Namibia’s total corporate debt stock reached N$49.3 billion in January 2025, reflecting a monthly increase of N$887 million from December 2024, according to Simonis Storm Securities.
Junior Economist Almandro Jansen noted that corporate credit expanded by 6.1% year-on-year, as businesses continued investing in infrastructure, technology, and capacity expansion.
However, credit uptake remains sector-specific, with some industries showing strong financing demand while others take a more cautious approach.
“The mining, construction, and tourism sectors saw notable increases, indicating that businesses in capital-intensive industries are actively deploying credit for expansion and capital investment. This reinforces the improving business sentiment that has been cautiously building over recent months,” Jansen said.
Despite the increase in corporate credit, overdraft lending contracted sharply, falling by 8.6% year-on-year. This suggests that firms are prioritizing cash flow optimization and short-term liability reduction instead of relying on revolving credit lines.
“This trend could indicate that while investment appetite is improving, businesses are still operating with a degree of financial conservatism, likely in response to lingering uncertainties around demand conditions and financing costs,” he added.
Meanwhile, Namibia’s household debt stock declined slightly to N$68.5 billion in January, down from N$68.6 billion in December, marking a monthly decrease of N$122.3 million.
“This signals that household credit expansion remains subdued, reinforcing a cautious borrowing stance amid persistently high real interest rates and weaker income growth. This continued stagnation in consumer borrowing underscores the strain from higher real interest rates, sluggish income growth, and tighter lending conditions, all of which are dampening household credit uptake,” Jansen explained.
Mortgage credit growth was virtually flat at just 0.3% year-on-year, indicating fragile consumer sentiment toward home financing. Overdraft lending among households also contracted by 8.6% year-on-year, reinforcing the trend of consumers actively deleveraging and prioritizing liquidity over additional borrowing.
“The widening gap between corporate and household credit growth underscores an asymmetric recovery in credit markets—one where businesses appear to be capitalizing on improved financing access, while households remain constrained by affordability challenges and conservative spending behavior,” Jansen noted.
He warned that weak consumer credit uptake could slow the overall economic recovery, even as corporate investment gains momentum.
In broader financial sector developments, Private Sector Credit Extension (PSCE) growth accelerated to 4.1% year-on-year in January 2025, its highest level since early 2023.
Additionally, the liquidity position of Namibia’s banking sector showed a modest improvement, with commercial bank liquidity averaging N$8.5 billion in January, up from N$8.3 billion in December 2024.
“This increase was primarily driven by higher diamond sales and coupon payments, which injected additional liquidity into the financial system,” Jansen said.
Looking ahead, Jansen said that liquidity conditions remain robust, ensuring financial system stability and a steady flow of credit to businesses and consumers. However, he cautioned that external volatility, including potential capital flow reversals, trade distortions, and currency pressures, would require ongoing policy vigilance.
“Namibia’s economic recovery remains on course, but the BoN’s ability to navigate the interplay between inflation risks and monetary support will define the trajectory of financial conditions and economic growth in 2025,” he said.
