Namibia’s household debt significantly increased by N$2.1 billion to N$66.8 billion in 2023 from N$64.7 billion in December 2022, recent data by Simonis Storm shows.
The data also indicates that the private sector’s credit uptake averaged a mere 2.4%, a notable decline from the 3.6% recorded in 2022.
The trend was further accentuated by December 2023 figures, revealing a credit growth of 2% year-on-year (y/y), slightly lower than the previous year’s statistics.
“The credit uptake throughout 2023 was mainly driven by the household sector, which averaged a growth rate of 4.7% y/y. In contrast, the corporate sector (businesses) experienced a decline, averaging -0.7% y/y in the same period,” the Simonis Storm report read.
However, the surge in household debt stands in stark contrast to the corporate sector, which witnessed a decline, averaging -0.7% y/y during the same period.
Although corporate debt saw a marginal increase of N$45.9 billion in December 2023, compared to N$45.8 billion in the previous year it does not come close to the substantial rise in household indebtedness.
According to the report, the slowdown in corporate credit growth poses challenges for various sectors such as mining, services, wholesale and retail trade, and agriculture because reduced demand and increased repayments by corporates have contributed to this slowdown.
“A detailed look into the various corporate credit categories reveals a continued negative growth in mortgage loans, other loans and advances, and overdrafts during December 2023. On a brighter note, the installment and leasing category within corporate credit exhibited strong performance, recording a 21.6% y/y growth,” the report said.
Despite the overall slowdown, non-resident debt, encompassing both foreign individuals and firms, exhibited a positive trend with a growth of 3.6% y/y in December 2023.
The uptick can be attributed to factors such as foreign direct investments and ongoing mining explorations, among others.
Investments in green hydrogen and other renewable energy projects also contributed to this positive trend.
“Non-resident debt, both foreign individuals and firms exhibited an increase in credit uptake, registering a growth of 3.6% y/y in December 2023, a rise from 0.7% y/y in November 2023,” the report states.
Similarly, the liquidity position of the banking industry showed signs of improvement by December 2023.
The banking sector’s cash balances increased to N$7.7 billion, attributed to factors like diamond sales and corporate tax payments.
“Additionally, the central bank’s international reserves experienced an 8.4% m/m increase, primarily due to higher inflows into commercial banks, largely as a result of diamond sales and customer foreign currency placements, as reported by the Bank of Namibia,” it reads.
