Namibia’s household credit increased by N$166 million in May 2025, pushing the total debt stock to N$68.9 billion, according to analysis by Simonis Storm.
The rise reflects continued demand for secured lending despite high living costs and sluggish income growth.
“Although credit growth remains positive, households are clearly operating in a constrained environment where affordability and income uncertainty are central to their financial decisions,” said Almandro Jansen, Junior Economist at Simonis Storm.
The firm noted that households remain focused on servicing existing debt and maintaining consumption levels, while showing little appetite for taking on new credit.
Mortgage lending declined by 0.7% year-on-year in May, reversing the 0.9% increase recorded in April. Despite the slowdown, the total mortgage balance stood at a high N$45.7 billion, with most borrowing concentrated among more financially secure households.
“This contraction reflects the structural affordability challenges in the housing market, where high property prices relative to income continue to keep many first-time buyers locked out,” said Jansen.
Other loans and advances rose by N$64 million in May, slowing to 5.9% year-on-year. Jansen said this reflects greater caution among middle-income borrowers, many of whom face job insecurity and are wary of additional debt.
“The slowdown in unsecured credit growth points to increased prudence, as households assess their capacity to take on new obligations under current economic pressures,” he said.
Overdraft facilities for households continued to contract, declining by 12.7% year-on-year in May, though improving from a 17.2% drop in April. The overdraft balance stood at N$2.7 billion.
“This sustained decline confirms that lower-income households are actively avoiding short-term borrowing, likely due to limited disposable income and fragile financial positions,” Jansen added.
Instalment and leasing credit held steady at N$8.2 billion, showing robust annual growth of 14.4%, largely driven by vehicle financing among middle- and upper-income earners. However, the firm cautioned that this momentum may not last.
“Despite strong growth in instalment credit, we may be nearing a turning point as passenger vehicle sales fell sharply by 31.2% month-on-month, reaching just 461 units, the lowest since September 2024,” Jansen said.
In summary, Jansen noted that household credit activity in May was shaped by asset-backed borrowing, with a clear preference for longer-term secured credit, while caution remains around unsecured lending.
“This pattern suggests that households are prioritising financial stability and managing risk, rather than driving credit expansion through increased consumption,” he said.
Meanwhile, corporate credit rose to N$50 billion in May from N$49.5 billion in April.
However, year-on-year growth slowed to 6.5%, down from 7.1% in April, indicating a cautious stance among businesses.
“Companies are being more calculated in their use of credit, balancing investment needs against liquidity and cost pressures,” Jansen said.
Overall, private sector credit expanded by 4.1% year-on-year in May, slightly below the 4.5% growth recorded in April, continuing the trend of softening credit conditions.
Banking sector liquidity also weakened, with average commercial bank balances falling to N$8.5 billion from N$9.9 billion the previous month. Simonis Storm attributed this to trade-related outflows, seasonal tax payments and muted inflows from key sectors.
“While liquidity conditions are still broadly supportive, they have become slightly less accommodative, which may constrain further credit extension in the short term,” said Jansen.
