Private sector credit slows for fourth consecutive month
The latest statistics from the Bank of Namibia show credit extended to the private sector remained depressed at the end of May, increasing by only 1.8%, with annual growth slowing for a fourth consecutive month.
The credit declined by N$129.9 million or 0.13% in May, bringing the cumulative credit outstanding to N$102.29 billion, with individuals taking up N$2.92 billion, while corporates decreased their borrowings by N$748.1 million, and the non-resident private sector paid back N$342.3 million of their borrowings.
Cumulative 12-month private sector credit issuance is down 75.5% from the N$7.46 billion figure as at May 2019. Rolling 12-month issuance of N$1.83 billion is now at levels last seen in 2005.
Meanwhile, analysis by IJG Research suggests that despite Namibian interest rates now being at their lowest levels yet, there is no expectation that either consumers or corporates will to rush to commercial banks to take up large sums of debt any time soon.
The research agency notes that this is is because economic activity remains very low and a lack of demand means that growth opportunities for businesses remain extremely slim.
“Businesses that do make use of credit will likely mostly do so to keep their doors open, instead of investing in capital projects. Banks will furthermore remain cautious in extending loans as their risk appetite will be low given the current economic environment,” IJG noted.