Company debt stock reaches N$46 billion
2.1% year-on-year increase
The growth in credit uptake was primarily driven by increased corporate demand.
In August 2024, private sector credit extension (PSCE) in Namibia rose moderately to 2.1% year-on-year (y/y), up from 1.8% y/y in July 2024, though slightly lower than the 2.2% y/y recorded in August 2023. This marks the first increase in credit extension over the past two months, following a period of relative steadiness, according to Simonis Storm's private sector credit extension report. The growth in credit uptake was primarily driven by increased corporate demand, which rose significantly to 2.1% y/y in August 2024, compared to 0.8% y/y in July 2024 and a contraction of -2.0% y/y in August 2023. In contrast, credit extended to households experienced a decline, stabilising at 2.1% y/y for the third consecutive month, a notable slowdown from the 5.4% y/y recorded in August 2023.
The total corporate debt stock in Namibia stood at N$46.1 billion in August 2024, with credit growth reaching 2.1% y/y. This growth was primarily driven by a substantial increase in the "other loans and advances" category, particularly by corporates in the mining sector.
"This category recorded a noteworthy 11.1% y/y growth in August 2024, representing a significant turnaround from the -5.5% contraction observed in the previous year. The Bank of Namibia noted that the increased demand mainly originated from mining sector corporates, reflecting heightened business confidence and a push for financing operations and expansion. This sentiment contrasts with the Q2 2024 GDP data from the Namibia Statistics Agency (NSA), which indicated continued negative growth in the mining sector for the first time since Q2 2021," Simonis Storm said.
According to Simonis Storm, this discrepancy between credit uptake and sectoral performance may indicate that the credit expansion is aimed at addressing future expectations or overcoming current challenges within the industry. Corporate instalment and leasing credit witnessed a decline of 24.3% y/y in August 2024, slightly lower than the 26.7% y/y decline recorded in July, with activity primarily driven by the tourism sector.
Mortgage loans
Meanwhile, mortgage loans for businesses showed an improvement, with a contraction of -0.7% y/y in August 2024 compared to -4.4% y/y in August 2023, indicating a modest recovery in corporate real estate borrowing – largely attributed to the recent reduction in interest rates. Additionally, corporate overdrafts decreased by 18.8% y/y in August 2024, an improvement from the -23.3% y/y recorded in the previous month. This suggests that businesses might be managing their cash flows more effectively or turning to alternative forms of financing.
"Household credit dynamics in August 2024 revealed a mixed picture. Total debt stock among households increased by N$125.94 million month-on-month and by N$1.3 billion year-on-year, although overall growth remains subdued. Mortgage loans declined by 1.1% y/y, reversing the 3.1% y/y growth observed in August 2023, primarily due to the impact of the previous high-interest rate environment. This decline highlights continued caution in long-term borrowing among households," Simonis Storm said.
Loans and advances
In contrast, it noted other loans and advances grew by only 1.5% y/y, a sharp decline from the 14.9% y/y increase recorded in the previous year, indicating more conservative borrowing behaviour.
However, overdrafts surged by 10.2% y/y – a significant improvement from the 3.5% y/y decline noted in August 2023 – suggesting an increased demand for short-term credit among households, likely driven by immediate financial needs amid persistent inflationary pressures.
"Instalment and leasing credit expanded by 6.7% y/y, surpassing the 6.1% y/y growth seen last year, which points to a resilient demand for financing vehicles and other durable goods. On the other hand, claims by non-residents saw a marked decline, contracting by 14.5% y/y compared to a 1.8% y/y increase in August 2023. The total debt stock held by non-residents stood at N$6.5 billion by the end of August 2024, reflecting a contraction in external borrowing or a repayment of existing liabilities," Simonis Storm said.