{"id":23728,"date":"2020-03-04T16:25:59","date_gmt":"2020-03-04T14:25:59","guid":{"rendered":"https:\/\/ijg.net\/research\/?p=23728"},"modified":"2020-03-04T16:26:00","modified_gmt":"2020-03-04T14:26:00","slug":"psce-january-2020","status":"publish","type":"post","link":"https:\/\/ijg.net\/research\/psce-january-2020\/","title":{"rendered":"PSCE \u2013 January 2020"},"content":{"rendered":"\n
\"\"<\/figure>\n\n\n\n

Overall<\/strong><\/p>\n\n\n\n

Private sector credit (PSCE) increased by N$304.6 million\nor 0.3% m\/m in January, bringing the cumulative credit outstanding to N$104.0\nbillion. On a year-on-year basis, private sector credit grew by 7.0% y\/y in\nJanuary, on par with December\u2019s increase of 6.9% y\/y. Cumulative credit\nextended to the private sector over the last 12-months amounted to N$6.77\nbillion. Of this cumulative issuance, individuals took up N$3.9 billion worth\nof debt while N$3.1 billion was extended to businesses. The non-resident\nprivate sector decreased their borrowings by N$200.6 million.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Credit Extension to Individuals<\/strong><\/p>\n\n\n\n

Credit\nextended to individuals increased by 7.0% y\/y in January, compared to 7.2% y\/y\nrecorded in December. On a monthly basis, household credit decreased by 4.4%.\nThis relatively large decline seems to be due to individuals paying back overdrafts\nduring the month, resulting in an 18.1% m\/m decrease in this category. There\nhas been a corresponding jump in the overdrafts and other loans and advances\ncategories for businesses which suggests a reclassification between individuals\nand businesses. The \u2018Other loans\nand advances\u2019 to individuals category recorded a decline of 13.3% m\/m, while\nthe same category for corporates jumped by 17.8% during the month. Installment\ncredit increased by 2.5% m\/m, while mortgage loans extended to individuals\ndecreased by 2.7% m\/m.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Credit Extension to Corporates<\/strong><\/p>\n\n\n\n

Credit\nextension to corporates grew by 7.5% y\/y in January, rising at a quicker rate\nthan the 7.1% y\/y increase recorded in December. On a month-on-month basis,\ncredit extension to corporates rose 7.3% in January, the highest monthly\nincrease since January 2007. Most of this stemmed from a substantial 17.8% m\/m\nincrease in \u2018other loans and advances\u2019 and a 10.0% m\/m increase in overdraft\nfacilities extended to corporates, which is likely due to a reclassification as\nnoted above. Mortgage loans to corporates also saw a sizeable increase of 8.9%\nm\/m. Leasing transactions to\ncorporations increased by 51.0% m\/m, although this is from a low\nbase. <\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Banking Sector Liquidity <\/strong><\/p>\n\n\n\n

The overall\nliquidity position of commercial banks deteriorated further during January,\ndeclining by N$935.0 million to reach an average of N$47.7 million. According\nto the Bank of Namibia, the decline is a result of seasonal factors following a\ndecrease in cash balances from the banking system over the festive season, as\nwell as commercial banks\u2019 accumulated long positions in liquid assets. The low\nliquidity position has meant that commercial banks had to utilize the BoN\u2019s\nrepo facility, with the balance of repo\u2019s outstanding increasing from N$1.75\nbillion at the start of January to N$2.04 billion at the end of the month.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Reserves\nand Money Supply<\/strong><\/p>\n\n\n\n

Broad money supply rose by N$11.0 billion or 10.6% y\/y in\nJanuary, as per the BoN\u2019s latest monetary statistics release. Foreign reserve\nbalances rose by 7.3% m\/m to N$31.0 billion in January. The BoN attributed the\nincrease to the inflow of SACU receipts during the period.<\/p>\n\n\n\n

\"\"<\/figure>\n\n\n\n

Outlook<\/strong><\/p>\n\n\n\n

Overall PSCE growth in\nJanuary was very much in line with the growth seen in December on a\nyear-on-year basis, increasing by 7.0%. Rolling 12-month private sector credit\nissuance is up 1.2% to N$6.8 billion as at the end of January 2019, with\nindividuals taking up most (56.9%) of the credit extended over the past 12\nmonths.<\/p>\n\n\n\n

The BoN\u2019s MPC unsurprisingly\nfollowed the SARB\u2019s MPC decision to cut the repo rate by 25-basis points at its\nmeeting in February. While this should provide some relief to heavily indebted\nconsumers, we don\u2019t anticipate that further accommodative monetary policy will\nbe effective in stimulating economic activity to the extent that it reverses\nthe current low growth trend. <\/p>\n\n\n\n

January\u2019s PSCE data shows\nthat businesses continue to be dependent on short-term debt, particularly in\nthe form of overdrafts and credit card debt. Businesses\u2019 reliance on short-term\ndebt is concerning, but not unexpected, given the fact that Namibia remains in\nan economic slump. While we do believe that there will be marginal economic\ngrowth in 2020, it will largely be due to base effects and not a significant\nimprovement in economic conditions. Businesses and consumers are thus expected\nto continue to rely on short-term debt as a means of making ends meet for as\nlong as economic conditions remain challenging.<\/p>\n","protected":false},"excerpt":{"rendered":"

Overall Private sector credit (PSCE) increased by N$304.6 million or 0.3% m\/m in January, bringing the cumulative credit outstanding to N$104.0 billion. On a year-on-year basis, private sector credit grew by 7.0% y\/y in January, on par with December\u2019s increase of 6.9% y\/y. Cumulative credit extended to the private sector \u2026 Continue reading → <\/span><\/a><\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[6,22],"tags":[],"class_list":["post-23728","post","type-post","status-publish","format-standard","hentry","category-economicresearch","category-psce"],"jetpack_featured_media_url":"","_links":{"self":[{"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts\/23728","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/comments?post=23728"}],"version-history":[{"count":1,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts\/23728\/revisions"}],"predecessor-version":[{"id":23735,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/posts\/23728\/revisions\/23735"}],"wp:attachment":[{"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/media?parent=23728"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/categories?post=23728"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/ijg.net\/research\/wp-json\/wp\/v2\/tags?post=23728"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}