Namibia experiencing credit saturation?

Capricorn Group Economist Rowland Brown suggests that Namibia is starting to reach a point of credit saturation as a result of a dramatic decline in growth in money supply (m2) experienced in January.
Latest figures released by the Bank of Namibia show a dramatic decline in growth in m2 in January. At just 7.1% growth, money supply expanded well below the average level seen in the second half of 2011 (10.6%).
“This slowing of growth is most likely due to the festive period with holidays stretching into the first half of January, in which limited new credit is taken out due to the closure of many businesses in the country (estate agents and car dealers amongst others) and reduced demand for credit from individuals on holiday.
“As such January is usually a fairly low month when it comes to money supply growth, and in this 2012 is no exception. As well as the festive period, it is possible that we are starting to reach a point of credit saturation, where those wishing to take out credit at the current rate have already done so, fulfilling their appetite for such credit at the current interest rates.,” Brown said.
Private sector credit (PSC) growth rebounded somewhat in January from the slightly lackluster growth seen in late 2011. At 11.2% this growth ,Rowland said, remains highly respectable, although slightly below the 2011 average of 11.3%.
According to the central bank, the increase in growth seen in January was largely due to increase business credit extension in the month, “mainly to mining companies borrowing to fulfill contractual obligations.”
After suffering from very weak growth of just 5.8% in December, business credit extension rebounded strongly in January to 11.8%. Credit to companies increased from N$14.5 billion in January 2011, to N$16.2 billion in January 2012.
The majority of the increase in business credit extension was driven by increases in overdraft, mortgage lending and installment credit.
Adversely, credit to individuals declined slightly in January 2012, to 10.9%, from the previous months and annual high of 2011 of 12.2%. The primary driver for this slight decline in growth was a reduction in mortgage loans taken out over the festive period and early on in 2012.
Overdraft lending continued to contract, however by a lesser amount in January, from 14.7% in  December to 7.7% in January.
Mortgage lending makes up the largest component of total loans advanced. After reaching an annual high in December 2011 of 15.6% growth, mortgage lending growth slowed slightly in January to  14.7%. The decline was primarily attributed to a slight reduction in mortgage credit extension to individuals in the first month of the year.