Annual Report on Exchange Arrangements and Exchange Restrictions 2005
Chapter

NAMIBIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
September 2005
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(Position as of December 31, 2004)

Status Under IMF Articles of Agreement
Article VIIIDate of acceptance: September 20, 1996.
Exchange Arrangement
CurrencyThe currency of Namibia is the Namibia dollar.
Other legal tenderThe South African rand is also legal tender.
Exchange rate structureUnitary.
Classification
Conventional pegged arrangementThe Namibia dollar is pegged to the South African rand at par. The exchange rate of the Namibia dollar against other currencies is determined on the basis of cross rates of the South African rand against the currencies concerned in international markets. The exchange market in Namibia has developed as an extension of the exchange market in South Africa.
Exchange taxNo.
Exchange subsidyNo.
Forward exchange marketADs are permitted to conduct forward exchange operations, including forward cover, with residents in any foreign currency with respect to authorized trade and nontrade transactions. Forward exchange contracts may cover the entire period of the outstanding commitments and accruals. Forward cover is also provided to nonresidents, subject to certain limitations. Gold mining companies and houses may sell forward anticipated receipts of their future gold sales. Forward cover is provided in U.S. dollars only and is available to ADs for maturities not exceeding 12 months at a time in the form of swap transactions involving Namibia dollars (South African rand) and U.S. dollars, with a margin based on the interest rate differential between the two currencies.
Official cover of forward operationsSpecial forward cover at preferential rates is provided for import financing.
Arrangements for Payments and Receipts
Prescription of currency requirementsIf a particular type of payment is not covered in the Exchange Control Rulings (ECR), an application is lodged with the Bank of Namibia (BON). Each application is considered on its merits.
Use of foreign exchange among residentsIn accordance with the CMA arrangements, residents are not allowed to transact business in foreign currencies. Transactions may be invoiced in foreign currencies, but payments must be made in local currency.
Payments arrangements
Regional arrangementsNamibia is part of the CMA, and no restrictions are applied to payments within the CMA.
Administration of controlThe BON has delegated some powers to ADs that assist the BON in administering exchange control. When an AD is not authorized to approve a transaction under the terms of the ECR, an application is lodged with the BON. The norms applied by the BON in scrutinizing applications are subject to policy guidelines established within the CMA.
International security restrictions
In accordance with UN sanctionsIn accordance with UN Security Council resolutions, the BON prohibits financial transactions with the Taliban.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)The exchange control regulations prohibit the purchase and sale, both domestically and abroad, of unwrought gold by Namibian residents without the specific authority of the BON. All such requests are considered on merit.
Controls on domestic ownership and/or tradeResidents are permitted to purchase, hold, and sell gold coins within the CMA for numismatic and investment purposes only.
Controls on external tradeAll exports and imports of gold require the prior approval of the monetary authority.
Controls on exports and imports of banknotes
On exports
Domestic currencyAn individual may export up to N$5,000.
Foreign currencyResidents and contract workers departing from Namibia to destinations outside the CMA may take out their travel allowance in foreign banknotes. Foreign visitors leaving Namibia may take with them the unspent portion of the proceeds of foreign currency imported and exchanged in Namibia
On imports
Domestic currencyUpon entry from countries outside the CMA, residents and nonresidents may bring in a total of N$5,000 in Namibian banknotes or R 5,000 in South African banknotes. There are no limitations on the importation of domestic currency from Lesotho and Swaziland.
Foreign currencyImportation of foreign currency by nonresidents of the CMA is unrestricted. However, Namibian residents are allowed to import into Namibia only the residual balance of foreign currency initially exported.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyResident private individuals are allowed to hold foreign currency accounts with local ADs, subject to prior approval. Effective July 27, 2004, exporters are allowed to retain export proceeds for 90 days (previously, 180 days) after accrual in foreign currency accounts with ADs. The BON eliminated the documentary requirement for sales and purchases of foreign exchange. The amount of N$750,000 allowed for investment by resident private individuals may also be held in a domestic foreign exchange account.
Held abroadApproval is required and is granted on the merit of the application. Private individuals are allowed to invest up to N$750,000 and to retain abroad income earned overseas. No prior approval is required for these transactions.
Accounts in domestic currency held abroadn.a.
Accounts in domestic currency convertible into foreign currencyPayments in foreign currency may be effected from resident accounts, provided the transaction is covered under the ECR or when prior approval has been obtained.
Nonresident Accounts
Foreign exchange accounts permittedOnly foreign currency accounts of export-processing zone (EPZ) customers are allowed without prior approval. These accounts are kept with a local AD and are set up to facilitate the foreign currency disbursements of EPZ enterprises. Transactions through these accounts must conform to normal banking practices and must be carried out with the full cognizance and approval of the AD concerned.
