Annual Report on Exchange Arrangements and Exchange Restrictions, 2007
Chapter

NAMIBIA

Author(s):
International Monetary Fund. Monetary and Capital Markets Department
Published Date:
October 2007
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(Position as of December 31, 2006)

Status under IMF Articles of Agreement
Article VIIIDate of acceptance: September 20, 1996.
Exchange Measures
Restrictions and/or multiple currency practicesNo restrictions as reported in the latest staff report as of December 31, 2006.
International security restrictions
Other security restrictionsIn accordance with UN Security Council resolutions, the Bank of Namibia (BON) prohibits financial transactions with the Taliban.
References to legal instruments and hyperlinksn.a.
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 in international markets of the South African rand against the currencies concerned. 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 conditions. 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.
References to legal instruments and hyperlinksn.a.
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 BON. Each application is considered on its merits.
Controls on the use of domestic currencyn.a.
Use of foreign exchange among residentsIn accordance with 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.
Payments arrearsNo.
Controls on trade in gold (coins and/or bullion)Exchange control regulations prohibit the purchase and sale, both domestically and abroad, of unworked gold by Namibian residents without the specific authority of the BON. All such requests are considered on their merits.
On domestic ownership and/or tradeResidents are permitted to purchase, hold, and sell gold coins within the CMA for numismatic and investment purposes only.
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 currencyOn 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.
References to legal instruments and hyperlinksn.a.
Resident Accounts
Foreign exchange accounts permittedYes.
Held domesticallyResident private individuals are allowed to hold foreign currency accounts with local ADs, subject to prior approval. Exporters may retain export proceeds for 90 days after accrual in foreign currency accounts with ADs. Effective March 31, 2006, up to the equivalent of N$2,000,000 may be held in a domestic foreign currency account.
Approval requiredYes.
Held abroadApproval is required and is granted on the merit of the application to resident private individuals. Effective March 31, 2006, resident private individuals are allowed to invest up to the equivalent of N$2,000,000 (previously, N$750,000) and to retain abroad income earned overseas. No prior approval is required for these transactions.
Approval requiredYes.
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 with prior approval.
References to legal instruments and hyperlinksn.a.
Nonresident Accounts
Foreign exchange accounts permittedOnly foreign currency accounts of EPZ customers and exports and imports related to businesses are allowed without prior approval. These accounts are kept with a local AD and are set up to facilitate the foreign currency disbursements of these 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.
Approval requiredYes.
Domestic currency accountsEPZ 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.
Approval requiredYes.
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.



Effective March 31, 2006, emigrants may transfer up to the equivalent of N$4,000,000 (previously, N$1,500,000) a family or N$2,000,000 (previously, 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.
References to legal instruments and hyperlinksn.a.
Imports and Import Payments
Foreign exchange budgetNo.
Financing requirements for imports
Advance payment requirementsAdvance payment for the importation of capital goods is allowed on filing an application with the BON. ADs may approve 33.3% of the ex-factory cost of capital goods. ADs may also approve cash-with-order advance payments of up to N$250,000 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.
Licenses with quotasn.a.
Other nontariff measuresn.a.
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.
References to legal instruments and hyperlinksn.a.
Exports and Export Proceeds
Repatriation requirementsAll export proceeds are normally required to be repatriated within 30 days of accrual.
Surrender requirements
Surrender to authorized dealersExporters may retain export proceeds for 90 days after accrual in a customer foreign currency account with an AD.
Financing requirementsNo.
Documentation requirementsAll exports from Namibia over the amount of N$50,000 must be accompanied by an export declaration, and, on 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.
References to legal instruments and hyperlinksn.a.
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.
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 travelPayments for travel allowances no longer require passenger tickets to be endorsed.
Quantitative limitsResidents who are 12 years old or older may obtain up to the equivalent of N$160,000 a person a year and those who are less than 12 years old 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 for payment of study abroad are approved when applicants provide 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.
References to legal instruments and hyperlinksn.a.
Proceeds from Invisible Transactions and Current Transfers
Repatriation requirementsNamibian private individuals may retain income earned abroad from any source other than merchandise exports.
Surrender requirements
Surrender to authorized dealersProceeds 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.
References to legal instruments and hyperlinksn.a.
Capital Transactions
Controls on capital transactionsEffective March 31, 2006, the investment limit for private residents abroad is the equivalent of N$2,000,000 (previously, N$750,000). Proceeds from the sale of quoted or unquoted CMA securities, real estate, and other equity investments by nonresidents are freely transferable.
Repatriation requirementsYes.
Surrender requirementsn.a.
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 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
Purchase abroad by residentsEffective March 31, 2006, these transactions are permitted up to the N$2,000,000 (previously, N$750,000) 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
Sale or issue locally by nonresidentsn.a.
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
Sale or issue locally by nonresidentsn.a.
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 locally by nonresidentsn.a.
Sale or issue locally by nonresidentsn.a.
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%; 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.
Financial credits
By residents to nonresidentsOnly companies that are 75% or more foreign owned are subject to exchange controls. A wholly nonresident-owned company may borrow locally up to 200% 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.
Guarantees, sureties, and financial backup facilitiesControls apply to all these transactions.
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.



