Brigitte Weidlich
29 May 2008
THE number of Namibians who do not have bank accounts has not increased over the past four years and hovers around 51 per cent, a new survey reveals.
The proportion of adults with bank accounts increased from 44,9 per cent in 2004, when the first survey was conducted, to 45,3 per cent in 2007.
However, the data also show that many people have dropped out of the financial system, accounting for the stagnant levels of financial inclusion.
The reasons for not having bank accounts are related to people's income and the perceived inability to meet entry requirements like being employed and being in possession of an identity document.
In 2007, 45,3 per cent of the adult population had bank accounts, another 1,5 per cent used some other kind of financial product such as insurance, and a further 1,5 per cent used only informal providers such as cash loans.
This means that 48,3 per cent of the Namibian adult population is financially served and 51,7 per cent is financially excluded.
However, more than half the adult population still does not use any type of financial service, either formal or informal, according to the findings of the FinScope Namibia survey.
According to the findings, a number of innovative entry-level products have been launched recently, such as Easy Save, Card Wise, First Save and the NamPost Savings Account smart card.
"Although people are using these products, the uptake of has been low: 53,8 per cent of respondents had never heard of them, raising the question of whether these products are really reaching the unbanked market," said Christiaan Keulder of Research Facilitation Services, which conducted the research for FinMark Trust.
The survey suggests a combination of marketing inefficiencies and a lack of financial literacy as reasons for failing to bring more people into the financial sector.
This points to the importance of consumer education to change traditional views of the financial system if innovations in product design and delivery are to succeed in lifting levels of financial inclusion.
"The perceived inability to meet requirements, despite the introduction of entry-level products with less stringent terms, suggests a gap between the marketing of products to consumers, and consumers understanding of these products," Keulder added during his presentation.
Approached for comment, Marlize Horn, Senior Marketing and Communications manager at Bank Windhoek, said the bank might review its marketing strategy to reach the unbanked sector of the population.
Asked whether advertising bank products mostly in English might constitute a language barrier, Horn said: "This we could look into."
The use of banks and banking products in Namibia is fairly traditional in that they are mainly used to save money, to receive money and to make payments.
The survey raises the need for appropriate alternative services.
With vast areas and a low population density, alternatives to traditional banking are needed, such as branchless banking and mobile phone banking.
However, people do not understand cellphone banking, and do not trust it, Keulder pointed out.
Consumers appear reluctant to use cellphones to request statements, pay for utilities, move money between accounts or make transfers.
People still prefer to go to the branch or to use an ATM.
"From a policy perspective, the issues therefore are both supply and demand side.
The problem is not about putting more products on the market but about getting consumers to understand these products, and what benefit they can derive from them," says Keulder.
The survey also highlights the untapped opportunity for insurance products.
The events people say put their financial stability at risk are drought and destruction of property, and loss of income due to the illness or death of a wage earner in the family.
The uptake of insurance products is low and this gap is an important challenge for the insurance industry.
FinScope Namibia was first carried out in 2004 and the 2007 survey was conducted by the Namibian market research firm Research Facilitation Services on behalf of FinMark Trust and syndicate members.
Face-to-face interviews were conducted with 1 200 Namibians aged 16 years and older.
The 2007 Namibian syndicate members are the Bank of Namibia, Bank Windhoek, Capricorn Investment Holdings, First National Bank Namibia, Nedbank, Old Mutual Namibia, Namfisa and Sanlam Namibia.
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