Namibia’s private sector received over N$3.80 billion in credit over the last 12 months, nearly double the amount expended during the same period the previous year, data from IJG Securities shows.
Of this, the firm noted that individuals accounted for N$1.82 billion, while corporations absorbed N$1.98 billion.
“Private sector credit extension (PSCE) increased by 0.7% m/m, equivalent to N$791.7 million, bringing the annual growth rate to 3.4% as of the end of October 2024,” said IJG.
This comes after adjusting for interbank swaps recorded by the Bank of Namibia (BoN) in non-resident private sector claims, the normalised cumulative credit outstanding reached N$115.41 billion.
According to Simonis Storm Securities (SSS), as of October 2024, Namibia’s corporate debt stock reached N$47.1 billion, reflecting an increase of N$410.5 million from September.
“Corporate credit growth rose to 4.4% y/y, signalling increased investments in infrastructure, technology, and capacity expansion. This broad-based growth suggests a positive outlook for the corporate sector,” said SSS.
Key corporate credit categories experienced notable growth, instalment and leasing credit demand surged to N$6.2 billion, up significantly from N$4.9 billion in October 2023.
This robust growth highlights increased business interest in leasing arrangements.
“Corporate mortgage borrowing improved, rising from N$13.807 billion in September (0.9%) to N$13.847 billion in October (1.4%). This growth indicates renewed interest in real estate investment, likely spurred by lower interest rates,” Simonis added.
While overdraft facilities contracted by -10.4%, the value rose marginally from N$8.960 billion to N$8.968 billion, representing an improvement from -11.8% recorded in September 2024.
“This may reflect businesses managing cash flows more efficiently or turning to alternative financing options,” said SSS.
Meanwhile, Namibia’s household (individual) debt stock rose slightly to N$68.2 billion in October 2024, up from N$67.8 billion in the prior month, reflecting an annual increase of N$1.8 billion.
Despite this growth, Simonis Storm noted that household credit expansion remains subdued, highlighting cautious borrowing behaviour amid a dynamic economic environment.
“Mortgage lending grew modestly from N$45.6 billion to N$45.7 billion, representing a y/y growth rate of 0.9%. This marks a significant slowdown compared to the 3.0% y/y growth recorded in October 2023,” said Simonis Storm.
According to IJG, credit extended to individuals increased by 2.7% y/y in October as overdraft facilities for individuals saw a 9.3% y/y decline, marking the first annual decrease in this category since June 2023.
“Mortgage loans to individuals grew modestly by 0.9% y/y. Meanwhile, other loans and advances—including credit cards, personal loans, and term loans—rose by 7.3% y/y, and instalment credit expanded significantly by 12.3% y/y,” said IJG.
This comes as the Bank of Namibia Governor Johannes !Gawaxab today noted that PSCE growth averaged 2.2% during the first ten months of 2024, lower than the 2.5 % recorded during the same period in 2023.
“The sluggish growth has been attributed to weak demand, reinforced by the high-interest rate environment. Since the last MPC meeting, however, annual growth in PSCE improved to 3.4% at the end of October 2024 from 2.1% at the end of August 2024, driven by both businesses and households,” he said.
IJG noted that Namibia’s PSCE is poised for gradual improvement in the coming months, supported by the ongoing interest rate-cutting cycle, which is likely to stimulate borrowing demand.
This comes as the BoN’s Monetary Policy Committee reduced the repo rate by 25 basis points to 7.00% during its final bi-monthly meeting for 2024 to support the domestic economy and maintain the Namibia Dollar’s peg to the South African Rand.
