Understanding Namibia’s financial landscape
Insights from the Old Mutual Financial Services Monitor
Old Mutual Namibia launched its Financial Services Monitor (OMFSM) earlier this week. This is an annual study which offers invaluable insights by focusing 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.According to the OMFSM, only 1 in 4 (24%) working Namibians express confidence in the country’s economic prospects. This is a clear indicator that most Namibians are feeling the weight of a sluggish economy.
Despite these macroeconomic challenges, the report highlights a sense of optimism among Namibians regarding their personal financial outlook. About 58% of Namibians believe their financial outlook will improve soon – a clear sign that despite the economic upheavals, there is a strong sense of resilience among Namibians.
Shift in personal earnings
However, the financial reality for many working Namibians is sobering. A significant proportion of individuals (75%) report earning the same or less income than they did three years ago, before the pandemic. In real terms, this means most working Namibians have experienced a decline in their income.
Furthermore, the survey highlights that 42% of Namibian consumers continue to experience significant financial stress. Notably, lower-income earners are more susceptible to financial stress, with many having to provide financial support to extended family members due to the lingering impact of the pandemic. An astonishing 6 in 10 (60%) Namibians find themselves in the "sandwich generation," financially supporting both children and adult dependents.
Income security is identified as the priority for Namibian consumers, followed by cost-cutting measures and paying off debt. Notably, emergency savings have gained importance in 2023, with a 12% increase since 2021, demonstrating a heightened awareness of the importance of financial preparedness.
Household income spending
The survey highlights that consumption/living expenses (48%) account for nearly half of Namibian household spending, with debt servicing (19%) making up a significant portion of expenditure, equal to that of savings. (Note that 27% indicate they are struggling to manage their debt.)
A striking finding is that about 40% of working Namibians currently have personal loans. These loans are primarily used to cover unexpected expenses (47%), pay off other debts (38%), manage day-to-day expenses (36%), or make specific purchases. Education costs, household maintenance, funeral expenses, and medical and health-related expenses are the primary reasons for taking out personal loans.
The report further reveals that approximately half of Namibian consumers (49%) rely on a single source of income. 29% are considered poly jobbers or are engaged in additional side jobs or contracting work, while almost a quarter use their savings as a source of income.
Retirement savings
When it comes to retirement savings, the report suggests that there is room for improvement. Less than half of all workers are actively saving for retirement, and there is low confidence in the adequacy of their retirement savings. Despite a significant number of respondents not taking any action to save for retirement, there is an expectation that children or the government will provide support during retirement.
In terms of financial goals, emergency savings, saving for children's education, saving for a better home, and securing their family's future are the top priorities among working Namibians. Retirement saving, although important, is not the primary savings goal, especially among younger and less affluent individuals.
“In these challenging times, Old Mutual Namibia is dedicated to not only understanding the financial landscape but also actively addressing it. Through initiatives like the Old Mutual Sustainable Economic & Empowerment Drive (OM SEED 2.0), we are empowering entrepreneurs to create employment opportunities. Furthermore, the OMF Indaba serves as a vital platform for fostering important conversations, ensuring that the voices of our community are heard,” Mignon du Preez, Old Mutual Namibia Group Marketing, Public Affairs and Sustainability Executive, said.
“Our internship programme plays a significant role in providing meaningful employment for first-time graduates as they embark on their journey into the job market.
The Old Mutual Financial Services Monitor sheds light on the challenges faced by working Namibians and underscores the importance of these initiatives in improving financial well-being within our nation.”