Cash is still king in Namibia despite the fact that most countries in the world are increasingly turning to cards and apps for payments during the pandemic.
Statistics from the Bank of Namibia revealed that Namibians carried out over 50 million ATM withdrawals in 2021 worth N$36.9 billion.
The central bank noted that Namibians continue to heavily rely on cash transactions despite the existence of cashless digital platforms, with N$4.63 billion having been the total currency in circulation as at 31 December 2021.
“These figures illustrate my point that Namibians remain heavily cash reliant despite the advancements in digital payments. It is also indicative of the symbiotic relationship between cash and cashless transactions, meaning the two have become intertwined and thus cash will not be displaced in the near future,” Bank of Namibia Governor Johannes Gawaxab said on Friday.
He said the emergence of COVID-19 had also driven up demand for cash, with a 4.3% increase recorded in the amount of currency in circulation, while 2021 recorded a slight reduction of 1.7%.
“Although Namibians increasingly transact electronically through digital payment channels, the adage that ‘Cash is KING’ is still valid for Namibia. One possible explanation for this apparent paradox is the increasing demand for banknotes in times of upheaval and uncertainty. When Covid-19 hit, people turned to cash as a tool to manage uncertainty and be able to conduct transactions despite (for many) having moved to remote areas where swiping cards is not always possible. In 2021, the slight reduction is partially attributed to a degree of normalisation following less severe restrictions and progress with adjustment to the pandemic,” the BoN Governor said.
Gawaxab said despite the observed trends in the country, transforming the country’s financial system and innovative payment solutions still remain relevant.
“In fact, we welcome innovations on this front as they can ensure meaningful participation of our people, especially those in the informal economy, SMEs, and rural Namibia. Like most central banks, the Bank of Namibia is researching Central Bank Digital Currencies (CBDCs). Money is undergoing one of the biggest changes since the Chinese introduced paper currency over 1 000 years ago. The number and value of cryptocurrencies have surged raising the possibility of a financial world operating outside the control of governments and central banks. There is thus a need for central banks to have a clear digital currency agenda to reinforce Central Bank authority over money and maintain control over the payment system,” he said.
This comes as BoN launched a modified N$10 banknote – the first note to be signed by Gawaxab.
“Over the years, the Bank has issued notes and coins and will continue to execute this task of national currency production in a responsible and cost efficient way to ensure that costs are fully absorbed by revenue. The replenishment of the modified N$10 banknote was informed by existing currency stock levels which are influenced by public demand for a particular denomination,” Governor said.
The N$10 banknote denomination, according to the central bank, is one of the banknotes with the highest circulation velocity (also known as the return frequency).
In 2021, the N$200 banknote was the most circulated with a volume of 14.3 million pieces, while the N$10 banknote was the second most circulated note with a volume of 10.2 million pieces.