Domestic currency accountsThe regulations that apply to these accounts in South Africa also apply in Namibia. EPZ nonresident accounts are allowed. These are Namibia dollar accounts funded with foreign currency that are used for the normal operational requirements and expenditures of EPZ enterprises and to facilitate local investments. Balances remaining in these accounts are freely convertible and transferable abroad.
Convertible into foreign currencyThese accounts may be converted, but approval is required.
Blocked accountsResidents who emigrated from Namibia on or before February 28, 2002, may transfer their blocked funds abroad freely through an authorized bank. The assets of residents who emigrated after that date are subject to normal emigration procedures.
Emigrants may transfer up to the equivalent of N$1.5 million a family unit or N$750,000 an individual, inclusive of any assets previously transferred abroad. Transfers in excess of these limits are subject to a transfer tax of 10% of the amount in excess of the limit. Emigrants may subsequently transfer annual income from their remaining blocked assets, but may not dispose of the assets through sale to Namibian residents.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsAdvance payment for the importation of capital goods is allowed upon filing an application with the BON. ADs may approve 33.3% of the ex-factory cost of capital goods. Effective June 7, 2004, they may also approve “cash-with-order” advance payments of up to N$250,000 (previously, N$50,000) a transaction for permissible imports other than capital goods.
Documentation requirements for release of foreign exchange for importsDocumentation confirming receipt of the imported articles into Namibia (e.g., a bill of entry or local post receipts) is required.
Letters of creditLCs may be established locally by ADs.
Import licenses and other nontariff measuresThere are no restrictions on imports originating in any country of the SACU. Imports from countries outside the SACU are usually licensed in conformity with South Africa’s import regulations. These permits are valid for one year for imports and are expressed in value terms. At present, about 90% of imports require a permit.
Negative listNamibia has the right to restrict certain imports (through customs duties or quantitative restrictions) from countries outside the SACU and, under certain conditions, from countries within the SACU.
Import taxes and/or tariffs
Taxes collected through the exchange systemA general sales tax of 10% is levied on all imports in addition to a sales duty between zero and 15%, depending on the type of commodity.
State import monopolyNo.
Exports and Export Proceeds
Repatriation requirementsAll export proceeds are normally required to be repatriated within 30 days of accrual.
Surrender requirementsEffective July 27, 2004, exporters are allowed to retain export proceeds for 90 days (previously, 180 days) after accrual in a customer foreign currency account with ADs.
Financing requirementsNo.
Documentation requirementsAll exports from Namibia over the amount of N$50,000 must be accompanied by an export declaration, and, upon receipt of export proceeds locally, the inflow of foreign currency must be declared.
Letters of creditYes.
GuaranteesYes.
Export licensesAll exports, except to SACU member countries, require a license.
Without quotasPermits are required for exports of goods in short supply to non-SACU countries.
Export taxesNo.
Payments for Invisible Transactions and Current Transfers
Controls on these transfersADs may approve trade-related invisible payments without limitation and other invisible payments up to established limits. Larger amounts may be approved on presentation of documentary proof of need. Some limits were retained to maximize the effectiveness of remaining controls on capital outflows.
Investment-related payments
Prior approvalNo prior approval is required, but if a local company is contracting any loans via a local source, an application should be filed with the BON. The repayment of foreign loans requires BON approval.
Payments for travel
Quantitative limitsResidents who are 12 years or older may obtain up to N$160,000 a person a year and those who are less than 12 years may obtain up to N$50,000 a person a year. Residents traveling to destinations outside the CMA are allowed to take out in any form the foreign exchange that was made available to them.
Indicative limits/bona fide testAmounts in excess of the indicative limits are approved when the applicant provides documents in support of a bona fide request.
Personal paymentsThere are no restrictions on payments of medical costs. Remittances for alimony (subject to presentation of a court order) are permitted up to the equivalent of N$9,000 a month.
Prior approvalYes.
Quantitative limitsThe annual allowance for study abroad for a single student is the equivalent of N$160,000 and for a student accompanied by a nonstudent spouse, N$320,000. Student holiday allowances are N$50,000 for an individual and N$100,000 if accompanied by a spouse. Family maintenance transfers are limited to N$9,000 a month for a recipient family.
Indicative limits/bona fide testAmounts in excess of the indicative limits are approved when the applicant provides documents in support of a bona fide request.
Foreign workers’ wages
Prior approvalYes.
Quantitative limitsContract workers may transfer two-thirds of their monthly salary.
Credit card use abroad
Prior approvalNo prior approval is required for travel expenses.
Quantitative limitsLimits must be in accordance with prescribed travel allowances. ADs may permit up to the equivalent of N$20,000 a transaction for permissible imports.
Indicative limits/bona fide testYes.
Other payments
Prior approvalYes.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNamibian private individuals may retain income earned abroad from any source other than merchandise exports.
