Many Namibians still keep cash 'under the mattress'

In a world increasingly driven by digital transactions, the comfort of cash remains a steadfast companion for many Namibians.

About 67% of Namibian adults held a bank account in 2017, according to the World Bank. This indicates that a sizable portion of the population lacks access to banking services.

The percentage of Namibians who save in banks as opposed to those who keep cash at home is a significant trend in the way Namibians handle their savings, according to a report by the Namibia Statistics Agency.



Compared to 47% in 2021, a significant 30% of Namibians choose to keep their savings in cash at home, or, as the saying goes, "under the mattress."



Interestingly, convenience remains the primary reason for unbanked cash savings, with a sizable section of the population still relying on cash savings. These figures mirror a broader trend in financial behaviour, indicating a gradual transition towards formal banking.



This includes avoiding banking fees and having easy access. Typically, people hold small percentages of the overall funds at home. People keep cash on hand for a variety of reasons. Namibians save money by keeping cash on hand, which is regarded as a safer alternative.



Many Namibians may opt to keep cash rather than subject it to fees and interest because they have limited disposable income in the current economic climate. In order to pay for transportation, groceries, airtime and other necessities, many Namibians require cash on a daily basis.



Using cash instead of other options is more convenient when dealing with emergencies, which doesn't require too much cash.



Vital role, risks



According to the Bank of Namibia (BoN), cash continues to play a vital role in the country’s financial system, even as digital payments become more popular. In 2023, over N$5.2 billion was in circulation, highlighting the ongoing importance of cash for everyday transactions. BoN emphasises that cash remains a convenient and accessible option for everyone, whether it’s for handling minor daily expenses, paying for transport, or purchasing food. However, police reports indicate that keeping large amounts of money at home or on business premises is not particularly safe.



While there are no laws against holding cash in this manner, it poses significant security risks. In Namibia, informal traders and low-income workers frequently rely on cash because they do not have bank accounts or because banking services are expensive. Having cash on hand has many benefits, including being accessible in an emergency when electronics or automated teller machines may not be working. Additionally, cash allows for immediate use without requiring electronic transactions.



Cash is still an essential component of daily life for many Namibians, particularly those without access to bank cards or online banking services. This is especially true for the vast majority of cash-based informal traders. For many people in Namibia, switching to electronic channels will take time. According to BoN statistics, cash is still crucial. Commercial banks received N$10 billion in banknotes in 2023. The volume of coins issued increased from N$14 million in 2022 to N$18 million in 2023, reflecting the consistent need for cash.



The phrase 'cash is king' frequently highlights the importance of having liquid assets in the world of finance, especially during challenging economic times.



The phrase suggests that the most valuable assets are cash or assets that can easily convert into cash without significant value loss, providing stability and flexibility in situations where other funding sources may not be available. This expression, which emphasises the importance of cash in preserving financial stability and taking advantage of opportunities during market downturns, gained especially significant popularity following the 1987 stock market crisis. Warren Buffet once said that "cash is to a business as oxygen is to an individual: never thought about when it is present, the only thing in mind when it is absent.”



*Elsie Kambala is the chief operating officer and head of unit trusts of Old Mutual Investment Group, Old Mutual Namibia.