Money continues to move slowly in Namibia

Namibia has more cash in the economic system than a decade ago, yet this money is moving at the slowest pace in years.

Data from the Bank of Namibia (BoN) shows that the velocity of money, the speed at which a single dollar circulates through the economy, has dipped from a ratio of 1.8 in 2015 to just 1.6 in 2025.

This decline comes despite a rise in broad money, which is the total amount of cash and bank deposits available.

“The velocity of money has slightly declined, suggesting that money has been circulating in the economy relatively slowly over the last few years, although the level of broad money has generally risen,” central bank spokesperson Kazembire Zemburuka says.

This also means people are choosing to spend less on goods, services, or investments.

Zemburuka says in relation to liquidity, the bank uses tools to ensure effective liquidity management.

This includes the issuance of BoN bills to drain idle capital and the extension of repo facilities to commercial banks to address liquidity shortages.

“These tools ensure the market functions smoothly throughout the cycle,” Zemburuka says.

As of mid-2025, the total amount of currency in circulation in Namibia is approximately N$5.6 billion. This represents a 6.9% increase from 2024.

Additionally, foreign reserves climbed to N$51.6 billion by the end of December 2025, marking a 4.9% monthly increase.

Under the terms of the Common Monetary Area (CMA), Namibia is legally tethered to the South African rand.

This agreement requires the central bank to maintain a strict 1:1 ratio, backing every Namibia dollar in circulation with an equivalent amount in international reserves.

This means if Namibia issues currency in circulation valued at N$1 million, it is required to simultaneously maintain a minimum of N$1 million equivalent in foreign/international reserves.

In South Africa, the velocity of money is 1.9.

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