Namibia’s private sector credit increased by N$5.84 billion during the first nine months of 2026, representing a 39% increase from the N$4.20 billion recorded during the corresponding period last year, as borrowing by businesses and households continued to rise.
According to Simonis Storm Economist Almandro Jansen, private sector credit extension (PSCE) increased by N$1.06 billion in September alone, bringing the total credit book to N$128.2 billion.
Businesses accounted for N$656.8 million, or 62% of the monthly increase, while household borrowing contributed N$403.5 million.
The increase pushed annual private sector credit growth to 5.6% in September, up from 5.4% in August, marking the fastest growth recorded in a year.
Jansen said credit extension had strengthened throughout the year, with banks extending N$2.68 billion during the third quarter, compared with N$2.14 billion in the second quarter and N$1.02 billion in the first quarter.
However, he warned that inflation continued to undermine the recovery in lending, with real private sector credit growth standing at just 0.2% after adjusting for inflation of 5.4%.
This was below the 0.3% recorded in August, indicating that much of the increase in borrowing reflected higher prices rather than a significant expansion in real credit activity.
“September’s data show a credit book that is growing in nominal terms but standing still in real terms,” Jansen said.
Corporate credit growth accelerated to 6.7% in September from 5.9% in August, with the total business credit book increasing by N$656.8 million to N$54.6 billion.
The increase was supported by stronger demand for other loans and advances, which rose by N$292.4 million, while commercial mortgage lending increased by N$235.8 million.
“The increase was supported by other loans and advances, which rose by N$292.4 million, while commercial mortgage lending increased by N$235.8 million. Growth in other loans and advances reached 8.5%, its highest level this year, while commercial mortgage growth turned positive at 0.8%,” Jansen said.
Overdraft lending remained largely unchanged, increasing by N$4.2 million, while annual growth in instalment and leasing credit slowed to 17.9% from 22.6% in August.
Jansen said the improvement in corporate lending was encouraging, particularly the increase in commercial mortgages and other loans, but cautioned that sustained growth would be needed before concluding that business investment was recovering.
“We would need two or three more months of similar flows before reading it as a capex recovery, especially with drought risk, foot and mouth disease restrictions and fuel costs weighing on agriculture and transport,” he said.
Meanwhile, household credit growth remained unchanged at 4.9%, with the total household credit book increasing by N$403.5 million to N$73.6 billion.
However, after adjusting for inflation, household credit contracted by approximately 0.5%, marking the second consecutive month of negative real growth.
Mortgage lending growth accelerated to 3.6% from 2.8% in August, adding N$199.3 million, while instalment and leasing credit increased by 15.6%, supported by an additional N$119.5 million in borrowing.
Growth in personal loans and advances slowed sharply to 2.1% from 5.4% in August, reflecting weaker demand for unsecured borrowing.
Jansen said higher fuel prices and borrowing costs were placing additional pressure on households, with the prime lending rate reaching 10.50% following the Bank of Namibia’s decision to increase the repo rate by 25 basis points to 7.00% on 28 October.
He expects household consumption to weaken during the fourth quarter of 2026 and the first quarter of 2027 as higher borrowing costs and pressure on real incomes constrain spending.
The economist also cautioned that stronger corporate lending figures should not obscure the impact of rising financing costs on businesses.
The weighted average lending rate increased to 9.81% in September, its highest level this year.
Simonis Storm expects private sector credit growth to remain between 5.5% and 6.5% during the fourth quarter of 2026, partly supported by favourable base effects.
However, growth is forecast to slow to approximately 5.0% by June 2027 as higher interest rates increasingly weigh on borrowing demand.
Jansen said the effects of the recent monetary policy tightening would become more visible from the first quarter of 2027, as interest rate changes typically take two to three quarters to feed through to credit volumes.