Surrender requirementsProceeds from invisibles must be surrendered within 30 days of the date of accrual, unless exemption is authorized.
Restrictions on use of fundsPrior BON approval should be obtained to use such funds outside the CMA.
Capital Transactions
Controls on capital transactionsThe investment limit for private residents abroad is the equivalent of N$750,000. Proceeds from the sale of quoted or unquoted CMA securities, real estate, and other equity investments by nonresidents are freely transferable.
Controls on capital and money market instrumentsInward transfers of capital from non-CMA countries for equity investment are freely permitted. Namibian corporations are allowed to invest substantial amounts in the SADC member countries, and dual listing of companies on both the Namibia Stock Exchange and other SADC stock exchanges is permitted.
On capital market securities
Shares or other securities of a participating nature
Sale or issue locally by nonresidentsProceeds from the sale of quoted or unquoted CMA securities, real estate, and other equity investments by nonresidents are freely transferable.
Purchase abroad by residentsThese transactions are permitted up to the N$750,000 (or its equivalent) foreign investment limit of resident individuals.
Sale or issue abroad by residentsYes.
Bonds or other debt securities
Purchase abroad by residentsThe controls governing shares or other securities of a participating nature apply.
Sale or issue abroad by residentsYes.
On money market instruments
Purchase abroad by residentsThe controls governing shares or other securities of a participating nature apply.
Sale or issue abroad by residentsYes.
On collective investment securities
Purchase abroad by residentsThe controls governing shares or other securities of a participating nature apply.
Sale or issue abroad by residentsYes.
Controls on derivatives and other instruments
Purchase abroad by residentsYes.
Sale or issue abroad by residentsYes.
Controls on credit operationsInterest rates applicable on foreign currency–denominated loans should not exceed LIBOR plus 2%, while those on local currency–denominated loans should not exceed the prime overdraft rate plus 3%.
Commercial creditsCredit operations outside the CMA are subject to the specific approval of the BON, which is generally given for borrowing abroad with a maturity of at least six months by domestic entrepreneurs, except for speculative borrowing or consumer credit. ADs are generally permitted to raise funds abroad in their own names for the financing of Namibia’s foreign trade and other approved purposes.
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Financial credits
By residents to nonresidentsOnly companies that are 75% or more foreign owned are subject to exchange controls. Effective June 16, 2004, a wholly nonresident-owned company may borrow locally up to 200% (previously, 100%) of shareholder equity.
To residents from nonresidentsForeign loans to Namibian residents require prior approval, which is usually granted when the repayment and servicing of loans do not disrupt the balance of payments, and the level of interest rates paid is reasonable in terms of prevailing international rates. Corporations are allowed to borrow abroad using their local balance sheet as a guarantee when the investment required exceeds the limit of the equivalent of N$750 million.
Guarantees, sureties, and financial backup facilities
By residents to nonresidentsYes.
To residents from nonresidentsYes.
Controls on direct investment
Outward direct investmentApplications by residents to retain funds in, or transfer them to, countries outside the CMA for bona fide long-term investments in specific development projects or for the expansion of existing projects owned or controlled by residents are considered on their merits.
The limit on outward direct investment is N$750 million. Consideration is given to foreign borrowings to finance direct investments with recourse to or guarantee from Namibia, implying that the local corporation’s balance sheet may be used in negotiating such a facility. Approved foreign subsidiaries may expand activities abroad without prior approval, provided such expansion is financed by foreign borrowings or by profits earned by the foreign subsidiary.
Namibian private individuals over 18 years of age may invest abroad in any form or place in a domestic foreign currency account up to the equivalent of N$750,000, subject to the production of a Tax Clearance Certificate from the Namibia Inland Revenue. Income earned abroad and capital introduced into Namibia on or after July 1, 1997, by private individuals resident in Namibia may be retransferred abroad, provided that the income and/or capital had previously been converted into Namibia dollars.
The BON is now considering applications by private individuals to invest in fixed property (e.g., holiday homes and farms) in the SADC member countries.
Inward direct investmentInward transfers of capital from non-CMA countries for equity investment may be effected freely.
Controls on liquidation of direct investmentYes.
Controls on real estate transactions
Purchase abroad by residentsThese purchases are permitted up to the foreign investment limit of N$750,000 (or its equivalent). Other purchases are subject to exchange control approval.
Controls on personal capital transactions
Loans
By residents to nonresidentsResidents require prior approval.
To residents from nonresidentsResidents require prior approval. ADs may allow the transfer of loans up to a limit of N$30,000 an applicant a year.
Gifts, endowments, inheritances, and legacies
By residents to nonresidentsCash bequests and the cash proceeds of legacies and distributions from such estates due to nonresidents may be remitted up to N$500,000. Sums due in excess of this amount require prior BON approval.
