Over 1,3m Namibians have N$25 000 or less in the bank

AT the end of December last year, over 1,3 million Namibians had about N$25 000 or less in their bank accounts, and inflation is to blame, analysts say.
This N$25 000 excludes money set aside as savings in pension funds, deposits made in other currencies, and funds held in unit trust accounts.

The figure was revealed by the Namibia Deposit Guarantee Authority (NDGA) yesterday as it launched its 2022 annual report in Windhoek.
Reacting to this, the head of research at High Economic Intelligence, Salomo Hei, said this was a true reflection of how inflation has eroded the disposable income of both businesses and individuals.
Inflation in Namibia settled at 6,9% in December, and averaged to 6,4% in 2022.

Hei said this high level of inflation was worrying as it was high above the rate at which salaries and any other reasonable income was growing, and will by all means cut off some individual and business earnings.
“Also, people and businesses are in debt, and the cost of living has just made it very difficult to have floating cash sitting in the bank,” he said.
Hei said while it could be that some people have moved their cash out of the bank to earn better interest in other asset classes, this possibility remains minimal.

These 1,3 million individuals have a combined N$3 billion in the bank, and represent only 4,9% of the total deposits held at commercial banks, which was to the tune of N$61,7 billion at the end of last year.
Launched in 2021, the NDGA released its third annual report for the financial year which ended on 31 December 2022, which shows that the Deposit Guarantee Fund has increased in value to N$16,2 million.
The authority was established primarily to administer the Deposit Guarantee Scheme.

This scheme aims to protect depositors from the loss of their deposits by compensating them in the unlikely event of a commercial bank failure.
This ultimately enhances consumer protection, while also improving financial stability.
The scheme adopts a guaranteed coverage limit of N$25 000, which is currently in effect, and at this coverage limit, the scheme covers more than 90% of current depositors.
There are close to 1,5 million individuals and businesses whose funds are with commercial banks, and 135 740 of them are responsible for the bigger bulk of deposits.

The 135 740 have deposits in the banks valued at N$58,7 billion, of which only 9,1% are covered should a fully fledged bank run occur.
All Namibian banking institutions and branches of foreign banks and building societies are required to be members of the Deposit Guarantee Scheme and pay annual premiums to the scheme.
Last year they paid N$5,2 million to the authority.
Earned interest on the N$16,2 million fund balance was recorded at N$790 963 for the full 2022 financial year.
Speaking at the launch of the annual report, NDGA head Florette Nakusera said despite some banking failures in the United States, the local banking industry remained resilient.

“The industry reported good balance sheet growth, strong capital, profitability and adequate liquidity levels. Moreover, the steady economic recovery during the reporting year resulted in the industry recording elevated growth in earnings.
“The banking industry thus remained well capitalised, with a notable improvement in asset quality and total income during the review period,” she said.
The chairperson of the NDGA board and deputy governor of the Bank of Namibia, Ebson Uanguta, said the release of the annual report indicates the authority is well accountable to the state, member institutions and the public.

The banking sector in Namibia comprises nine authorised banking institutions, which are categorised as seven commercial banking institutions, a branch of a foreign banking institution and a representative office.
These banking institutions are the primary mobilisers of funds for the public and the main source of financing for business operations and economic activities in Namibia.

They include Bank Windhoek Namibia Limited, First National Bank Namibia Limited, Standard Bank Namibia Limited, Nedbank Namibia Limited, Bank BIC Namibia Limited, Trustco Bank Namibia Limited, Letshego Bank Namibia Limited (a micro-finance banking institution) and Banco Atlántico (a branch of a foreign banking institution).
These entities have a combined asset base of N$164 billion.
Demand deposits account for the largest portion of non-bank funding, while negotiable certificates of deposit and fixed and notice deposits lagged.

Demand deposits increased from N$61,2 billion to N$63,5 billion during 2022, while negotiable certificates of deposits stood at N$23,3 billion.
Fixed notice deposits were at N$22,9 billion.
Email: lazarus@namibian.com.na
Twitter: @Lasarus_A

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