceptions of Namibia remain broadly positive.

“Given that Namibia’s currency is pegged to the South African rand, the negative effects on the exchange rate associated with the greylisting appears minimal,” said Eiseb.

The greylisting period is generally two years to demonstrate effective progress on the remaining weaknesses identified.

“The inherent consequence of not exiting greylisting is potential escalation to the so-called FATF blacklist,” said Eiseb.

The FATF is a global intergovernmental body that promotes policies and sets international standards relating to the combating of money laundering, terrorist financing and the financing of the proliferation of weapons of mass destruction.

As noted by FATF in its statement on 24 February 2023: “Jurisdictions under increased monitoring are actively working with the FATF to address strategic deficiencies in their regimes to counter money laundering, terrorist financing and proliferation financing.

“When the FATF places a jurisdiction under increased monitoring, it means the country has committed to swiftly resolving the identified strategic deficiencies within agreed time frames and is subject to increased monitoring.”

Eiseb said countries greylisted by FATF generally experience significant reductions in capital inflows, averaging a net loss of 7,7% relative to gross domestic product (GDP).

He added that greylisting typically impacts an economy through various channels, including GDP, government funding costs, exchange rates, cross-border transactions and capital markets.

“Namibia’s strong macroeconomic fundamentals suggest that the country may be well placed to withstand the short-term impact of greylisting,” said Eiseb.

However, he noted that the period is certainly too short to thoroughly examine the full extent of the impact on some key indicators, such as GDP.

“Given the prevailing robust economic landscape, these effects may be offset,” Eiseb added.