Private sector loans set at N$87.9 billion
Total credit extended to the private sector increased by N$387.7 million (0.44%) in July, bringing the cumulative credit outstanding to N$87.9 billion.
IJG securities stated that private sector credit extension remains very subdued continuing to slowdown as the year progresses.
“The current slowdown in private credit extension is testament to an already stressed consumer. A scenario that speaks of low consumer and business confidence. A consumer that is already overburdened and may soon face further tightening of credit qualifying criterion, should our expectations of the effects of IFRS9 come to fruition,” IJG reported.
Growth in total private sector credit extension continues to fall in 2017, on a rolling 12-month basis N$5.6 billion worth of credit was extended. Meanwhile, N$1.71 billion in credit has been extended to corporates and N$3.97 billion to individuals on a 12-month cumulative basis, while the non-resident private sector has decreased their borrowings by N$31.15 million.
The South African Reserve Bank (SARB) cut its repo rate by 25 basis points in July, this, IJG stated, however did little to avoid an unexpected slowdown in South Africa’s private sector growth that moderated to 5.71% in July from 6.16% in June. Bank of Namibia (BoN) followed suit in effecting a rate cut of 25 basis points as well, citing the need to support an ailing economy and maintaining the currency peg between the Namibian Dollar and the SA Rand.
“The improvement in foreign currency reserves does bode well in achieving the its goal of maintaining the peg. Further rate cuts are expecting at Monetary Policy Committee meeting in August and September for the SARB and BoN respectively. Should that hold to be true, we might see an increase in private credit extension, since a single reduction of 25 basis points was going to do little to spur on demand for credit,” IJG stated.