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The Bank of Namibia (BoN) says high fees associated with everyday banking interactions prevent customers from utilising formal financial institutions.
The Bank of Namibia (BoN) says high fees associated with everyday banking interactions prevent customers from utilising formal financial institutions. High fees in day-to-day interactions with the formal financial system may deter consumers from engaging with formal institutions, contributing to their exclusion and increased participation in the informal sector and underground economy, stated BoN Governor Johannes !Gawaxab
He also identified travelling long distances to access branches or ATMs adding further cost and discouraging potential customers from the formal banking system. The Governor also said the point of financial inclusion is to provide access to banking services for people and businesses, including savings accounts, loans, and insurance, highlighting studies that show that financial inclusion can improve people’s health, education, and ability to feed themselves and their families.
He further explained that while the country boasts a 78% financial inclusion rate, a significant disparity still exists with nearly 60% of the rural population lacking access to formal financial services and still relying primarily on cash for income and payments. While Namibia has made significant strides in ensuring financial inclusion estimated at 78% such efforts have mostly contributed to access in terms of formal account ownership, but have not yielded broad-based results on usage, especially in the rural areas.
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The Governor also said that the apex bank aims to bridge this gap with the launch of its Instant Payment Project in 2025, an initiative aimed at providing efficient, instant, and inclusive transactions accessible on any device, including non-smartphones. The technology is expected to significantly reduce the time and cost associated with traditional banking, making financial services more accessible to rural and informal sectors. The instant payment solution focuses specifically on enhancing financial inclusion with a particular focus on rural areas and the informal sector, thereby reducing cash dependency and increasing transactional efficiency.
