By Erastus Kalenga Hamunjela
There is a cruelty to poverty that does not get talked about enough. It costs more to have less. Terribly so, and it strips you of everything, even dignity and self-worth.
And it charges interest. It compounds against you the way wealth compounds for others.
Economists have a name for this. They call it the poverty premium, the well documented pattern where low income households pay more than everyone else for the same basic goods, the same credit, the same services.
It is not a theory about bad choices. It is a structural feature of how markets treat people with less, and once you know it exists you start seeing it everywhere.
When capital is tight, two forces work against you, inflation and idle cash. Inflation erodes the purchasing power of whatever you have managed to keep.
Idle cash in a low interest savings account is actually losing value in real terms. Building wealth with limited funds is not impossible, but it requires a strategic shift, prioritising debt elimination and automating micro investments to combat the rising cost of living.
Before you invest a single dollar, you must neutralise what is bleeding you. High interest debt in Namibia, store accounts at furniture retailers charging 20% to 25% annual interest, microloans from cash lenders at rates that can exceed 30%, credit cards with rates above prime, carries costs that will easily outpace any reasonable return you could earn in a unit trust.
The mathematics are unforgiving. Paying 22% interest on a clothing account while hoping to earn 9% in a balanced fund is not diversification. It is a guaranteed loss of 13% per year. So the first investment you make is not in the market. It is in your own freedom.
Identify your most expensive debt, the one charging the highest interest rate, and direct every available dollar to extinguishing it aggressively.
Pay the minimum on the rest. Once that first debt is dead, roll its payment onto the next most expensive. This is the debt avalanche method, and it is the most mathematically efficient way out of the hole.
Simultaneously, build a micro emergency fund. Target N$5,000 N$15 000, enough to absorb a burst tyre, an unexpected doctor’s visit, or a family emergency that would otherwise force you go back onto a loan shark’s doorstep.
This fund is not an investment. It is the insurance policy that protects your future investments from being liquidated by a single bad week. Park it in a separate, easily accessible account, not your main transactional account, so it remains visible but not tempting.
Once the expensive debt is gone and the buffer is in place, the instinct is to wait. To hold the money close.
To tell yourself you will start investing properly when things ease up, when the salary improves, when there is something spare. I hear it constantly, and I understand it completely. But it is the single most expensive belief a person can hold, and I want to explain exactly why.
Ask yourself who can actually afford to leave money sitting still. It is not the person earning six thousand a month. It is the person earning sixty thousand.
They can park a large sum in an account paying two or three percent while inflation runs higher, lose value, and never really feel it. They can make a bad decision and absorb it. Their margin for error is wide because their cushion is thick.
The person with very little has no cushion at all. Every dollar they hold has to work as hard as it can, precisely because there are so few of them.
Leaving that money to earn two percent while prices climb faster is not caution. It is a slow, invisible loss, and it is a loss the wealthy can shrug off and the poor genuinely cannot afford. Idle money is a luxury good.
It is something only people with spare money can afford to own, and yet it is almost always the poor who end up holding it.
There is also a reason nobody at your bank is in a hurry to explain any of this to you. Look at what happens to the money you leave in a savings account.
The bank pays you two or three percent for it. Then it lends that same money out, to someone buying a car, or running a store account, or taking a personal loan, at rates well above ten percent.
The gap between the two is the bank’s margin, and it is one of the safest, most reliable profits in the entire economy. So when your money sits idle, it is not doing nothing. It is working extremely hard. Just not for you.
So it is not that we are too broke to invest. It is that we are too broke not to.
And there is one more thing, the thing thats the most important, and it is the only asset in this entire discussion that is not distributed by income. Time.
The wealthy cannot buy more of it. A twenty three year old cleaner and a twenty three year old executive own exactly the same amount, and it is the single greatest advantage a poor young person has.
It is also the one they are most often persuaded to give away, because waiting feels responsible, and every year of waiting is a year that compounding cannot get back.
Look at what that actually means in numbers. Start with a once off N$1,000, add N$500 a month, and increase that monthly amount by just 2% a year, roughly in line with your own salary increases so it never starts to pinch.
Over eighteen years that becomes somewhere between N$345,000 and N$433,000, from total contributions of about N$129,000. By year eighteen your monthly contribution has crept up to only N$714, which is barely noticeable when it has climbed by two percent at a time.
And here is where it becomes something else entirely. This is exactly what a parent can do from the day a child is born.
Open the account at birth, contribute steadily, and by the time that child turns eighteen there is a third of a million dollars waiting for them.
Give it until twenty one and it reaches between N$496,000 and N$651,000, of which more than N$340,000 is pure growth. You will have contributed roughly N$155,000. The market will have contributed the rest.
Read that again, because the striking part is not the total. It is the gap between what went in and what came out. More than twice as much growth as contribution, and the only thing that made it possible was starting early and leaving it alone.
The money you put in barely changes. What changes is how long you let it work. That is not a trick and it is not a scheme. It is arithmetic, and it is available to anyone.
There are unit trusts in Namibia that will open on a lump sum of around N$300, or a monthly contribution of about N$100.
A hundred dollars a month is less than many of us spend on airtime without thinking, or on takeaways we will not remember by Friday.
It is not a fortune being demanded of you. It is a redirection of money already leaving your hands, sent somewhere it grows instead of somewhere it vanishes.
I want to be honest about the limits of this, because I am tired of watching people be sold discipline as a cure for structural problems. Investing will not fix poverty.
No amount of budgeting compensates for a wage that does not cover rent and food and transport, and anyone who tells a struggling person that they simply need better habits is not being helpful. Wages, unemployment and the cost of housing are not personal failings and no unit trust will solve them.
But within the space each of us does control, there is a real difference between money that works and money that leaks. And the leaks are where the poverty premium does its damage.
The small sachet instead of the big box. The daily taxi fare instead of the monthly pass. The furniture paid off at three times its price.
The cash loan taken because there was no buffer. Every one of those is poverty charging you interest, and the only way to stop paying it is to build, slowly, the thing that makes you unnecessary to lenders.
That is what this is really about. Not getting rich. Getting free.
The tragedy is how few people are ever told any of this. They are told to save, vaguely, into accounts that lose value. They are sold products nobody explains.
They are surrounded by schemes promising to turn five thousand into twenty thousand in a week, and those schemes thrive precisely because nobody ever showed them what real investing looks like.
Being poor is expensive. That is simply true, and it is not a moral failing of the people living it. But the response to that truth is not to wait until we are less poor before we begin.
It is to kill the debt that compounds against you, build the buffer that keeps you off the lender’s doorstep, and then start putting something aside, however small it feels, and let time do the work that our salaries alone never will.
Disclaimer: The information provided in this article is for educational and informational purposes only. It does not constitute financial, investment, legal, or professional advice. Readers should not rely on this content as the sole basis for making investment decisions and are encouraged to seek independent professional advice before acting on any information contained herein.
*Erastus Kalenga Hamunjela is a Namibian investment researcher and financial markets commentator with a strong focus on capital markets, investment literacy, and data driven financial education.
For Educational Investments, Business Consultation & Collaborations: erastuskalengier@gmail.com
