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Mineral exports push banking liquidity to N$6.2 billion

Mineral exports push banking liquidity to N$6.2 billion

The overall banking liquidity position stood at N$6.2 billion on 1 June and according to the central bank, this is the highest it has been since August 2017.

The liquidity position in Namibia stood at N$4.6 billion, while in neighbouring South Africa it stood at N$1.6 billion which brought the overall position to N$6.2 billion.

Speaking to the Economist, the Bank of Namibia explained that the liquidity position of the Namibian banking industry has been generally high when compared to historical levels, with recorded similar high liquidity levels last observed during August 2015.

Kazembire Zemburuka, Deputy Director: Corporate Communications at the central bank said the banking sector’s liquidity is influenced by many factors, which include government spending patterns as well as the inflow of export proceeds into the country.

“The recent increase in the liquidity position has been largely on the back of mineral export proceeds,” Zemburuka said.

Proceeds are usually used to finance imports of material used in the production process and for investment purposes.

“In line with this, the funds usually flow out for import financing purposes as well as in search of investment opportunities outside the country. Given the above, the liquidity levels are expected to normalize to standard levels,” Zemburuka added.

Meanwhile, the overall liquidity position of commercial banks increased by N$190 million to an average of N$3.2 billion during April. According to the central bank, government payments and mineral sales proceeds of about N$1 billion contributed to the improved liquidity position during the month.

Caption: The mining sector is the fastest growing sector in Namibia, contributing largely to the local economy.

About The Author

Donald Matthys

Donald Matthys has been part of the media fraternity since 2015. He has been working at the Namibia Economist for the past three years mainly covering business, tourism and agriculture. Donald occasionally refers to himself as a theatre maker and has staged two theatre plays so far. Follow him on twitter at @zuleitmatthys