Namibia’s household credit data for August 2024 shows a mixed trend, with total debt increasing by N$125.94 million month-on-month and N$1.3 billion year-on-year, official figures show.
Despite this rise, a report by Simonis Storm Securities shows that overall credit growth remains subdued.
“Household credit dynamics in August 2024 revealed a mixed picture. Total debt stock among households increased by N$125.94 million month-on-month and by N$1.3 billion year-on-year, although overall growth remains subdued,” said Simonis Storm Securities (SSS) in its latest report.
According to the firm, mortgage loans declined by 1.1% y/y, reversing the 3.1% y/y growth observed in August 2023, primarily due to the impact of the previous high-interest rate environment.
“This decline highlights continued caution in long-term borrowing among households. In contrast, other loans and advances grew by only 1.5% y/y, a sharp decline from the 14.9% y/y increase recorded in the previous year, indicating more conservative borrowing behaviour,” said SSS.
However, overdrafts surged by 10.2% y/y—a significant improvement from the 3.5% y/y decline noted in August 2023—suggesting an increased demand for short-term credit among households, likely driven by immediate financial needs amid persistent inflationary pressures.
Instalment and leasing credit expanded by 6.7% y/y, surpassing the 6.1% y/y growth seen last year, which points to a resilient demand for financing vehicles and other durable goods.
On the other hand, claims by non-residents saw a marked decline, contracting by 14.5% y/y compared to a 1.8% y/y increase in August 2023.
“The total debt stock held by non-residents stood at N$6.5 billion by the end of August 2024, reflecting a contraction in external borrowing or a repayment of existing liabilities,” noted the firm.
As of the end of August 2024, liquidity in the banking sector averaged N$5.7 billion, down from N$6.4 billion in July 2024.
This comes as by August 2024, private sector credit extension (PSCE) in Namibia rose moderately to 2.1% y/y, up from 1.8% y/y in July 2024, though slightly lower than the 2.2% y/y recorded in August 2023.
SSS highlighted that this marks the first increase in credit extension over the past two months, following a period of relative steadiness.
“The growth in credit uptake was primarily driven by increased corporate demand, which rose significantly to 2.1% y/y in August 2024, compared to 0.8% y/y in July 2024 and a contraction of -2.0% y/y in August 2023,” noted the report.
In contrast, credit extended to households experienced a decline, stabilizing at 2.1% y/y for the third consecutive month, a notable slowdown from the 5.4% y/y recorded in August 2023.
Meanwhile, the total corporate debt stock in Namibia stood at N$46.1 billion in August 2024, with credit growth reaching 2.1% y/y.
“This growth was primarily driven by a substantial increase in the “other loans and advances” category, particularly by corporates in the mining sector. This category recorded a noteworthy 11.1% y/y growth in August 2024, representing a significant turnaround from the -5.5% contraction observed in the previous year,” noted the firm.
The Bank of Namibia noted that the increased demand mainly originated from mining sector corporates, reflecting heightened business confidence and a push for financing operations and expansion.
However, SSS noted that this sentiment contrasts with the Q2 2024 GDP data from the Namibia Statistics Agency, which indicated continued negative growth in the mining sector for the first time since Q2 2021.
“This discrepancy between credit uptake and sectoral performance may indicate that the credit expansion is aimed at addressing future expectations or overcoming current challenges within the industry,” said the report.
