Businesses bleeding red ink
Private sector credit extension increased by 1.5% year-on-year in September, compared to 2.2% growth recorded in August representing the lowest level of annual growth since 2002.
PHILLEPUS UUSIKU
Despite the Bank of Namibia (BoN) cutting interest rates several times to make borrowing attractive for individuals and businesses to help stimulate the economy, growth in credit extension remain extremely weak.
According to IJG Securities, credit extended to businesses contracted by 0.8% month-on-month and 2.2% year-on-year in September, following the low growth of 1.8% month-on-month and 0.4% year-on-year in August.
Instalment credit extended to businesses, which has been contracting since February 2017 on an annual basis, remained depressed, contracting by 2.5% month-on-month and 15.6% year-on-year in September, IJG says.
Credit extended to individuals increased by 0.5% month-on-month and 5.0% year-on-year in September. The month-on-month growth has mostly been driven by an increase in other loans and advances which grew by 1.4% month-on-month and 14.0% year-on-year in August, IJG added.
Overdraft facilities extended to individuals increased by 0.7% month-on-month and 4.2% year-on-year. Instalment credit and leasing transactions remained steady month-on-month, but contracted by 5.2% year-on-year.
Overall
Overall, total credit extended to the private sector (PSCE) decreased by N$106.9 million or 0.1% month-on-month in September, bringing the cumulative credit outstanding to N$102.88 billion.
On a year-on-year basis private sector credit extension increased by only 1.5% year-on-year in September, compared to 2.2% growth recorded in August. This represents the lowest level of annual growth since 2002, IJG said.
N$2.80 billion worth of credit has been extended to individuals on a 12-month cumulative basis, while businesses and the non-resident private sector decreased their borrowings by N$943.7 million and N$372.3 million, respectively, IJG pointed out.
Also commenting on the statistics, Cirrus Capital mentions that they believe this slowing growth is not so much driven by weak demand, but rather weak tangible demand and increased caution exercised by lenders resulting in lower supply. [email protected]
Despite the Bank of Namibia (BoN) cutting interest rates several times to make borrowing attractive for individuals and businesses to help stimulate the economy, growth in credit extension remain extremely weak.
According to IJG Securities, credit extended to businesses contracted by 0.8% month-on-month and 2.2% year-on-year in September, following the low growth of 1.8% month-on-month and 0.4% year-on-year in August.
Instalment credit extended to businesses, which has been contracting since February 2017 on an annual basis, remained depressed, contracting by 2.5% month-on-month and 15.6% year-on-year in September, IJG says.
Credit extended to individuals increased by 0.5% month-on-month and 5.0% year-on-year in September. The month-on-month growth has mostly been driven by an increase in other loans and advances which grew by 1.4% month-on-month and 14.0% year-on-year in August, IJG added.
Overdraft facilities extended to individuals increased by 0.7% month-on-month and 4.2% year-on-year. Instalment credit and leasing transactions remained steady month-on-month, but contracted by 5.2% year-on-year.
Overall
Overall, total credit extended to the private sector (PSCE) decreased by N$106.9 million or 0.1% month-on-month in September, bringing the cumulative credit outstanding to N$102.88 billion.
On a year-on-year basis private sector credit extension increased by only 1.5% year-on-year in September, compared to 2.2% growth recorded in August. This represents the lowest level of annual growth since 2002, IJG said.
N$2.80 billion worth of credit has been extended to individuals on a 12-month cumulative basis, while businesses and the non-resident private sector decreased their borrowings by N$943.7 million and N$372.3 million, respectively, IJG pointed out.
Also commenting on the statistics, Cirrus Capital mentions that they believe this slowing growth is not so much driven by weak demand, but rather weak tangible demand and increased caution exercised by lenders resulting in lower supply. [email protected]
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