WINDHOEK, Sept. 1 (Xinhua) -- Namibia faces tighter U.S. dollar liquidity and higher settlement costs, as the recently imposed 30-percent U.S. tariffs on South African exports weaken the very financial channels it relies on for cross-border trade payments, according to an analysis by Namibian research and investment firm Simonis Storm Securities (SSS).

According to an SSS report released Monday, although Namibia's direct exposure to U.S. markets is relatively small, its reliance on South Africa's financial system magnifies the impact of any fluctuations in those markets.

"Most Namibian banks do not hold direct correspondent accounts in New York and instead rely on South African banks for U.S.-dollar clearing," the report said.

It noted that a decline in South Africa's sales to the United States due to the new tariffs would lower the amount of dollars coming into its banks, which would hurt the systems Namibia depends on and lead to slower payments, higher costs for transactions, and less money available for cross-border trade.

"The tariffs are more than just a commercial barrier; they are a trigger for structural change in both trade patterns and financial flows," the report added.

The SSS warned that less money coming into the Southern African Customs Union in dollars could make it harder for the region to manage its finances and put pressure on Namibia's currency, which is pegged to the South African rand, causing more businesses to have to use euros, pounds, or yuan for trade, which would complicate operations and increase hedging costs.

Over the medium term, the firm expects Namibia's trade and financial flows to shift toward Europe, Asia, and intra-African markets under the African Continental Free Trade Area, likely resulting in less SWIFT activity linked to U.S. institutions and more transactions routed through European, Asian, and regional banks.

The SSS also highlighted the growing opportunity for alternative settlement systems, noting that as trade with China and other BRICS members deepens, systems such as CIPS (Cross-Border Interbank Payment System), which enables seamless cross-border renminbi transactions, are poised to see greater adoption. ■