The number of new loans issued in Namibia during the first quarter of 2024 increased by almost 10% to 166 452. This represents a quarter-to-quarter increase of 9.8%, and a 16.1% increase year-on-year (y/y).
This uptake in loans suggest a robust demand for financing, indicative of a strengthening lending environment. This can have broader implications for economic growth and consumer spending in the coming months.
The latest figures were released by the Namibia Financial Institutions Supervisory Authority (Namfisa), which noted that the growth in new loans aligns with the increase in loans issued by both term and payday lenders.
“Regarding the distribution of new loans, payday lenders dominated, issuing 83% of all new loans, and term-lenders accounted for the remaining 17%,” reads the quarterly bulletin. Payday lenders provide very short-term, high-cost loans, while term-lenders offer longer-term, lower-interest financing.
The loan book value in the microlending industry increased by 7.9% y/y, reaching N$7.2 billion. Term-lender loans continued to dominate, with a 0.7% quarterly reduction and a 7% y/y increase, totalling N$6.8 billion. Term- lenders’ loans made up 95% of the overall share.
Furthermore, Namfisa added that the cumulative number of household borrowers benefiting from microlending transactions increased by 3.5% y/y by the end of the first quarter of 2024, reaching a total of 224 124. This growth was primarily observed among borrowers using term-lenders. Additionally, term-borrowers continued to outnumber payday borrowers at the end of the reporting period.
Namfisa is an independent institution established to regulate and supervise institutions in the financial services’ industry in the public interest. The authority is fully-funded by levies imposed on this industry.
The average disbursement value for term-lenders stood at N$22 938, and the average disbursement value for payday lenders amounted to N$2 921.
Meanwhile, the Bank of Namibia (BoN) and Namfisa earlier this year showed that household debt-servicing costs almost doubled from 2020 to 2022.
“The household debt-servicing costs increased from 9% in 2020 to 17.8% in 2022, reflecting a combination of higher debt levels as well as high interest rates. Although households are highly- indebted, most of their debt is secured lending, with mortgage lending accounting for most of it,” reads the financial report released by the two entities.
A Windhoek citizen who spoke on condition of anonymity said taking such loans is not by choice, but it is dictated by circumstances.
“No, I am not excluded. What choice do I have when the house is empty and the children are looking at you for something?” she pondered.
Meanwhile, Namfisa’s consumer complaints’ department received 137 complaints from consumers of financial services during the first quarter of 2024. This reflects a decrease of 10.5%, compared with the previous quarter, and a decrease of 6.8%, compared to the same quarter last year.