WINDHOEK – Namibians have a propensity to accrue debts and pay very little attention to saving, while the availability of formal physical banking infrastructure in the country remains low. This is according to a new study by local brokerage and market research firm, Simonis Storm Securities.

Namibian consumers were found to have a propensity to acquire debt and the propensity to save reached a trough in 2009.
Also, noticeable is the rise in the propensity to accrue debt after the trough, increasing to 10 percent of disposable income in 2011 from 1 percent in 2009.
Meanwhile, the propensity to save failed to increase by the same proportion as that of incurring debts. Besides contractual savings, Namibians have a poor savings culture.
Low savings levels constrain households presenting the potential for them to turn to debt facilities to finance consumption and overextend themselves in the process, the study found.

The study shows that banks close a branch for every new branch they open.  “Infrastructure expansion has not been constantly progressive. Although there have been years in which 20 branches were opened in a single year, in 2006, nine branches were closed,” the study says. However, the general level of Namibians with access to formal banking facilities is low and inadequate when compared to international trends.

Considering the very slow progress in penetration levels, the study compared growth in infrastructure and growth in earnings of the sector. It found that between 2005 and 2011, growth in agencies and branches averaged 8 percent and 2 percent respectively, while earnings growth averaged 18 percent.

“The difference in growth rates again re-enforces that there are still grounds to be covered.
“We hope the sector will invest portions of their earnings to close the gap and grow their client base and earnings,” the firm noted.
In addition, when looking at fixed and alternative banking infrastructure measures, the level of penetration is around 50 percent, while 27 percent of the population is unbanked.

“This suggests that banks have failed to further grow their earnings by taking advantage of these levels, by first investing in infrastructure and reaping the rewards later,” said the study.
Nevertheless, the sector has expanded more than the economy, which portrays a trend of following cyclical patterns and is in a sound financial position from a balance sheet perspective.

Growing at a higher rate than the overall economy is one of the characteristics of banks in emerging markets.
The study looked at Standard Bank, First National Bank, Nedbank and Bank Windhoek operations.
In 2011, banks continued to have positive liquidity positions, with Standard Bank Limited leading the pack while FNB Namibia had the edge in terms of efficiency. Nedbank was found to have the most solid asset base.