Businesses boost credit uptake in April 2022

Businesses in the agricultural and health services sectors as well as the commercial rental property space boosted credit uptake during April 2022. Loans advanced to businesses rose to 5.9% at the end of April 2022, relative to a growth of 1.9% a month ago, according to the Bank of Namibia (BoN).Overall, growth in private sector credit extension (PSCE) increased to 3.8% at the end of April 2022 compared to 2.1% at the end of March 2022, the highest recorded since July 2021 when a growth of 3.0% was observed.Growth in credit extended to households moderated to 2.2% at the end of April 2022, compared to a growth of 2.3% reported at the end of the preceding month, BoN said.According to Simonis Storm, year to date, net growth in household debt has been on a declining trend, with monthly annual growth rates averaging 2.7% for mortgages, 0.3% for overdrafts and 1.2% for instalment credit.As for comporates, credit uptake has been trending upwards year to date, with monthly annual growth rates averaging 5.1% for mortgages, -3.7% for overdrafts and 9.2% for instalment credit, Simonis pointed out.On 13 April 2022, the central bank increased the cost of borrowing. The repo rate increased by 25 basis points to 4.25%, bringing the prime lending rate at 8.0%. The next monetary policy announcement is set to take place on 15 June 2022. Local analysts expect a repo rate hike following the South African Reserve Bank (SARB) decision to increase the repo rate by 50 basis points to 4.75% at its May 2022 meeting.PRICE MONSTER“Historically, growth in private sector credit extension still remains subdued as low borrower’s appetite persists for credit amid a rise in inflation,” BoN pointed out.During April 2022, inflation which was main driven by transport and food and non-alcoholic beverages which stood at 5.6%, compared to 3.9% recorded in April 2021.Transport inflation stood at 18.9%, up from 13.8% recorded in March 2022, while food and non-alcoholic beverages inflation stood at 5.7%, compared to 4.6% in the preceding month, according to the Namibia Statistics Agency (NSA).Prices in the transport category were mainly driven by fuel, while inflation in the food and non-alcoholic beverages category was driven by oil and fats.On Monday the Ministry of Mines and Energy announced an increase in fuel prices, bringing it to a new all-time high.Since yesterday, motorists started paying N$2.50 per litre more for petrol and N$1.50 per litre extra for diesel. The increase could have been worse, thanks to a temporary three-month reduction in fuel levies.There is no doubt that every average Namibian consumer will be affected by the increase as fuel is a key input in various industries of the economy. Therefore, consumers can expect an increase in the prices of other goods and services.-phillep@nmh.com.na

Businesses boost credit uptake in April 2022

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Businesses boost credit uptake in April 2022

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