• Poverty Alleviation in Rural Namibia through Improved Access to Financial Services

This paper analysed whether improved access to financial services could contribute to poverty alleviation strategies among the rural population in Namibia.

Using data from the FinScope survey conducted in 2003 and the preliminary Namibia Household Income and Expenditure Survey 2003/2004 report, a censored regression model was applied to financial service usage by household heads in Namibia using the monthly income for each head of a household as a proxy for poverty. An Ordinary Least Squares model was also applied to financial service usage by household heads in Namibia using the food consumption ratio in each of Namibia’s 13 regions as a second proxy for poverty.

When income is used as a poverty measure, this paper found that improved access to financial services is associated with higher levels of income for the household head in rural areas. This relationship is consistent in an overall sample consisting of both urban and rural populations. In addition, a disaggregated analysis of household heads points out that several financial products are inferior goods, which are defined as those whose use decreases as income rises. These inferior goods include debit cards, garage or petrol cards and transaction or transmission accounts. Finally, the use of informal micro lenders seems to be present among low-income households in rural areas. This relationship cannot be rejected conclusively even at higher levels of income.