To residents from nonresidentsResidents must declare funds obtained and repatriate them to Namibia. An exemption may be obtained from the BON for the retention of such funds abroad. Transfer by ADs of monetary gifts of up to N$30,000 an applicant are allowed annually.
Settlement of debts abroad by immigrantsIf immigrants have formally declared their assets and liabilities and have no cash resources available with which to pay a debt, the BON may consider requests for exemption.
Transfer of assets
Transfer abroad by emigrantsThe regulations that apply to the transfer of assets abroad in South Africa also apply in Namibia. Emigrants are allowed to export any household and personal effects for an emigrating family unit or single person up to an overall limit of N$1.5 million or N$750,000, respectively. Previously, families emigrating outside the CMA were granted the normal tourist allowance and were permitted to remit up to N$400,000 (N$200,000 for single persons). Emigrants are allowed to transfer abroad funds in excess of the aforementioned limits, subject to a transfer tax of 10% of the amount in excess of the limits.
Transfer into the country by immigrantsImmigrants are required to furnish the exchange control authorities with a complete account of their foreign assets and liabilities at the time of their arrival. Any foreign assets they transfer to Namibia may, through the same channel, be retransferred abroad.
Transfer of gambling and prize earningsAs Namibians are discouraged from participating in international lotteries, most requests are denied.
Provisions specific to commercial banks and other credit institutions
Borrowing abroadADs are generally permitted to raise funds abroad in their own names for the financing of Namibia’s foreign trade and for other approved purposes.
Lending to nonresidents (financial or commercial credits)Prior approval is needed for lending not related to trade transactions. Only companies that are 75% or more foreign owned are subject to exchange controls, and permission is given for local financial assistance to be granted to nonresident-owned companies against a nonresident guarantee, provided the amount made available does not exceed the limit calculated in terms of the formula requirements.
Lending locally in foreign exchangeADs may lend money locally in Namibia dollars.
Differential treatment of deposit accounts in foreign exchangeAs long as these deposits are liabilities to the public arising from operations in Namibia, they will be included in the basis for calculating the minimum liquid assets and reserve requirements.
Credit controlsThe limit for credit facilities to any person or group of related persons is 30% of a banking institution’s capital funds. In addition to the above limit, granted credit facilities of more than 10% of capital funds may not exceed, in aggregate, 800% of the total capital funds of the banking institution in Namibia. These limits apply to all customers irrespective of their citizenship.
Differential treatment of deposit accounts held by nonresidentsAs long as these deposits are liabilities to the public, arising from operations in Namibia, they will be included in the basis for calculating the minimum liquid assets and reserve requirements.
Credit controlsThe regulations governing deposit accounts in foreign exchange apply.
Investment regulations
Abroad by banksBanking institutions are at all times required to maintain minimum local assets situated in Namibia of an aggregate value of not less than 100% of the amount of their liabilities payable in Namibia dollars (excluding capital funds), less any debit balances denominated in South African rand in the clearing account held with their associate banks in South Africa.
Open foreign exchange position limitsThere is no distinction between residents and nonresidents. The net open position limit is 15% of a bank’s share capital and unimpaired reserves.
On resident assets and liabilitiesYes.
On nonresident assets and liabilitiesYes.
Provisions specific to institutional investorsNamibian pension funds and insurance companies are obliged by law to invest 35% of their total assets locally.
Limits (max.) on securities issued by nonresidentsThe maximum is 65% of the total assets of pension funds and insurance companies.
Limits (max.) on investment portfolio held abroadEffective July 27, 2004, with BON approval, qualifying institutions (i.e., insurance companies, pension funds, and fund managers) may invest up to 15% of total assets and 15% (previously, 20%) of their total assets under management by fund managers and unit trust management companies. Previously, institutional investors were allowed to acquire foreign portfolio investments up to the percentages mentioned above by way of foreign currency transfers based on a percentage of the previous year’s inflow of funds. Ten percent of the net inflow of funds in the previous year could be invested on the stock exchanges of SADC member countries, subject to the limits in place.
Limits (min.) on investment portfolio held locallyThe minimum is 35% of the total assets of pension funds and insurance companies.
Other controls imposed by securities lawsNo.
Changes During 2004
Resident accountsJuly 27. The period during which exporters are allowed to retain export proceeds was reduced to 90 days from 180 days after accrual in foreign currency accounts with ADs.
Imports and import paymentsJune 7. The maximum permitted amount of “cash-with-order” advance payments was raised to N$250,000 from N$50,000.
Exports and export proceedsJuly 27. The period during which exporters are allowed to retain export proceeds was reduced to 90 days from 180 days.
Capital transactions
Controls on credit operationsJune 16. The amount that a wholly nonresident-owned company may borrow locally was raised to 200% from 100% of shareholder equity.
Provisions specific to institutional investorsJuly 27. The proportion of assets under management by fund managers and unit trust management companies that may be invested abroad was reduced to 15% from 20%.

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