The microlending loan book value in Namibia increased to N$7.2 billion in the first quarter of 2024 from N$6.7 billion in the prior year, representing a 7.9% annual and 0.2% quarterly growth, official figures show.
According to the Namibia Financial Institutions Supervisory Authority’s (NAMFISA) statistical report for the first quarter of 2024, term lender loans continued to dominate, with a slight quarter-on-quarter decline of 0.7% and a year-on-year rise of 7%, reaching N$6.8 billion.
Term lenders’ loans constituted 95% of the total share during the quarter under review.
The report also said the number of payday lender clients grew by 5.7%, far outpacing the 2.8% rise in term lender clients.
The surge reflects a broader trend within the microlending sector, where the total value of loans disbursed climbed by 25% to N$1 billion.
“Payday loans saw a 23.4% increase in average loan amounts, rising from N$2,368 in Q1 2023 to N$2,921 in Q1 2024. Payday lenders were the main contributors to this growth, representing 39.0% of the total disbursements, and term lenders accounted for the remaining 61%,” the report noted.
In contrast, term lenders experienced a 16.3% decline in average loan amounts, dropping from N$27,408 to N$22,938, signalling a move away from long-term credit options.
“Term lender loans continued to dominate, with a slight decline of 0.7% quarter-on-quarter and a rise of 7.0% year-on-year, reaching N$6.8 billion. Term lenders’ loans constituted 95.0% of the total share,” said NAMFISA.
Mirroring the rise in the value of disbursements, the number of new loans issued increased during the first quarter of 2024, reaching 166,452 loans, a 9.8% increase quarter-on-quarter and a 16.1% increase year-on-year.
“The growth in new loans aligns with the increase in loans issued by both term and payday lenders. Regarding the distribution of new loans, payday lenders dominated, issuing 83.0% of all new loans, and term lenders accounted for the remaining 17.0%,” said the quarterly bulletin.
Meanwhile, the total arrears showed a downward trend, decreasing by 1.0% quarter-on-quarter, but increasing by 7.9% year-on-year to N$1.5 billion at the end of the first quarter of 2024.
“Arrears accounted for 20.0% of the total loan book value at the end of this period which indicates the potential risk of borrowers defaulting on their loans,” said the report.
The total arrears for term borrowers stood at N$1.4 billion at the end of the first quarter of 2024, representing a default rate of 20.0 % of the loan book value for term lenders.
“Compared with the previous quarter, this reflects a downward trend with a decrease in arrears by 2.1 %, but with an increase of 6.7 % year-on-year. The age category of 120 days+ accounted for the largest share of arrears at 12.0 % of the total value, and the 30-60 days category represented 6.0 %. These figures highlight the potential of repayment difficulties among term borrowers,” the authority said.
Meanwhile, the arrears for payday borrowers amounted to N$74.2 million with a default rate of 22.0% accounting for 76.0% of the payments due in the first quarter of 2024.
“Within the different age categories, the 120 days+ category represented the largest portion of the total arrears, making up 12.0 % by the end of the first quarter of 2024,” said NAMFISA.
