The microlending sector in Namibia saw significant growth in the fourth quarter of 2024, with the total loan book expanding by 11.1% quarter-on-quarter and 12.8% year-on-year, reaching N$8.1 billion, latest data shows.
The Namibia Financial Institutions Supervisory Authority (NAMFISA) noted that loan disbursements have been the key driver behind the growth, as term lender loans, which make up 94.0% of the total loan book, grew by 10.7% from the previous quarter and 10.1% year-on-year, reaching N$7.6 billion.
The number of new loans issued also surged, increasing by 13.0% quarter-on-quarter and 15.9% year-on-year to 190,973 loans.
“Payday lenders were the leaders in loan issuance, accounting for 76.0% of new loans, while term lenders contributed the remaining 24.0%,” NAMFISA added.
However, the report highlighted a drop in average loan disbursement values for term lenders.
“The average loan disbursement for term lenders decreased to N$27,885, while payday lenders saw an increase, with their average loan value rising to N$3,875,” NAMFISA said.
Despite the growth, the report indicated challenges in repayment, with total arrears declining by 4.6% quarterly but still reaching N$1.3 billion by the end of the quarter.
“Arrears as a percentage of the total loan book represent 17.0%, signaling potential repayment difficulties among borrowers,” NAMFISA noted.
Arrears for term borrowers amounted to N$1.2 billion, marking a 6.9% decrease from the previous quarter.
“This decline suggests some improvement in repayment, although arrears exceeding 120 days still represented a significant portion at 11.0% of total arrears,” said the report.
Payday borrowers faced higher arrears, totaling N$109 million, with 22.0% of payments overdue.
The largest portion of payday loan arrears was also from those exceeding 120 days, which accounted for 13.0% of total payday arrears, said NAMFISA.
In terms of participation, the total number of household borrowers reached 240,475 by the end of December 2024.
While this marked a 2.3% decrease quarter-on-quarter, it represented an 8.4% increase year-on-year.
“The decrease in borrowers was mainly driven by term lenders, while the year-on-year growth was supported by both term and payday lending,” NAMFISA explained.
