An Old Mutual Financial Services Monitor (OMFSM) report estimates that approximately 40% of working Namibians currently hold personal loans.
The loans, according to a recent report, are often used for unexpected expenses, debt consolidation, day-to-day expenses, or specific purchases.
The Old Mutual report notes that education costs, household maintenance, funeral expenses, and medical and health-related expenses are the primary reasons for individuals taking out personal loans.
Surprisingly, amidst these grim economic indicators, the report reveals a contrasting sentiment regarding personal financial outlook that about 58% of Namibians are optimistic about their individual financial situations, believing that their financial prospects will improve in the near future.
This is a stark contrast to the 24% of working Namibians who express confidence in the country’s financial future.
The report, however, notes that 75% of individuals report earning the same or less income than they did three years ago, before the pandemic. This decline in income represents a significant challenge for most of the workforce.
The report also identifies income security as the top priority for Namibian consumers, followed by cost-cutting measures and paying off debt. Interestingly, emergency savings have gained importance in 2023, with a 12% increase since 2021.
“This is indicative of a growing awareness of the importance of financial preparedness. Household spending is heavily skewed toward consumption/living expenses (48%), with debt servicing (19%) constituting a significant portion of expenditure, equal to that of savings,” the report reads.
However, less than half of all workers are actively saving for retirement, with low confidence in the adequacy of their retirement savings. It is reported that most Namibians expect their children or the government to provide support during retirement.
“Despite the importance of retirement savings, it is not the primary savings goal, particularly among younger and less affluent individuals. Emergency savings, education, a better home, and family security rank higher on the list of financial priorities.”
The report further reveals that almost half of Namibian consumers rely on a single source of income, while 29% engage in additional side jobs or contracting work, and almost a quarter utilise their savings as a source of income.
“This diversity in income sources highlights the adaptive strategies of Namibians to navigate economic challenges,” it states.
The Old Mutual Financial Services Monitor provides crucial insights into the financial landscape of working Namibians, shedding light on the challenges they face, the significance of financial security, and the need for accessible and relevant financial information.
The study, focuses on a key cohort in society, namely employed Namibians, who account for about 28% of the Namibian population, aged between 18 to 65 with an income of N$3 000 or more and reside in urban and peri urban areas.
