Namibia’s financial sector is facing increased risks from cyberattacks, climate change and growing exposure to government debt, despite banks and other financial institutions remaining financially stable during the first half of 2026.
The Bank of Namibia (BoN) and the Namibia Financial Institutions Supervisory Authority (NAMFISA), in their October 2026 Financial Stability Report, warned that these emerging threats could place pressure on the country’s financial system, particularly as global economic uncertainty and domestic vulnerabilities persist.
The report assessed overall financial stability risks as low to moderate but identified climate-related threats and cyber risks as having a high probability of materialising during the final quarter of 2026.
Cyber vulnerabilities detected in Namibia increased by 39% to 513,921 during the second quarter of 2026, while reported cyber events rose by 56% to 109,593 over the same period, according to figures cited from the Communications Regulatory Authority of Namibia.
The report warned that increasing digitalisation and interconnected financial systems could expose financial institutions to cyber threats, potentially disrupting financial services and payment systems.
Cyber risks were assessed as having a high probability of materialising, although their potential impact on financial stability was classified as moderate.
Climate-related risks have also increased, with the anticipated strengthening of El Niño raising concerns about below-normal rainfall and higher temperatures during the 2026/27 rainy season.
The report warned that drought conditions could reduce agricultural production, weaken household and business incomes and affect borrowers’ ability to repay loans, potentially increasing credit losses in the banking sector.
Although banks’ direct exposure to agriculture declined from 5.1% of total loans and advances in the fourth quarter of 2025 to 4.8% by June 2026, the report cautioned that indirect risks could emerge through higher food prices and weaker economic activity.
Meanwhile, the report identified growing links between commercial banks and government debt as another source of financial vulnerability.
Banks’ holdings of government securities increased from 14.6% of total banking sector assets in December 2025 to 16.1% by June 2026, exposing the sector to potential shocks arising from government finances.
Retirement funds’ exposure to government securities also reached 14.8% of total assets, slightly above the historical upper quartile of 14.7%.
The report assessed the probability of risks arising from the relationship between government finances and financial institutions as moderate, with a potentially high impact on financial stability.
Despite these concerns, Namibia’s banking sector remained well-capitalised, profitable and liquid during the first half of 2026.
The sector’s capital adequacy ratio increased from 17.3% to 18.6%, while the ratio of non-performing loans declined from 4.3% to 4.0%, indicating an improvement in loan repayment performance.
Stress tests conducted by the central bank also indicated that commercial banks maintained sufficient capital buffers to absorb potential losses under adverse economic conditions.
The non-bank financial sector similarly remained stable, with total assets increasing by 4.0% to N$575 billion during the first half of 2026.
However, the retirement fund sector continued to face structural pressures, with benefit payments of N$8.6 billion exceeding contributions of N$6.8 billion during the period.
The report said the imbalance reflected a maturing retirement system rather than immediate financial distress, although prolonged weak investment returns could affect funds’ ability to accumulate assets over time.
The Financial System Stability Committee concluded that Namibia’s financial system remained resilient but stressed the need for continued monitoring of emerging risks.
The report also noted that Namibia’s removal from the Financial Action Task Force greylist in June 2026 had reduced risks associated with international financial transactions and regulatory compliance.
