In a move that was both expected and necessary, the Bank of Namibia has lowered its benchmark repo rate to 6.50%. 

This decision, emerging from the Monetary Policy Committee’s meeting this October, is more than just a financial headline.

 It is a targeted stimulus injected directly into the veins of our domestic economy. 

For every Namibian, from the homeowner in Windhoek to the entrepreneur in Oshigambo, this shift carries significant weight.

The central bank’s decision did not occur in a vacuum. 

It is a direct response to some worrying economic signals. 

Our nation’s economic growth has noticeably slowed, with the gross domestic product expansion falling to 1.6% in the second quarter of this year from a much healthier 3.3% in 2024. 

This deceleration translates into a reality where we all feel businesses are more cautious, job opportunities are scarcer and the collective confidence to spend is waning.

Thankfully, the Bank had the room to act. With inflation holding a steady, low average of 3.6% and foreign reserves standing strong at N$54.7 billion, the conditions were perfect for a rate cut. 

These robust reserves are our national safety net, ensuring the vital one-to-one peg with the South African Rand remains secure. 

In essence, the Bank is using its strongest tools to reignite growth without gambling on price stability.

But what does this mean for you and your finances? 

The effects are twofold, presenting both immediate relief and a nudge toward long-term financial prudence.

Relief for borrowers

For those with debt, this is unequivocally good news. 

Commercial banks will likely lower their prime lending rates to around 10.125%. 

This means homeowners will see their monthly bond repayments decrease. 

Even a slight 0.25% cut can save tens of thousands of dollars over the lifespan of a mortgage, freeing up crucial cash for households. 

On the other hand, car owners and other loan holders will benefit from similarly lower instalments. 

Furthermore, small businesses and entrepreneurs will find credit slightly more affordable, easing cash flow pressures and potentially funding expansion or new hiring.

Savers’ dilemma, investor’s opportunity

For savers, however, the news is bittersweet. 

The interest earned on fixed deposits and savings accounts will likely decrease. 

This environment requires a crucial financial rethink: parking cash in the bank will barely, if at all, beat inflation. 

The era of lazy savings is over. 

This is also where the opportunity lies. 

The same low-rate environment that harms savers is a tailwind for investors. 

Lower borrowing costs increase corporate profits, which often lifts the stock market. 

This clearly signals to Namibians to look beyond traditional savings accounts and consider growth-focused assets like equities, ETFs or unit trusts to build real, long-term wealth.

A collective responsibility

While the rate cut is a potent stimulus, it is not a magic wand. 

Banks will still lend judiciously, and the onus is on us to borrow responsibly. 

In order for the economy to truly rebound, this cheaper credit must translate into productive investments in growing businesses, new ventures and sustainable consumption. 

The Bank of Namibia has done its part. 

It has handed us a key. 

It is now up to us the consumers, the business owners, the investors to unlock the door to a more prosperous and resilient economic future. 

Let us use this opportunity wisely.

*Peya Junior Mushelenga is a national development advisor at the National Planning Commission. He holds a Master of Public Administration (National Development) from Peking University, China; Master of Business Administration Management Strategy from the University of Namibia; Bachelor Degree Economics Honors (NUST) and B-tech Economics (Polytechnic of Namibia). The views expressed in this opinion piece are his own.