Households borrow N$1.8 billion more in October

Namibian households borrowed N$68.2 billion in October, up from N$67.8 billion the previous month.

This is reflected in the N$1.8 billion increase in household borrowing from October 2023 to October 2024.

This contributed to a rise in private sector credit extension (PSCE) in October, which registered its highest growth in 18 months at 3.4% year on year (y/y), up from 3.0% in September.

According to Simonis Storm Securities economic researcher Almandro Jansen, this represents the strongest PSCE performance of the year, highlighting sustained growth momentum throughout 2024.

“Year to date, annual credit growth has averaged 2.2%, slightly below the 2.5% average recorded during the same period in 2023,” the researcher notes.

Jansen attributes the October uptick primarily to the robust corporate credit demand, supported by easing monetary conditions.

Corporate credit growth surged to 4.4% y/y, the second time it has surpassed the 4% mark this year.

“This is a notable improvement from 3.3% y/y in September and a significant recovery from -1.4% y/y in October 2023,” he notes.

In contrast, however, Jansen says household credit growth decelerated to 2.7% y/y in October, down from 4.2% y/y in October 2023.

“This slowdown may be partly attributed to higher disposable incomes stemming from tax refunds.”
As of October 2024, Namibia’s corporate debt stock reached N$47.1 billion, reflecting an increase of N$410.5 million from September.

According to the analysis, corporate credit growth rose to 4.4% y/y, signalling increased investments in infrastructure, technology and capacity expansion. This broad-based growth suggests a positive outlook for the corporate sector.

Corporate instalment and leasing credit demand surged to N$6.2 billion, up significantly from N$4.9 billion in October 2023. This robust growth highlights increased business interest in leasing arrangements.

Corporate mortgage borrowing improved, rising 0.9% from N$13.807 billion in September to N$13.847 billion in October.

While overdraft facilities contracted by 10.4%, the value rose marginally from N$8.960 billion to N$8.968 billion, representing an improvement from 11.8% contraction recorded in September.

Despite the N$1.8 billion growth, household credit expansion remains subdued, highlighting cautious borrowing behaviour amid a dynamic economic environment.

According to Jansen’s analysis, mortgage lending grew modestly from N$45.6 billion to N$45.7 billion, representing a y/y growth rate of 0.9%.

“This marks a significant slowdown compared to the 3.0% y/y growth recorded in October 2023, with the deceleration in mortgage uptake likely due to the lingering effects of elevated interest rates, which have dampened demand for home loans,” says Jansen.

Other loans and advances increased by 7.3% y/y in October, up from 6.9% y/y in September, suggesting a potential recovery in consumer confidence.

Overdraft facilities saw a sharp contraction of 9.3% y/y, a stark contrast to the 25.1% y/y growth recorded in October 2023.

“This decline may indicate reduced household reliance on short-term credit for immediate expenses, potentially supported by improved liquidity due to tax refunds received during the month,” Jansen notes.

Instalment and leasing credit posted robust growth of 12.3% y/y, a significant improvement compared to the 3.2% y/y growth recorded in October 2023.

“While household debt continues to rise incrementally, the varying performance across credit categories highlights shifting consumer behaviour and evolving economic conditions,” he adds.
– email: matthew@namibian.com.na