The Old Mutual Financial Services Monitor (OMFSM) report recently revealed that approximately 40% of working Namibians currently hold personal loans at various banking institutions countrywide.
The study indicates that these loans are mostly used to cover unforeseen needs (47%), pay off other debts (38%), manage daily spending (36%) or make specific purchases.
The top reasons for taking out personal loans include education expenditures, household maintenance, burial expenses, and medical and health-related spending.
The study offers invaluable insights by focusing on a key cohort in society, namely employed Namibians, who account for approximately 28% of the Namibian population between the ages of 18 to 65, with an income of N$3 000 or more, and who live in urban and peri-urban areas.
The OMFSM states that only one in four, or 24%, of working Namibians expressed confidence in the country’s economic prospects, a clear indicator that most citizens are feeling the weight of a sluggish economy.
The report highlights a sense of optimism among Namibians regarding their personal financial outlook, and adds that about 58% of Namibians believe their financial outlook will improve soon. That is a clear sign that despite the economic upheavals, there is a strong sense of resilience among Namibians.
The report further shows that most working Namibians have experienced a decline in their income as a significant proportion of individuals (75%) report earning the same or less income than they did three years ago, prior to the pandemic.
The report further highlighted that 42% of Namibian consumers continue to experience significant financial stress, with lower-income earners more susceptible to financial stress because many must provide financial support to extended family members due to the lingering impact of the pandemic.
Income security is identified as the top priority for Namibian consumers, followed by cost-cutting measures, and paying off debt.
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.
- Nampa