Private sector credit extension remains subdued
During September, total credit extended to the private sector decreased by N$106.9 million, bringing the cumulative credit outstanding to N$102.88 billion.
The month under review also shows that credit extended to corporates contracted by 0.8% while credit extended to individuals increased by 0.5%.
In an analysis report, IJG said the data shows that while the various rate cuts by the Bank of Namibia would have provided relief to those who are heavily indebted, it did not spur on additional credit uptake, as predicted.
“The heightened uptake of short-term personal debt and overdrafts is a sign of a stretched consumer, many of whom will have been negatively impacted by the effect of the pandemic and resultant lockdowns,” the firm noted.
As economic activity is expected to remain depressed for quite some time, IJG does not expect to see a recovery in credit extension in the short term.
“Corporates continue to deliver, indicating that they are not preparing to invest in capital expansion projects anytime soon, which makes sense given the current economic climate,” IJG said.