Namibia’s household debt stock stood at N$68.4 billion in February, reflecting a slight monthly decline of N$143.5 million from January, according to Simonis Storm.
“Household borrowing remains subdued, largely due to weak wage growth and ongoing cost-of-living pressures, which have affected consumers’ ability to take on new credit,” said Simonis Storm Junior Economist, Almandro Jansen.
Private sector credit extension (PSCE) growth in Namibia slowed slightly to 3.9% year-on-year (y/y) in February 2025, down from 4.1% y/y in January. However, despite this moderation, PSCE remained significantly stronger than the 1.7% y/y recorded in February 2024, driven largely by corporate credit demand.
“The annual improvement in PSCE reflects a sustained but cautious credit recovery, with corporate lending leading the way while household credit remains constrained,” Jansen said.
Mortgage credit for households grew marginally by 0.7% y/y in February, up from 0.3% y/y in January, though it remains below long-term averages due to affordability concerns in the housing market. Other loans and advances softened to 7.9% y/y, down from 8.1% y/y in January, indicating reduced discretionary borrowing.
“The deceleration in other loans and advances aligns with post-holiday caution, indicating that consumers are wary of accumulating additional debt,” Jansen said.
Overdraft facilities contracted sharply by -13.2% y/y, deepening from -14.4% y/y in January, reflecting reduced reliance on short-term financing as households prioritise debt repayment. Meanwhile, instalment and leasing credit remained strong at 12.3% y/y, primarily driven by demand for passenger vehicles, which recorded a 10.4% y/y increase in sales.
“Consumers continue to show demand for durable goods despite constrained finances, with car sales remaining resilient,” Jansen added.
Household credit growth remained stagnant at 2.6% y/y in February 2025, significantly below the 4.3% y/y recorded in the same period last year. This continued stagnation highlights subdued consumer confidence and affordability constraints.
“The absence of tax bracket adjustments in the latest budget effectively reduces real disposable income, pushing more households to rely on credit facilities to sustain consumption,” Jansen remarked.
On the corporate front, Namibia’s total corporate debt stock rose to N$49.4 billion in February, reflecting a modest monthly increase of N$129 million. Corporate credit expanded by 5.9% y/y, slightly down from 6.1% y/y in January.
“While corporate credit continues to grow, the pace has moderated due to sector-specific challenges, particularly in manufacturing, mining, and fishing,” Jansen observed.
Instalment and leasing credit for businesses slowed to 20.4% y/y from 22.7% y/y in January, though demand remains solid in the transportation and capital equipment segments. Mortgage loans showed marginal improvement, growing 0.2% y/y after contracting by -1.0% y/y in January, signalling stabilising sentiment in the property market.
“While mortgage credit for corporates is slowly recovering, many firms remain hesitant to make major property investments,” Jansen noted.
Overdraft lending to businesses saw a slight rebound, increasing by 0.3% y/y in February after contracting by -7.0% y/y in the previous month. This suggests short-term credit use is stabilising, although overall repayments still dominate.
Despite the moderation in PSCE growth, improving business sentiment and policy support could drive renewed credit demand in the coming months. The recent corporate tax cut from 30% to 28%, along with favourable rainfall for agriculture, is expected to further support business lending.
“With lower corporate taxes and improved cash flow, businesses could gradually increase their borrowing for expansion and capital investment,” Jansen said.
