Business sector pays back N$1 billion in loans in June

Businesses repaid a net amount of N$1 billion in loans taken up for the month of June alone, IJG found in its assessment of the Private Sector Credit Extension for the same period.“A net amount of N$732.6 million was repaid to creditors during June, driven by a net repayment of N$1 billion by business, which was partially offset by individuals borrowing a net amount of N$285.3 million,” IJG said.According to the latest PSCE figures released by the Bank of Namibia (BoN), growth in credit remains subdued. PSCE fell by 0.64% from May through to June, translating to an annual growth of 1.81%.Big declineSectorally, overdraft lending fell 18.62% this year June compared to the same period in 2023, which is the largest decline in this credit type since 2005 and the fifth consecutive month that the credit type contracted, IJG noted.“Repayments by businesses in the commercial and services sector and the manufacturing sector drove overdraft lending down. However, the other credit types recorded growth,” IJG said.On the flipside, instalment credit has been the fastest growing credit sector. “The sector grew by 14.98% year-on-year in June, slightly slower than the 15.13% year-on-year in May. The growth of the tourism sector benefits instalment credit extension as rental companies are buying vehicles to meet volumes demanded,” IJG added.Pressure likelyWith repo rate figures on the increase since March 2023, IJG says it could put pressure on economic growth going forward.“Indeed, the real repo rate has been in positive territory since March 2023, reflecting a tightening of monetary conditions. This environment of higher real borrowing costs, combined with reduced credit availability, remains a concern for economic activity and investment,” it said.IJG was worried that the fall in PSCE growth could undermine a broader economic recovery.“The persistent contraction in real PSCE growth underscores challenges in stimulating private sector spending and investment, potentially impeding a broader economic recovery,” IJG said.“Thus, we remain of the view that meaningful expansion in consumer credit usage, which typically precedes broad-based business confidence, has yet to materialise. This indicates that, despite the robust economic growth reflected in real GDP prints, this growth is not broad-based,” it added.

Business sector pays back N$1 billion in loans in June

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Republikein 2025-11-12

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Business sector pays back N$1 billion in loans in June

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