Risk appetite among borrowers remains subdued
Credit extended to the private sector moderated to 2.6% in June 2021 from 2.7% a month earlier, according the Bank of Namibia.
Credit growth continues to be driven mainly by households, which saw a flat annual credit growth of 4% in June. The biggest contributors to this were overdrafts, slowing to 5% in June (compared to 5.1% in the prior month) and mortgage loans, remaining flat at 4.9%.
Based on data available, risk management firm Simonis Storm Securities, estimates that
the average household in Namibia has about N$98,000 in debt.
“Using the average income for both males and females from the 2018 Labour Force Survey (the latest version) and assuming each household has both an employed male and female, each household currently has about 6 months’ salary in debt,” Theo Klein, an economist at the firm said.
Corporates, on the other hand, continue to borrow cautiously. Lower demand from businesses in the financial services and construction sectors weighed on credit extended to corporates, according to the central bank.
Corporate credit growth slowed to 0.8% in June compared to 1.2% in May. This moderated corporate borrowing was mainly attributed to overdrafts, which slowed sharply to 5.7% in
June (compared to 10.2% in May). This drop was mainly caused by repayments by businesses in
the fishing, agricultural and wholesale and retail sectors according to the central bank.
Growth in overdraft credit for businesses and households combined, slowed to 5.6% in June 2021 (compared to 9.2% in May 2021).