Growth in the annual credit extended to Namibia’s private sector moderated at the end of October 2020 and slowed to 1.4% from 1.8% recorded at the end of September 2020. This is according to the latest figures from the Bank of Namibia’s (BoN) money and banking statistics for October 2020.
BoN figures reveal a decrease by 0.4 percentage points in Private Sector Credit Extension (PSCE) relative to the growth in September 2020. The slower growth in PSCE stemmed from a decline in credit extended to businesses, coupled with slow uptake of credit from the household sector during the period under review.
The bank said the credit growth extended to businesses contracted at the end of October 2020 as credit extended to businesses recorded negative growth of 2.2% at the end of October 2020, maintaining the same rate as at the end of September 2020.
“The sluggish growth resulted from deeper contractions in asset-backed categories, like the mortgage loans, instalment and leasing credit reflecting businesses unwillingness to engage in long-term debt obligations amid slower and weaker economic activities,” reads the report.
Also, growth in credit extended to the household sector slowed for the same period. Growth in credit extended to households slowed to 4.2% at the end of October 2020, from 5% at the end of September 2020. The slower growth was observed in all credit categories largely due to slower economic activity coupled with income uncertainties reinforced by the impact of the Covid-19 pandemic.
The central bank publication also revealed that overdraft credit growth slowed at the end of October 2020. The 12-month growth in overdraft credit stood at 2.8% at the end of October 2020, decreasing by 1.1 percentage points month-on-month.
“The lower growth largely reflected a decline in demand from the corporate sector specifically in the agriculture and mining sectors during the period under review,” reports the central bank.
According to BoN, annual growth in other loans and advances slowed at the end of October 2020. Annual growth in other loans and advances slowed to 5.9% at the end of October 2020 decreasing by 1.2 percentage points month-on-month.
The decline was in part due to lower demand from both the household and business sectors amid lower economic activities during the month under review.
Meanwhile, instalment and leasing credit recorded a deeper contraction at the end of October 2020. The central bank said the instalment and leasing credit registered a deeper contraction of 9.7% at the end of October 2020, relative to the preceding month.
The central bank confirmed the persistent negative growth in instalment and leasing credit was consistent with the general sluggish growth in the wholesale and retail trade sector and the overall domestic economy.