Cyber Fraud in Finance: Namibia Records 357 Cases, Loses N$26.3 Million
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The Bank of Namibia’s annual results presentation on Tuesday revealed a staggering 357 cases of fraud reported in the financial sector of Namibia in 2023, resulting in losses of N$26.3 million.
Fraud Categories and Recovery Efforts
According to Deputy Minister of Finance and Public Enterprises Maureen Hinda-Mbuende, the categories of fraud include:
- ATM fraud
- Electronic fund transfers
- Credit and debit card fraud
- Mobile application fraud
- Theft of cash
The banking sector has managed to recover N$4.8 million of the losses, but this is still a significant blow to individuals and businesses affected by the fraud.
Illicit Financial Flows and Cybersecurity Concerns
Preliminary estimates from United Nations studies reveal that inward illicit financial flows in Namibia amount to N$19.6 billion between 2018 and 2020, while outward illicit financial flows total $4.7 billion during the same period. Hinda-Mbuende emphasized the need for concerted efforts to curb these flows and bolster cybersecurity defenses to safeguard the integrity of the financial system.
Banking Sector Performance
Despite the high levels of fraud, the banking sector remains profitable:
- Income: N$12.8 billion
- Net income after tax: increasing by 24.5% to N$3.7 billion
The growth is attributed to higher interest rates, which have allowed banks to charge more on loans.
Risks and Challenges Ahead
However, the deputy minister warned against further interest rate hikes, citing concerns that this could lead to borrowers defaulting on loans, particularly mortgages, which account for over half of total private sector credit extension. She highlighted the high exposure of commercial banks to mortgage risk and the potential for significant losses if many borrowers default.
The Bank of Namibia has identified climate change, greylisting, and cybersecurity as key risks to the banking sector going forward.
Non-Banking Financial Institutions
Non-banking financial institutions have seen positive performances in 2023, with investments managed by these institutions generating strong returns.