The total number of new loans issued in the country as of 31 December 2019 contracted by 11% compared to the previous reporting year.
This is according to the 2020 annual report by the Namibia Financial Institutions Supervisory Authority (Namfisa).
The decline in the total number of new loans issued is consistent with that of the lower number of new loans issued by both term and payday lenders. Payday lenders accounted for 78% of the total new loans, while term lenders accounted for the rest.
The authority noted that concerning the cumulative number of household borrowers that benefited from micro-lending transactions, a contraction of 9.3% was realised between 31 December 2018 and the period under review.
It stated that both the term- and payday-loan household borrowers drove this contraction.
The total number of household borrowers stood at 230 317, which was lower than the 253 922 recorded for 2018.
The number of term-loan household borrowers continued to dominate, constituting 82% of the total number of borrowers, while their payday-loan counterparts made up only 18% of the total.
“The value of the loan book (outstanding value) realised at the end of 2019 was less than that of 2018, and this was due to contractions in the number of borrowers and that of new loans issued by both the term and payday lenders.
Similarly, the value of new loans issued by both categories in 2019 declined relative to the preceding year,” read the report.
Conversely, the average amount of disbursements rose over the same period, albeit at margins which could not offset the effects on the loan book from the declines in the number of borrowers and new loans issued, as well as the reduced value of disbursements due to a fall in the value of transactions between lenders and borrowers of both categories during 2019.
Furthermore, the report stated that at the end of the year 2019, the total value of the loan book stood at N$5.8 billion, which is a decrease of 10% when compared to the end of the previous year. The category of term lenders accounted for 97% of the total loan book.
The average amount of the loans extended by term lenders continued to be larger than that issued by payday-lenders.
“During the period under review, the average amount of loans extended by term and payday lenders stood at N$25 865 and N$2 064, respectively. Thus, relative to the legislative requirement that loan disbursements should not exceed N$50 000, the industry continued to operate below the maximum limit,” states the report.
The total value of loans disbursed during 2019 declined from the level recorded for the previous reporting year, by six percent, to register at N$3.8 billion by the end of the reporting period.
Namfisa said the decrease is attributed to a fall in the value of transactions between lenders and borrowers of both categories during 2019.
The credit extended by term and payday-lenders both declined year-on-year, namely by seven percent and two percent, respectively, between 31 December 2018 and 31 December 2019.
– mndjavera@nepc.com.na