Over the past year, the Namibian private sector secured a total of N$3.73 billion in credit.
Individuals received N$2.07 billion, and corporations took up N$1.66 billion.
The demand for credit among individuals has shown some resilience, with an annual growth rate of 3.1% in November.
Overdraft facilities saw a slight increase of 0.4%, while mortgage loans rose by 1%.
More notably, other loans and advances, including credit cards and personal loans, experienced an impressive surge of 8%.
Yet, the growth rate of instalment credit slowed to 9.7%, indicating some caution among borrowers.
This information is contained in IJG Securities’ latest report.
On the corporate side, the story is different.
Credit extended to businesses slowed down significantly, with annual growth easing to 3.6%, compared to 4.4% in October.
This deceleration is largely attributed to reduced demand from companies in the real estate sector, which has been grappling with challenges in recent months.
It stated that corporate overdrafts continued to decline, posting an 8.8% drop year-on-year, while mortgage loans fell by 3.9%.
However, there was a silver lining, as other loans and advances surged by 11.9%.
Instalment credit recorded a remarkable rise of 21.3%.
“The subdued growth in corporate credit highlights the continued muted demand for credit within this sector,” noted IJG Securities in their report.
All in all, the company stated that in November 2024, Namibia’s private sector credit extension (PSCE) experienced a modest rise of 0.8% month-on-month, translating to N$908.8 million.
However, this increase has brought the annual growth rate down to 3.3%, reflecting a cautious economic environment.
On the other hand, the overall liquidity within commercial banks increased by N$1.48 billion in November, averaging N$8.14 billion.
This is in comparison to N$6.65 billion in October, primarily driven by strong diamond sales during the month.
Despite these positive indicators, PSCE growth remains subdued, reflecting weak demand for credit from both individuals and corporations, particularly within the real estate sector.
While liquidity conditions have improved, ongoing elevated debt levels and cautious spending habits are likely to keep credit demand muted in the near term.
However, the company noted that the ongoing interest rate-cutting cycle could provide much-needed relief, gradually boosting credit uptake and supporting economic recovery efforts in Namibia.
As individuals navigate their financial futures amid these dynamics, many are feeling the weight of their decisions more than ever before, balancing aspirations against economic realities that seem to shift daily.
Finance minister Iipumbu Shiimi towards the end of 2024 stated that at the half-year mark, the total debt stock for the country stood at N$161 billion, equivalent to 60% of gross domestic product (GDP).
“Nonetheless, as a fiscal policy stance, we aim to consistently maintain a primary budget surplus over the medium-term expenditure framework (MTEF) as a measure to moderate the pace of debt accumulation, and subsequently manage public debt levels,” he said at the time.
With the revisions above, the total public debt stock expressed as a ratio of GDP is estimated to reduce from 65.1% in FY2023/24 to 62.1% in FY2024/25.
Shiimi further estimated the debt ratio to remain on a downward trend, reducing to 57.8% by the end of the MTEF.
“Accordingly, we remain committed to taking advantage of the current growth momentum to drive the debt metrics in the right direction, while still making the necessary provisions to meet our most urgent social and developmental needs,” said the minister.