Effective March 31, 2006, the previous limit of N$750 million was abolished. Consideration is given to foreign borrowing to finance direct investment 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 borrowing or by profits earned by the foreign subsidiary.



Effective March 31, 2006, 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$2,000,000 (previously, N$750,000), on presentation 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 transferred abroad, provided 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 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 residentsEffective March 31, 2006, these purchases are permitted up to the foreign investment limit of N$2,000,000 (previously, N$750,000). 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 abroad.
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.
Settlements 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. Effective March 31, 2006, emigrants are allowed to export household and personal effects for an emigrating family or single person up to an overall limit of N$4,000,000 (previously, N$1,500,000) or N$2,000,000 (previously, N$750,000), respectively. 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 earningsNamibians are discouraged from participating in international lotteries; therefore, most requests are denied.
References to legal instruments and hyperlinksn.a.
Provisions Specific to the Financial Sector
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. However, lending locally in foreign currency is not allowed.
Purchase of locally issued securities denominated in foreign exchangen.a.
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, regardless 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.
Provisions specific to institutional investors
Insurance companies
Limits (max.) on securities issued by nonresidentsThe maximum is 65% of the total assets of insurance companies.
Limits (max.) on investment portfolio held abroadEffective July 31, 2006, with BON approval, qualifying institutions (i.e., insurance companies, pension funds, and fund managers) may invest up to 20% (previously, 15%) of total assets under management by fund managers and unit trust management companies.
Limits (min.) on investment portfolio held locallyThe minimum is 35% of the total assets of insurance companies.
Pension funds
Limits (max.) on securities issued by nonresidentsThe maximum is 65% of the total assets of pension funds.
Limits (max.) on investment portfolio held abroadEffective July 31, 2006, with BON approval, qualifying institutions (i.e., insurance companies, pension funds, and fund managers) may invest up to 20% (previously, 15%) of total assets under management by fund managers and unit trust management companies.
Limits (min.) on investment portfolio held locallyThe minimum is 35% of the total assets of the pension fund.
Currency-matching regulations on assets/liabilities compositionn.a.
Investment firms and collective investment fundsn.a.
References to legal instruments and hyperlinksn.a.
Changes during 2006
Resident accountsMarch 31. Residents were allowed to hold amounts up to the equivalent of the investment limit of N$2,000,000 in a domestic foreign currency account.



March 31. Resident private individuals were allowed to invest up to the equivalent of N$2,000,000 (previously, N$750,000) and to retain abroad income earned overseas. No prior approval is required for these transactions.
Nonresident accountsMarch 31. Emigrants were allowed to transfer up to the equivalent of N$4,000,000 (previously, N$1,500,000) a family or N$2,000,000 (previously, N$750,000) an individual, inclusive of any assets previously transferred abroad.
Capital transactionsMarch 31. The investment limit for private individuals abroad was raised to N$2,000,000 (previously, N$750,000).
Controls on capital and money market instrumentsMarch 31. The foreign investment limit applicable to purchase of shares and other securities abroad by resident individuals was raised to N$2,000,000 from N$750,000.
Controls on direct investmentMarch 31. Namibian private individuals over 18 years of age were allowed to invest abroad in any form or place in a domestic foreign currency account up to the equivalent of N$2,000,000 (previously, N$750,000), on presentation of a tax clearance certificate from the Namibia Inland Revenue.



March 31. The N$750,000,000 limit on outward direct investment was abolished.
Controls on real estate transactionsMarch 31. Real estate purchases abroad by residents were permitted up to the foreign investment limit of N$2,000,000 (previously, N$750,000).
Controls on personal capital transactionsMarch 31. Emigrants were allowed to export household and personal effects for an emigrating family or single person up to an overall limit of N$4,000,000 (previously, N$1,500,000) or N$2,000,000 (previously, N$750,000), respectively.
Provisions specific to the financial sector
Provisions specific to institutional investorsJuly 31. With BON approval, qualifying institutions (i.e., insurance companies, pension funds, and fund managers) were allowed to invest up to 20% (previously, 15%) of total assets under management by fund managers and unit trust management companies.

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