History of the NDGA
The Namibia Financial Sector Strategy (2001 – 2021), a ten-year transformative strategy which was developed by the country’s financial authorities and stakeholders advocated for a safety net to be put in place to protect small depositors in Namibia. This was necessitated by global developments, where countries have responded to bank failures by establishing deposit guarantee schemes. In order to achieve this objective, the NFSS called for a study to be conducted to determine the feasibility and appropriate format of a deposit guarantee and resolution scheme for Namibia. A feasibility study was concluded and recommended that, in line with international practice as well as developments in the region, Namibia should consider establishing a Deposit Guarantee Scheme. The primary objective of the envisaged scheme was to protect smaller depositors in the event of bank failures by ensuring that depositors are reimbursed with the value of their guaranteed deposits in an efficient, transparent and speedy manner.
The Namibia Deposit Guarantee Authority was established by the Namibia Deposit Guarantee Act (No. 16 of 2018), which was gazetted on 28 December 2018 and the institution was fully operationalised in February 2020. In line with international best practices, the main objectives of the scheme include the protection of a high percentage of depositors against the loss of their deposits by providing compensation in the event of bank failures; and the enhancement of financial stability as a portion of total deposits are insured. The existence of a deposit guarantee system ensures that depositors have access to all or part of their funds in the event of a bank failure. It is also meant to prevent panic withdrawals by assuring depositors of the safety of their deposits even in the event of a bank failure and safeguarding the stability of the financial system. The NDGA is an independent juristic entity, although the institution resorts under the Bank of Namibia for day-to-day administrative support.
