A sharp rise in short-term overdraft borrowing by businesses and households pushed Namibia’s private sector credit growth to its highest level in seven months during April, signalling growing demand for liquidity rather than investment.
Private Sector Credit Extension (PSCE) accelerated to 4.8% year-on-year in April 2026 from 4.3% in March, marking the strongest expansion since the start of the year and the highest level since September 2025.
According to FNB Graduate Analyst Ndateelela Amukuhu, the increase was largely driven by a surge in overdraft lending across both corporates and households.
“Private Sector Credit Extension (PSCE) increased to 4.8% year-on-year (y/y) in April 2026, from 4.3% y/y in March 2026, marking the strongest expansion since the start of the year and the highest level seen since September last year. The pickup was largely driven by a surge in overdraft lending across both households and corporates,” she said.
Overdraft lending expanded by 11.4% year-on-year in April, a significant turnaround from the 2.0% contraction recorded in March.
The data suggests that businesses and consumers are increasingly relying on short-term credit facilities to manage cash flow pressures rather than taking on longer-term debt to finance growth and investment.
Corporate borrowing remained the main driver of overall credit growth, with corporate credit accelerating to 5.5% year-on-year during the month.
Mining companies were largely responsible for the increase, driving corporate overdraft lending growth to 12.9% year-on-year.
However, the broader lending picture points to a cautious private sector.
While instalment sales and leasing credit remained robust at 27.7% year-on-year, other corporate loans and advances contracted by 1.0%, reflecting efforts by businesses in the commercial and services sectors to reduce debt levels.
Corporate mortgage lending also remained under pressure, with the category contracting by 1.0% year-on-year.
On the household side, credit growth edged up to 4.2% year-on-year, supported primarily by increased overdraft utilisation.
Household overdraft borrowing rose by 5.4% year-on-year in April, compared to just 0.5% growth in March.
“Overall, while corporate credit is expected to remain the main driver of credit growth averaging around 4.0%, the composition suggests a cautious stance. The combination of rising short-term borrowing and weakening longer-term lending indicates that firms are prioritising liquidity and balance sheet consolidation over expansion, which is likely to keep overall credit growth contained in the near term,” Amukuhu said.
The housing market remained subdued, with mortgage credit growth stagnating at 1.9% year-on-year.
Meanwhile, instalment and leasing credit slowed to 14.8% year-on-year, mirroring a sharp 16.7% decline in domestic passenger vehicle sales.
Amukuhu said consumer demand for credit is likely to remain constrained as households face rising living costs.
Namibia’s annual inflation rate increased to 3.1% in April from 2.1% in March, driven largely by higher fuel prices linked to geopolitical tensions in the Middle East.
“That said, the inflation outlook remains highly sensitive to developments in the Middle East conflict. Any further escalation is likely to further lift transport costs and spill over into food prices, intensifying household expenditure pressures while also compressing business margins,” she said.
The Bank of Namibia kept the repo rate unchanged at 6.50% in April, but Amukuhu noted that a subsequent interest rate increase by the South African Reserve Bank widened the interest rate differential between the two countries to 50 basis points.
She said the central bank is therefore expected to maintain a cautious monetary policy stance to protect the currency peg and preserve financial stability.
