Low income limits financial gains

Namibia's financial sector should stop judging success by the number of people with bank accounts and instead measure whether financial services are making households more financially resilient, according to Simonis Storm.

In a policy analysis of the 2025 Namibia Financial Inclusion Survey (NFIS), Simonis Storm said Namibia’s financial inclusion agenda has entered a new phase. While expanding access remains important, it says the greater challenge is ensuring financial products help people save, manage financial shocks and build long-term financial security.

"The next phase of Namibia's inclusion strategy must shift from counting products to measuring whether those products are active, affordable, suitable and capable of strengthening household resilience," the report said.

Simonis Storm said headline financial inclusion figures paint an incomplete picture of household finances.

"A person may be formally included and remain financially insecure," it said, noting that many accounts simply receive salaries, pensions or remittances without helping households accumulate savings or strengthen their financial position.

The report identified declining formal savings as one of the clearest warning signs. While access to financial services has broadened, the proportion of adults saving through formal institutions has fallen to 53.2% from 60% in 2017. Insurance coverage also remains limited at 32.7%, while many households continue to rely on relatives or friends, rather than regulated financial institutions, when faced with unexpected expenses.

According to Simonis Storm, these findings suggest Namibia has made greater progress in expanding access than in improving financial resilience.

Simonis Storm said weak household incomes remain the biggest structural constraint. More than half of adults earn N$2 000 or less a month, leaving limited scope to save, purchase insurance or use credit to build wealth. As a result, it says financial-sector reforms should be accompanied by policies that support employment, productivity and income growth.

Rather than relying primarily on the national financial inclusion rate, Simonis Storm recommended regulators begin monitoring indicators that reflect how people actually use financial services. These include active account usage, emergency savings, insurance coverage, debt stress, financial capability and access to financial services in rural areas.

It also proposed a series of reforms aimed at deepening financial resilience. Among them are standardised banking fee comparisons, expanded rural banking agents, stronger debt advisory services, and low-cost emergency savings products. The report further calls for affordable microinsurance, agricultural lending tailored to seasonal farming income, supported by partial credit guarantees and crop or livestock insurance.

To strengthen long-term participation in the financial system, Simonis Storm recommended introducing age-appropriate savings products for young people from the age of 16 and enhancing digital consumer protection to combat fraud and build confidence in electronic financial services.