WINDHOEK – Namibia’s 12-month growth in broadly defined money supply (M2) rose further at the end of September 2019, relative to the preceding month. This was confirmed in the Bank of Namibia’s (BoN’s) latest Money and Banking Statistics for September 2019, which indicated that growth in M2 edged up to 8.4 percent during the month under review, increasing by 0.4 percentage points, month-on-month, compared to the growth recorded at the end of August 2019.
According to BoN, the rise in M2 growth was sustained by the growth in domestic claims specifically claims on the private sector. Moreover, the higher growth in M2 is reflected in short-term deposit holdings specifically that of the businesses and non-bank financial institutions, which rose during the period under review.
Growth in total PSCE edged slightly up at the end of September 2019. The annual growth in total PSCE rose moderately to 6.5 percent at the end of September 2019, from 6.4 percent in August 2019. The rising growth in PSCE emanated from an increase in demand for credit by both the household and business sectors during the period under review.
The latest figures also show that growth in total credit extended to businesses rose at the end of September 2019. The annual growth in credit extended to businesses edged up to 6.2 percent in September 2019 from 6.0 percent a month earlier. The increase mainly stemmed from an increase in overdraft credit and other loans and advances extended to businesses in the manufacturing, services, construction and fishing sectors during the month under review.
Also, growth in credit extended to the household sector rose moderately in September 2019. Growth in total credit extended to individuals rose to 6.8 percent at the end of September 2019, compared to 6.7 percent at the end of August 2019. This was largely due to a rise in the short-term credit facilities i.e. overdraft credit and other loans and advances which rose during the period under review.
The annual growth in total overdraft credit rose significantly at the end of September 2019. Annual growth in overdraft credit rose to 6.6 percent at the end of September 2019 from a growth of 5.9 percent in August 2019. The increase in overdraft credit was mainly driven by an increase in demand for short-term credit by the household sector. Lending extended to businesses in the manufacturing, services, construction and fishing sectors during the review period also contributed to the rise in overdraft credit. Annual growth in other loans and advances, such as personal/commercial loans and credit cards, edged up at the end of September 2019. Growth in other loans and advances rose by 0.5 percentage point month-on-month to 19.7 percent at the end of September 2019. The increase was explained by a rising demand for short term credit facilities from both the household and corporate sector specifically corporates in the construction and retail trade sectors during the period under review.
Growth in instalment credit remained in negative territory at the end of September 2019. The contraction in instalment credit stood at 6.1 percent at the end of September 2019. Despite the slight lower contraction during the month under review, the persistent negative growth in instalment credit is in line with the generally low demand within the domestic economy. This was supported by the declining numbers of vehicles sold during the period under review.
Meanwhile, annual growth in mortgage credit extended to the private sector continued to decline during the period up to the end of September 2019. Growth in mortgage credit stood at 6.3 percent at the end of September 2019, compared to 6.4 percent at the end of August 2019. The slower growth in mortgage credit mainly stemmed from a decrease in demand for this credit category from both the household and corporate sectors.
The overall liquidity position of the banking sector trended lower in September 2019. The liquidity balances of commercial banks decreased by 18.2 percent to an average level of N$3.0 billion in September 2019. The decline in liquidity is as a result of lower domestic Government spending mainly ascribed to lower economic activity coupled with higher foreign currency outflows as a result of import payments during the review period.
Overall inflation edged lower during September 2019. Namibia’s annual inflation rate stood at 3.3 percent in September 2019, declining by a meagre 0.4 percentage point from a month earlier. The main contributors that lead to the decline in the overall inflation were transport, alcohol and tobacco as well as services.