An increase in loans and advances saw Namibia’s household annual credit growing by 3.2% year on year (y/y) in January 2022, compared to 2.1% y/y in December 2021, latest official figures show.
The Bank of Namibia on Tuesday said the biggest contributors to a surge in household credit were other loans and advances, which increased by 4.0% in January 2021 – compared to 2.8% in the prior month – while instalment and leasing credit increased by 3.6%.
In the period under review, mortgage loans increased by 3.4% compared to 2.6% in December, and overdrafts went up 1.2% compared to –3.3% in the previous month.
At the same time, credit extended to the private sector increased by 2.7% against 1.2% in December 2021.
“All subcategories recorded increases in net debt levels for households, while overdrafts were the only sub-category recording a lower net level of debt for corporates. Growth in corporate debt was driven by increases in short-term debt instruments by businesses in the agriculture, fishing and transport sectors,” said BoN.
The latest figures come at a time Namibia’s household debt increased by 2.8% to N$61.8 billion last year due to a rise in loans and advances. This means that the country’s household credit rose by N$4.6 million daily.
Meanwhile, corporate credit growth increased by 2% in January 2022 from –0.1% in the prior month.
“Corporate borrowing was mainly supported by other loans and advances increasing by 5.5% y/y (compared to 2.8% y/y in the prior month) and instalment and leasing credit increasing by 3.6% y/y (compared to 5.6% y/y in the prior month) in January 2022.”
“Corporate overdrafts decreased by 2.7% y/y (compared to –3.3% y/y in the prior month) as businesses in the retail and commercial services sector were the biggest drag on overdraft credit growth.
“On average in the last 10-years, overdraft credit growth exceeded the annual average of the preceding year in all years for corporates, but only 7 out of the last 10 years for households. The data shows a clear January effect for corporates, most likely due to the holiday season and business being slower than usual during December, leading to lower cash flow levels. As a result, corporates make use of overdrafts to meet short-term operational expense obligations. The data shows a clear trend that overdraft demand by corporates immediately reduces in February of each year, indicating that overdrafts obtained in January is mostly a once off event,” BoN added.
Simonis Storm Economist Theo Klein is forecasting a slowdown in demand for mortgage loans by companies amid the adoption of working from home by some corporates.
“Lower demand for mortgage credit mainly stemmed from businesses in the commercial property and rental space, where corporate mortgage loans increased by 1.4% y/y (compared to 5.8% y/y in the prior month). This is in line with our previous reports which outlined that demand for office space will be declining as a result of businesses adopting hybrid and remote working arrangements going forward. As a result, we expect lower demand for mortgage loans by corporates.”
