Private sector credit increases by over N$277 million in December
Private sector credit increased by N$277.2 million (0.3%) in December, bringing the cumulative credit outstanding to N$105.4 billion, results by the Bank of Namibia show.
On a rolling 12-month basis, N$1.64 billion worth of credit was extended to the private sector. Compared to the previous year, the rolling 12-month issuance is down 75.5% from the N$6.71 billion issuance observed by the end of December 2019.
Of this cumulative issuance, individuals took up N$2.60 billion, while corporates reduced their borrowings by N$546.0 million and the non-resident private sector repaid N$414.7 million of their borrowings.
Credit extended to individuals increased by 0.5% in December, growing at a slightly quicker pace than the 4.2% increase recorded in November. This growth mostly stemmed from instalment credit which grew by 1.4%. Instalment credit, however, remains down on an annual basis, falling by 2.6% in December, although at a slower rate than in the prior 11 months.
IJG Research noted that overall, private sector credit growth remained depressed in 2020, slowing from the roughly 6% growth observed at the beginning of the year to the 1-2% range at the end of the year.
“The slowdown in growth was especially evident from May onwards, as corporates started repaying their debt,” IJG said. “Corporate demand for instalment and leasing credit contracted sharply during the year, indicating that corporates are hanging on to their existing fleet and machinery.”
Credit extended to corporates grew by 0.2% after increasing by 2.4% in November, however, on an annual basis, credit extended to corporates contracted by 1.2%.
“This is to be expected in the current economic climate where the is little reason for businesses to expand their current operations as no significant improvement in economic growth is expected,” IJG noted.
