Namibia’s financial system remained resilient in 2025 despite weaker economic growth and external headwinds, according to the October 2025 Financial Stability Report released by the Bank of Namibia (BoN) and the Namibia Financial Institutions Supervisory Authority (Namfisa).
The Macroprudential Oversight Committee (MOC) said that while global growth and market conditions improved slightly, elevated risks such as rising sovereign debt, policy uncertainty, and trade tensions continue to weigh on global financial stability.
To strengthen Namibia’s macroprudential policy framework, the committee approved the countercyclical loan-to-value regulation, which will eventually replace the existing regulation.
“Apart from the continuous enhancements to the macroprudential policy tools, the Committee has determined that no additional macroprudential policy intervention is required at this stage. The Financial System Stability Committee (FSSC) will continue to monitor risks to financial stability and, when necessary, recommend policy interventions to the MOC,” the committee said.
Namibia’s economy slowed to 1.6% growth in the second quarter of 2025, compared to 3.3% a year earlier, mainly due to weaker performance in manufacturing, fishing, and agriculture.
“The financial system in Namibia remained stable, sound, and resilient, with no major disruptions or disorderly functioning of key financial services, despite the moderation of economic growth and prevailing risks,” the report stated.
The report noted that mining was the only primary industry to record growth, driven by increased uranium output. Growth in the construction and utilities sectors was supported by government infrastructure projects, while services such as trade, tourism, finance, and public administration helped sustain overall economic activity.
However, the BoN cautioned that risks remain from falling diamond prices, competition from lab-grown diamonds, and lower Southern African Customs Union (SACU) receipts expected in the 2025/26 fiscal year.
“Global and domestic risks remain moderate but warrant close monitoring to prevent potential shocks to the financial system,” the report said.
The report showed that household debt growth slowed to 0.3%, while corporate debt increased marginally by 0.7% to N$182.1 billion. Corporate debt as a share of GDP dropped from 73.8% to 70.8%, supported by stronger nominal GDP and lower foreign borrowing.
The BoN said that the easing of foreign debt exposure has reduced exchange rate risk, while moderate growth in domestic borrowing continues to support productive investment.
“While domestic corporate debt remains stable, reduced foreign exposure supports financial stability through lower vulnerability to currency fluctuations,” the report stated.
The banking sector was described as well-capitalised, profitable, and liquid. Asset quality improved, with non-performing loans declining to 4.9% from 5.6% in 2024. The report added that stress tests confirmed the banking sector’s resilience under various economic scenarios.
“The banking sector remains well positioned to manage potential loan defaults, supported by sufficient provisions and strong capital buffers,” the report noted.
The report also said that non-bank financial institutions (NBFIs) grew by 5.8% to N$501.7 billion by mid-2025, supported by lower inflation and accommodative monetary conditions. The sector continued to play a key role in government financing and providing long-term investment capital.
Overall, the BoN and Namfisa assessed risks to financial stability as moderate, with improvements observed in the banking, non-bank financial, and property sectors.
The main vulnerabilities, they said, have shifted toward global risks such as trade tensions, cyber threats, and macroeconomic uncertainty. “Despite these risks, Namibia’s financial system continues to demonstrate resilience, supported by prudent regulation and ongoing macroprudential oversight,” the report concluded.
