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Developing a Central Securities Depository and Enhancing Payment Systems Oversight in Namibia

Project Development Objective (PDO)

The objective of this project is to assist the Bank of Namibia and relevant national authorities in establishing a modern central securities depository (CSD) and to strengthen the legal, regulatory, and oversight framework for the payments and securities settlements systems.

Background

Namibia developed the National Payment System Vision 2015 and identified six strategic areas of focus: (a) oversight, (b) access to and participation in the payment system, (c) interoperability and standards, (d) infrastructure and technology, (e) cross-border remittances, and (f) participation in the regional initiatives of the Southern African Development Community and Common Monetary Area payment systems. Overall, the vision considers a future where commerce is driven by real-time payment mechanisms; various payment channels are created through e-payments, mobile phones, Internet, and so on; and the Bank of Namibia continues to take the lead in driving the modernization process. Although a number of technological developments have occurred since the Payment and Settlement System Act was promulgated in 2003, the technical assistance was requested in order to address remaining issues.

Activities

The tangible outputs of the technical assistance project include the following:
Central securities depository 
    1.  Delivering a report on the Namibian environment that covers key issues to address in the
         establishment of a modern CSD, including legal and operational issues
    2.  Providing recommendations on the type of CSD ownership model and structure, build versus
         outsources model, and cost versus benefit, that would best suit the Namibian environment
    3.  Developing a comprehensive technical and business specification document for a CSD solution,
         taking into account the specific local policy issues and needs of different market
         participants in line with international standards
Enhancing the legal, regulatory, and oversight framework for payment systems
    1.  Developing a detailed report on the assessment of the legal and regulatory framework
         governing payment systems
    2.  Identifying the current gaps in the legal environment and the shortcomings in current
         supervisory and oversight roles and framework in order to recommend possible amendments
         or changes to existing laws
    3.  Designing a comprehensive oversight framework covering both large and small value
         payments, including mobile methods, remittances, various payment instruments, and
         participants

Expected Outcomes

The expected outcomes of the project are the following:
Central securities depository
    1.  Establishing a modernized CSD in line with international standards (Principles for Financial
         Market Infrastructures by the Committee on Payment and Settlement Systems and the
         International Organization of Securities Commissions) 
    2.  Drafting and enacting legal amendments or new regulations and policies to enable the
         establishment of a CSD and its link with a real-time gross settlement system
Legal, regulatory, and oversight framework for payment systems 
    1.  Strengthening oversight framework that enhances the safety and efficiency in payment,
         clearing, and settlement arrangements; reduces systemic risk; and increases transparency and
         financial stability 
    2.  Increasing efficiency and access to retail payments, remittances, or innovative payment
         mechanisms