Private sector credit extension ticked a touch higher in February
Private sector credit extension (PSCE) growth increased to N$2.44 billion in February, but credit demand remains subdued due to the economic stagnation since 2016.
The February figure brings the combined credit outstanding to N$113.1 billion. According to the Bank of Namibia’s latest Money and Banking Statistics report, growth in total credit extended to businesses increased by 2.7% in February, compared with a growth of 2% in January.
This is attributed to the higher demand for asset-backed credit facilities specifically by corporates in the fishing, transport, and financial services industries.
Growth in credit extended to households grew at a slower pace of 2.9% in February compared with 3.2% in January, largely due to mortgage and overdraft credit.
Looking at the monetary aggregates, the expansion in broad money supply (M2) slowed slightly to 1.6% in February compared with higher growth of 1.7% logged in the preceding month.
According to the central bank, the decrease in M2 stemmed mainly from declines in net claims on the central government and a contraction in longer-dated deposits.
Shelly Louw, PSG Namibia’s research analyst said the monetary and credit aggregates did not show any signs of a resurgence in credit demand and economic growth in the first two months of 2022.
“We expect PSCE growth to pick up gradually and moderately over the course of the year as an economic growth recovery gains traction,” Louw added.
