Africa-Press – Namibia. NAMIBIA’S Total Private Sector Credit Extension (PSCE) edged up slightly to 5.8% year-on-year (y/y) in August 2025, compared to 5.7% y/y in July, underscoring a gradual recovery in credit demand. The current figures suggest a more favourable credit environment and improved market sentiment when compared to the subdued growth of 2.1% y/y observed in August of last year.
The modest acceleration in PSCE was primarily fuelled by corporate sector borrowing, while household credit expansion remained relatively restrained. Corporate borrowing continues to drive overall PSCE growth, a trend observed since early 2025.
Corporate Sector Maintains Momentum
The corporate credit segment continued to be the main growth driver, with y/y growth rising to 10.3% in August 2025 from 10.1% in July. This reflects ongoing business investment and operational financing needs. This acceleration was significantly higher than the 2.1% recorded a year earlier.
Corporate borrowing was supported by increases in specific subcategories:
However, not all segments grew. Overdraft lending continued to contract for corporates, declining to 20.9% y/y in August, as firms in the manufacturing, financial, and agriculture sectors increasingly settled outstanding debts. Additionally, corporate mortgage credit remained in negative territory for the tenth consecutive month, with flat growth at -2.3% y/y in August.
Looking forward, corporate credit growth is expected to maintain momentum, with PSCE growth forecast to average around 4.8% in 2025, with corporate borrowing, particularly in the manufacturing and mining sectors, being the main driver.
Households Face Persistent Affordability Constraints
In contrast to the corporate sector, household credit growth showed only a modest improvement, rising slightly to 2.8% y/y in August from 2.7% y/y in July.
Household borrowing capacity continues to be limited by sluggish income growth. Affordability challenges are cited as a key factor: according to the 2023 Labour Force Survey, more than 55% of employed Namibians earn below N$5,000 per month, while only 2.6% earn over N$40,000.
Among household subcategories:
Instalment sales and leasing credit (combining corporate and household segments) rose to 17.5% y/y overall, in line with robust vehicle sales which increased by 26.7% y/y in August. This boost was likely due to activity in the tourism and rental sector.
Monetary Policy and Economic Context
For household credit growth to strengthen sustainably, meaningful improvements in both purchasing power and housing availability will be essential. The Bank of Namibia (BoN) recently issued a directive for commercial banks to reduce prime lending margins, which may help ease borrowing costs and potentially stimulate credit uptake among households.
Despite this effort, the BoN opted to keep the repo rate unchanged following its 13 August 2025 meeting. The BoN is expected to hold this stance at the upcoming MPC meeting on 15 October 2025.
In terms of price stability, Namibia’s inflation slowed to 3.2% y/y in August, down from 3.5% y/y in July, reflecting weaker price increases in food, housing, utilities, and transport. Inflation is expected to rise modestly to 3.5% by December this year.
In related economic indicators, growth in broad money supply (M2) slowed slightly to 10.2% y/y in August, compared to 10.4% in July. Furthermore, international reserves declined by NAD1.1 billion in August, reaching NAD56.9 billion, driven by increased government foreign payments and withdrawals of Customer Foreign Currency holdings. Despite the decline, the current reserve level remains adequate to support the BoN’s mandate of maintaining the country’s macroeconomic stability effectively.
Source: FNB Namibia Economist Helena Mboti and Graduate Analyst Ndateelela Amukuhu
Source: Informanté
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