Individual borrowing accumulated in 12 months reaches N$2.39 billion
Over the 12-month period ended October 2020, credit extended to individuals has reached N$2.39 billion, according to the Bank of Namibia.
On the single month of October, credit extended to individuals increased by 0.7%. This growth has mostly been driven by an increase in credit card debt, personal and term loans. Overdrafts grew by 1.1%, indicating continued use of short-term credit by individuals.
On the other hand, longer-term credit agreements like mortgages and instalment credit continued to slow. Mortgages declined by 0.8%, as housing purchases continue to slow in value terms. Instalment credit grew by 0.1% monthly but was down 5.3% year on year as new vehicle sales continue to dwindle, declining 27.3% year on year.
Meanwhile, credit extended to corporates contracted by 0.8% in October, following similar contractions in September.
The overall credit extended to the private sector increased by N$71.6 million or 0.1% in October, bringing the cumulative credit outstanding to N$102.95 billion.
IJG Research however shows that credit uptake remains weak, as the base of growth, individual mortgages, continues to slow, this as a result of economic activity, which was slow before the pandemic, has been hit hard by global lockdowns, and recovery may take years to materialise.
“Additionally, corporates continue to repay debt and de-lever their balance sheets. If these trends continue, we are likely to see private sector credit extension contract on an annual basis in the coming months,” IJG noted.
