Namibia’s household debt stock slightly decreased to N$68.5 billion in January, down from N$68.6 billion in December.
According to Simonis Storm, this marks a monthly decrease of N$122.3 million and signals that household credit expansion remains subdued, reinforcing a cautious borrowing stance amid persistently high real interest rates and weaker income growth.
Mortgage lending softened, with total mortgage debt declining from N$45.824 billion in December to N$45.764 billion in January, representing a 0.7% year-on-year increase. This is a sharp deceleration from the 2.2% year-on-year growth seen in January 2024, further underscoring the impact of elevated borrowing costs on home loan demand.
“Moreover, other loans and advances grew at a slower pace, easing to 8.1% year-on-year from 8.2% in December. The marginal pullback in non-mortgage credit suggests a potential weakening in consumer confidence, a trend often observed following seasonal holiday spending spikes. Overdraft facilities experienced a significant contraction of 14.4% year-on-year, contrasting sharply with the 19.2% increase recorded in January 2024. This significant pullback indicates a reduced reliance on short-term borrowing, likely reflecting improved liquidity conditions at the end of 2024,” said Simonis Storm.
In contrast, instalment and leasing credit surged by 12.3% year-on-year, significantly outpacing the 5.8% growth recorded in January 2024. This strong expansion signals renewed consumer spending on durable goods, likely driven by rising disposable incomes and improving economic conditions, especially following interest rate cuts that have eased debt-servicing costs.
On the corporate front, as of January 2025, Namibia’s corporate debt stock has reached N$49.3 billion, reflecting a monthly increase of N$887 million from December 2024.
this growth translates to a year-on-year expansion of 6.1%, driven by ongoing investments in infrastructure, technology, and capacity expansion.
“However, the uptake of credit varies significantly across different sectors, with some industries experiencing strong financing demand while others adopt a more cautious stance. This divergence highlights the evolving economic conditions in the country,” Simonis Storm said.
In terms of specific categories, instalment and leasing credit saw a moderation to 22.7% year-on-year, down from 24.1% in December. This suggests a slight cooling in leasing activity; nevertheless, demand remains robust in the transportation and equipment sectors as businesses continue to invest in fleet expansions and machinery.
“Conversely, mortgage loans contracted by 1.0% year-on-year, deepening from a marginal decline of 0.1% in December. This trend indicates corporate caution towards property investments, as businesses delay acquisitions amid lingering uncertainties about economic growth and financing costs. As a result, many firms are prioritizing liquidity over long-term property commitments. Additionally, overdraft facilities declined by 7.0% year-on-year, showing a slight improvement from the previous month’s decline of 7.6%. This continued retreat suggests that businesses are actively managing cash flows and reducing short-term liabilities, reflecting a shift toward financial prudence in an uncertain operating environment.”
Looking ahead, Namibia’s monetary policy in 2025 is set against a complex backdrop of shifting global dynamics, where inflation risks and growth considerations must be carefully balanced. The Bank of Namibia (BoN) has maintained the repo rate at 6.75%, with the prime lending rate at 10.75%. This ensures a policy stance that remains adaptive to both domestic conditions and external volatility. Inflation in Namibia eased to 3.2% in January from 3.4% in December, primarily due to subdued housing inflation. However, core pressures persist in food, transport, and non-alcoholic beverages, highlighting ongoing sectoral cost rigidities.
“The risk profile is shifting as well, with the US reinstating tariffs on Chinese goods and imposing duties on imports from Mexico and Canada. This move is likely to disrupt global supply chains, elevate input costs, and increase trade-related inflation, all of which will have downstream effects in Namibia through higher import costs on consumer goods, fuel, and industrial inputs. A weaker rand adds another layer of complexity, potentially impacting imported inflation and capital flow dynamics.
“While the scope for monetary easing remains intact, the BoN’s timing will depend on inflation trends and external cost dynamics. A cumulative 25 basis point rate cut is anticipated in 2025, but the pace and sequencing of this adjustment will be contingent on broader macroeconomic conditions. Should global cost pressures remain elevated, the central bank may need to adopt a more cautious approach to avoid premature easing, ensuring inflation expectations remain anchored while sustaining real economic momentum.”
In summary, corporate lending in Namibia remains resilient, reflecting continued investment in key sectors and improved credit conditions. However, industries reliant on foreign inputs could see capital expenditure slow if cost pressures intensify. Household credit remains subdued, particularly in mortgage lending, which will depend on wage dynamics and consumer sentiment. The outlook for vehicle financing and consumer credit may strengthen in the latter half of the year, contingent on rate adjustments and stabilized inflation. Overall, Namibia’s economic recovery appears on track, but the BoN’s ability to navigate the interplay between inflation risks and monetary support will be crucial in defining the trajectory of financial conditions and economic growth throughout 2025.