PSCE – September 2017


Total credit extended to the private sector increased by N$287.3 million or 0.32% m/m in September, bringing the cumulative credit outstanding to N$88.8 billion. On a y/y basis, credit extended to the private sector rose by 5.24% in September, compared to growth of 6.35% in August. Growth in total credit extended to the private sector continued to fall on a rolling 12-month basis as N$4.42 billion worth of credit has been extended over the last 12 months, down from N$8.42 billion in the prior 12-month period. N$1.38 billion of this cumulative issuance was issued to corporates and N$3.13 billion to individuals, while claims on non-resident private sector credit decreased by N$89.33 million y/y.

Credit extension to households

 Credit extended to individuals increased slightly from 6.38% y/y in August to 6.45% y/y in September. This follows a significant slowdown in credit extension to individuals that grew at an average of 8.7% y/y for the first six months of the year. Credit extended to individuals increased by 0.59% m/m in September. Installment credit contracted by 0.93% m/m and 0.6% y/y. The effects of the amendments to the Credit Agreement Act continue to be felt 6 months after implementation. Subdued vehicle sales volumes serve as testament to the contraction in installment credit, which is largely used as means of vehicle financing. The value of mortgage loans extended to individuals increased by 0.9% m/m and 6.4% y/y. Overdraft facilities extended to individuals recorded no change m/m while increasing by 11.6% y/y. Other loans and advances recorded growth of 0.9% m/m and 17.3% y/y.

Credit extension to corporates

Credit extension to corporates printed flat m/m in September, compared to the 2.1% rise registered in August. Y/y credit extension rose 3.9%, down from the 6.0% growth recorded in August. Installment credit extended to corporates contracted by 0.6% in September. Y/y installment credit extended to corporates has contracted by 7.4%. Mortgage loans extended to corporates increased by 10.9% y/y and contracted by 0.4% m/m. Overdraft facilities extended to corporates rose 0.1% m/m and 9.9% y/y.

Banking Sector Liquidity

The average monthly liquidity position of commercial banks decreased slightly to N$3.55 billion in September from N$3.91 billion in August. The decrease is attributed to cross border payments made during the month of September.

Reserves and money supply

Foreign reserves rose by N$842.02 million to N$31.4 billion at the end of September from N$30.62 billion in August. According to the Bank of Namibia the increase in the level of reserves stemmed from the repayment of debt by the Banco Nacional de Angola as well as exchange rate effects. This is a welcome sight following that government has confirmed settling of all outstanding invoices, which was most likely done through the AfDB loan facility.


Private sector credit extension continues its downward trend with persistent subdued growth. Expectations of easing monetary policy was blown out the water, when the South African Reserve Bank (SARB) kept rates unchanged at its September MPC meeting. The more defining moment was when finance minister, Malusi Gigaba, presented the midterm budget framework to parliament sighting revenue shortfalls and the subtle hint of abandonment of fiscal discipline. This reaffirmed fears that South Africa might be see its local currency downgraded as early as December. This could in turn result in the country falling out of global bond indexes. The exclusion from these indices will trigger huge bond selloffs that will impact the rand negatively. If these events materialize and inflation ticks upward outside of the SARB’s 6% target monetary policy is likely to enter a hiking cycle which will place further pressure on consumers.

The Bank of Namibia (BoN), as a result of its mandate to maintain the currency peg with the South African rand, will then follow with the same monetary stance. Following the tabling of Namibia’s own midterm budget review yesterday, local risk in expenditure overruns characterize the state of Namibian finances. Expected increases in domestic debt that will result in debt to GDP exceeding 44% are anticipated. Debt to GDP is forecasted to moderate over the MTEF period although guidance in prior budgets pointing to this have not led to this materializing. Credit ratings agencies will not look favourably on further fiscal slippage.

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