The Bank of Namibia (BoN) has found that nearly 84% of Namibians still prefer using cash as a mode of payment.
The Central Bank said it will not abandon cash for cashless transactions despite a heightened global shift to digitisation.
BoN Governor Johannes !Gawaxab said in 2023, the Bank carried out a Consumer Payments Choice and Behaviour Survey, validating the cash phenomenon.
“It is evident from this that many of our people continue to use cash both coins and banknotes, as the primary form of payment in settling their transactions, conducting their business activities, and meeting social obligations. The Bank’s Cash Management Strategy therefore aims to ensure that cash remains widely available and accepted as both a means of payment and a store of value,” !Gawaxab said.
In addition, he said Namibia will not entirely move away from cash transactions even though the world is tending to be more digital and faster. He said this raises the question on whether paper money will become an outdated payment method.
“The short answer is no! In our journey towards a more digital world, we must acknowledge the enduring importance of physical banknotes. They serve as a lifeline for millions who lack access to digital banking services, ensuring financial inclusion and accessibility for all,” !Gawaxab said while launching a new N$100 banknote at Lüderitz.
“Consider, for a moment, the weight of a banknote in your hand—the crispness of its edges, the texture of its paper. It embodies trust and signifies the exchange of value between individuals, offering reliability and security amidst a digital age dominated by algorithms and encryption keys.
“In times of crisis, be it natural disasters, economic downturns, or unforeseen emergencies, the usage of physical cash often experiences a notable increase. This is because individuals tend to revert to the tangible security of physical currency, thus reflecting a fundamental aspect of human behaviour in times of uncertainty,” he added.
!Gawaxab also said the same reality is evident when digital systems falter or access to electronic forms of payment becomes compromised; henceforth cash emerges as a reliable means of transaction, offering a sense of immediate reassurance and stability.
“This resilience was vividly demonstrated during the COVID-19 lockdown period, where Namibia experienced a surge in cash demand. In 2021, the total value of currency in circulation rose from N$4.71 billion in 2020 to N$4.76 billion, underscoring the enduring significance of physical currency in ensuring financial resilience during challenging times,” !Gawaxab said.
“Two years later cash remains king. In 2023, the value of currency in circulation increased from N$4.9 billion in 2022 to N$5.2 billion in 2023, equating to a 7.6% increase, being the highest ever recorded in the history of the Bank. The demand for cash in circulation was necessitated by increased economic activities during the last quarter of 2023.”
The factors that normally influence the cash in circulation among others entail interest rates, political stability, economic growth, and inflation, !Gawaxab said.
The regions with highest cash volumes are Ohangwena, Omusati, Oshana, Oshikoto, Kavango East, Kavango West, Kunene, Zambezi, Otjozondjupa, Omaheke and //Kharas.
“Worth noting is that the //Kharas Region accounts for around 10% of the total currency in circulation (N$500 million), whereas the physical cash in the public domain within Lüderitz itself, is around N$120 million,” he said.
He further reiterated that the availability and acceptance of cash will remain critical for financial inclusion in vulnerable segments as a social imperative.
“Namibian banknotes and coins hold legal tender status, offering direct access to public money for all. So, let us not dismiss the humble banknote as a relic of the past, but rather embrace it as a cornerstone of our present and future prosperity,” the Governor said.
He highlighted that BoN remains committed to ensuring that banknotes and coins are relevant.
“The Bank needs to ensure our currency is counterfeit resilient to maintain the public’s trust and the integrity of our currency. As you might be aware, the first Namibian banknotes and coins series were issued in 1993, marking 30 years in circulation,” he said.
“In May 2012, the Bank issued the second family of banknotes with state-of-the-art security features, which are currently in circulation. However, the coins have not been upgraded since its initial issuance in 1993.”
