Private sector debt slows to N$121.1 billion in February

Namibia’s private sector debt, including liabilities from households, corporations, and non-residents, surged to N$121.1 billion as of February 2024, recent data by Simonis Storm shows.

This reflects a year-on-year (y/y) growth of 1.8% but the growth is lower than the 5.1% y/y growth observed in the same month of the previous year. 

The firm noted that in February 2024, private sector credit extension decreased to 1.7% y/y, down from 2.4% y/y in January 2024 and 3.1% y/y in February 2023.

Simonis Storm Researcher Halleluya Ndimulunde said the trend reflects a continued slowdown in credit uptake, with growth consistently falling below the six-month moving average.

This comes as households were the main contributors to the credit uptake. 

“The Bank of Namibia attributes the decrease in credit growth to reduced demand from both households and corporates, alongside repayments by specific corporate sectors such as mining, transport, fishing, wholesale, and retail trade,” she said. 

Meanwhile, the trend among corporates in recent months appears to be towards reducing existing debt rather than acquiring new loans as corporate credit growth has averaged a modest 0.7% since its peak of 8.2% y/y in August 2022.

“Corporate credit growth was recorded at 0.6% y/y for February 2024, a decline from 2.1% in January 2024 (Figure 3) yet showing a slight improvement from 0.4% y/y in February 2023.  Additionally, corporates primarily focused on repaying their mortgage debts, which experienced a growth of -2.6% in February 2024, and overdrafts, which contracted further to -6.1% y/y from -3.0% y/y in February 2023,” Ndimulunde noted.

For households, credit uptake also saw a slight deceleration to 2.4% y/y in February 2024, the slowest rate since the 2.0% y/y recorded in August 2022.

This marked a decrease from 2.6% y/y in January 2024 and 5.0% y/y in February 2023. Despite this decline, the household sector remains the primary driver of overall credit growth. 

“The main contributors to household credit growth during February 2024 were overdrafts, which witnessed a significant increase of 18.5% y/y compared to February 2023, and instalment and leasing, which experienced a 6.2% y/y increase in February 2024 from 2.8% y/y in February 2023,” Ndimulunde said.

However, the overall sluggish credit growth from households every month can be attributed to reduced demand for mortgage loans and other loans and advances. 

Other loans and advances, which typically include credit cards and personal loan instruments, experienced negative growth of 1.1% y/y in February 2024 compared to 17.8% y/y in February 2023.

 

 

 

 

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