The Bank of Namibia (BoN) says high fees and charges associated with everyday banking interactions discourage customers from utilising formal financial institutions.
Speaking at a lecture at the NUST Eenhana satellite campus, BoN Governor Johannes !Gawaxab also identified travelling long distances to access branches or ATMs adding further cost and discouraging potential customers to the formal banking system.
“High fees and charges and charges in day-to-day interactions with the formal financial system may deter consumers from engaging with formal institutions, contributing to their exclusion and increased participation in the informal sector and underground economy,” he said.
The Governor also said the point of financial inclusion is to provide access to banking services for people and businesses, this includes savings accounts, loans and insurance, highlighting studies that show that financial inclusion can improve people’s health, education, and ability to feed themselves and their families.
He further explained that while the country boasts a 78% financial inclusion rate, a significant disparity still exists with nearly 60% of the rural population lacking access to formal financial services and still rely primarily on cash for income and payments.
“While Namibia has made significant strides in ensuring financial inclusion is estimated at 78% such efforts have mostly contributed to access in terms of formal account ownership, but not yielded broad based results on usage, especially in the rural area,” he said.
The Governor also said that the apex bank aims to bridge this gap with the launch of its Instant Payment Project in 2025, an initiative aimed at providing efficient, instant, and inclusive transactions accessible on any device, including non-smartphones.
The technology is expected to significantly reduce the time and cost associated with traditional banking, making financial services more accessible to rural and informal sectors.
“The instant payment solution focuses specifically on enhancing financial inclusion with a particular focus on rural areas and the informal sector, thereby reducing cash dependency and increasing transactional efficiency,” !Gawaxab said.
