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Our eight material matters​​​

Whereas our four strategic choices respond directly to our operating context and direct our resource allocation and trade-offs, the group’s material matters ensure that we keep those aspects that enable us to create sustainable value, top of mind. As with the strategy, the board plays a key role in identifying and testing assumptions and approving the material matters.


Our 2019 material matters in summary

2019 material matters

High-level shifts from 2018 material matters

Ethical leadership, management and business This is a new and now the highest-ranking material matter, which includes aspects of mitigating corruption and fraud.
Credit risk management and mitigating losses due to bad debt There has been a shift in emphasis away from growth prospects to managing credit and liquidity risk.
Financial and cybercrime/cybersecurity Financial crime has been separated from the ethical aspects with the emphasis on technology as an enabler.
Meeting customer needs and expectations No change
Demand for specialist skills driving focused development, training and diversity Supporting elements now include succession planning.
Responding to a changing regulatory and operating context Supporting elements include socioeconomic issues, political instability and environmental and governance challenges.
Fintech, insurtech and evolving digital assets No change
Enhancing and optimising management and operational systems No change

Our material matters explained​

In this section, we provide more detail on the material matters, including the stakeholder groups most affected, positively or negatively, by each. The risk report contains specific detail on some of these matters. For example, in the risk report, we set out the material matters in relation to the principal risks and identify the board committees mandated to consider each.

Responding to a changing regulatory and operating landscape


Financial services globally are exposed to an ever-increasing regulatory compliance burden. A significant portion of new regulation introduced in the Capricorn Group jurisdictions is influenced by extraterritorial pressures. Examples are Basel iii, the Foreign Account Tax Compliance Act (FATCA), IFRS and Anti-Money Laundering regulation. Regulatory changes in the region are also influenced by local socio-political circumstances and government priorities. The expansion of operations into adjacent or different industries further increases the amount of regulation that the group must comply with.

Regulatory compliance can divert management attention and increase capacity needed to make changes to comply, thereby reducing the aptitude to pursue strategic objectives. It often tends to increase the size of risk, compliance and assurance functions which monitor, maintain and report on compliance. Regulatory compliance can introduce complexity and inefficiencies into ordinary business processes, which drive up cost and impact customers who do not always appreciate the value of regulations.

In addition to regulatory compliance matters, the regional economies are confronted with sustainability challenges, such as climate change, poverty, health issues and resource shortages (water, food and energy). In addressing these concerns, governments use regulation as an instrument to enable and encourage the necessary change. While sustainability issues may trigger regulatory responses, they also bring about new opportunities. The banking sector can play a vital role in accelerating the local markets’ transition to a sustainable future.

There are early signs that government is addressing sustainability challenges which have been deepened by inconclusive legal and regulatory reforms. We welcome government’s response to concerns raised by the private sector on the National Equitable Economic Empowerment Framework (NEEEF), in particular on the ownership pillar. The National Equitable Economic Empowerment Bill (NEEEB) will go a long way towards providing policy certainty. Government is also in the process of revising new investment legislation and has put the Namibia Investment Promotion Act on hold to accommodate broader inputs by the private sector. Unemployment, especially among the youth, and widespread retrenchments in the wholesale, retail and construction sectors remain of great concern.

In Namibia there have been several new government interventions, including the following:

  • New tax proposals which, if implemented, will affect trusts and income from commercial activities of charitable, religious and educational institutions as well as the introduction of a dividends tax on dividends paid to residents.
  • The Microlending Act, 7 of 2018 was introduced to promote responsible borrowing while protecting the rights of borrowers.
  • Regulation 15 of the Long-Term Insurance Act and Regulation 28 of the Pension Funds Act Regulations were amended, requiring long-term insurance companies and pension funds operating in Namibia to invest 45% of their assets in Namibia compared to 35% previously.
  • Implementation of the industry’s regulatory and compliance projects such as PSD7 (Determination on the Efficiency of the National Payment System) will bring efficiency, safety and effective control of the domestic Electronic Fund Transfer components of the Namibian Payment system.

Read more in the Group CEO’s report, the risk report and the BSEC report



In Botswana, a high unemployment rate remains one of the key social issues. This is partly due to a skills mismatch in the market, as new graduates are unable to meet business requirements. Proposed amendments to the National Employment Act, 29 of 1982 is expected to assist in addressing the mismatch and achieving a greater level of employment.

Three national priority areas were identified in terms of the environment:

  • Pollution prevention and control
  • Sustainable use of natural and cultural resources
  • Climate change and global warming

Botswana has partnered with the World Bank to develop a renewable energy strategy that will allow the country to be more independent in its energy consumption. The government has established the Energy Regulatory Authority to set out the rules for independent power production and to ensure that proper procedures are adhered to in financing renewable energy projects.

New regulatory changes include the requirement to register all trusts with the high court and the implementation of the Company Re-registration Act, 24 of 2018. Financial Intelligence Agency amendments were made, which increased the penalties and broadened the scope of AML issues covered.

In Zambia, the Bank of Zambia issued a prohibition against bank charges and fees that are deemed unwarranted. The new Employment Code Act, 3 of 2019 relates to contracts, entitlements and employment benefits, which affects Cavmont Bank.

Failure to comply with applicable rules and regulations can expose the group to penalties and reputational damage. The group remains optimistic that with regulatory change and within sustainability challenges there are opportunities to be exploited to our advantage. This requires a positive and proactive stance.

Capricorn Group’s response and approach

In terms of regulatory changes, our Group Risk Internal Control and Assurance Framework follows a systematic approach to ensure that new regulations are identified in advance and that changes are proactively introduced. The purpose of our legislative review process is to identify emerging regulation in advance to ensure that the group can use every opportunity to influence and prepare for regulation.

Dedicated capacity was created to implement changes to systems and processes that are required by regulation and industry standards. In doing so we have simplified our change environment to better focus on strategic change.

An established risk and compliance framework ensures that our regulatory risk profile is reviewed and updated at least annually, or as and when new regulatory requirements are introduced.

We maintain good relations with all regulators as part of a deliberate stakeholder engagement strategy. This status has been maintained throughout the reporting period in all jurisdictions.

In relation to the operating environment Capricorn Group, as a corporate citizen, acts as a Connector of Positive Change in our operating context. Our operating context is reflected in the needs and concerns of our stakeholders. To be successful as a Connector of Positive Change it is necessary for the group to maintain good stakeholder relations which allow the group to sense and respond to stakeholder needs. These efforts illustrate how we respond to our operating context. Examples include:

In response to the Namibian government’s state of emergency declaration, Bank Windhoek is exploring innovative ways to determine the exposure of commercial and communal farmers and mitigate the impact of loss of income on their financial obligations. The Bank Windhoek vehicle and asset finance team is offering bush equipment to enable the production of animal fodder, using encroached bush. Bush thinning helps to restore degraded farmland and increase agricultural productivity. There are currently 30 million hectares of Namibian farmland that are bush encroached according to the de-bushing advisory services of the Ministry of Agriculture, Water and Forestry.

Bank Windhoek also contributed N$500,000 to the Dare to Care initiative. This is aimed at assisting farmers in preparing their animals for market and saving their core breeding herds for when the rain returns.

“All regulated businesses have to contend with regulatory changes: realistic and unrealistic. We need to respond, but much more, we should anticipate and predict so that we can be proactive. We should also leverage changing regulatory landscapes as these are opportunities if we look for them.” – Capricorn Group board member

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