Households more confident than businesses

PHILLEPUS UUSIKU Households showed more credit uptake appetite than businesses for the month May 2021. According to the Bank of Namibia (BoN) money and banking statistics, the annual growth in credit extended to households edged higher to 4.0% at the end of May 2021 from 3.9% in April 2021. The slight increase in growth reflected a rise in demand for credit by individuals in the form of overdrafts, other loans and advances and instalment and leasing sales.In addition, growth in credit extended to businesses edged lower at 1.2% in May 2021, compared to 2.0% in the preceding month. The decrease reflects a lower uptake of credit specifically by corporations in the wholesale and retail trade sector as well as the energy and financial services sectors during the review period, BoN said.Overall, credit extended to the private sector moderated to 2.8% year-on-year in May 2021 from 3.1% year-on-year in April 2021. Nonetheless, private sector credit extension (PSCE) growth remains subdued due to the persistent sluggish domestic economic activity and low transaction demand reinforced by the Covid-19 pandemic.The repo rate currently stands at its historic low level of 3.75% to make borrowing attractive for both households and businesses in order to boost economic activities. Analysts expect the repo rate to remain unchanged for the rest of the year.LoansGrowth in other loans and advances rose at the end of May 2021. The 12-month growth in other loans and advances rose to 1.3% at the end of May 2021 from a growth rate of 1.1% at the end of April 2021. The rise was mainly due to higher demand for short-term credit by both households and businesses, specifically corporates in the financial services sector and construction sectors during the period under review, the central bank said.Instalment sale and leasing credit growth recorded a less steep contraction in May 2021. The annual growth in instalment and leasing sales credit registered a contraction of 2.9% at the end of May 2021, compared to the 3.9% in the preceding month.The sluggish growth in instalment and leasing credit is consistent with the deteriorating number of vehicles sold during the review period. This is despite improved contractions recorded in recent months, BoN added.Property marketGrowth in mortgage credit extended to the private sector slowed at the end of May 2021. The annual growth in mortgage credit edged lower at 3.1% at the end of May 2021 from 3.5 percent at the end of April 2021. The decline in mortgage credit was due to a contractionary demand from businesses and a moderate decline from the household sector, BoN pointed out.According to Simonis Storm (SS), “while there has been some recovery in the property market in terms of volumes sold, we believe it is likely that majority of the increase in mortgages rather reflect households refinancing their existing mortgage bonds to supplement suppressed incomes. Instalment and leasing credit rose marginally to 1.5% year-on-year in May 2021.”The inflection point is indicative that households are finding it more difficult to keep afloat given the current subdued environment. There are various arguments to be made for corporates, they might be pessimistic about future business opportunities and demand less credit as a result, corporate credit could be decreasing due to insolvencies or corporates are paying off debts at a faster pace due to lower interest rates, SS said.Namibia’s annual inflation rate stood at 3.8% in May 2021, lower than the 3.9% in April 2021. The decrease in inflation in May was predominantly evident in the price level of transport, alcohol and beverages, furnishing and household items during the period under review, BoN pointed out.

Households more confident than businesses

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Republikein 2026-05-04

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Households more confident than businesses

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Republikein 2026-05-04

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