Namibia’s corporate sector has recorded a milestone in its post-pandemic recovery, with business overdraft facilities posting positive annual growth for the first time in over a year, signalling renewed confidence among firms amid broader credit expansion. According to the latest Private Sector Credit Extension (PSCE) report by Simonis Storm, overdraft credit for businesses grew by 4.6% year-on-year (y/y) in March 2025, ending a 13-month contraction streak. This turnaround, alongside an 8.2% y/y surge in overall corporate credit—the fastest pace since December 2019—reflects tentative optimism as Namibia’s economy navigates global headwinds and domestic structural challenges.
The rebound in overdrafts, often used for short-term operational liquidity, points to improved cash flow management and a gradual easing of risk aversion among businesses. This shift is underpinned by stronger demand in key sectors such as energy, tourism, manufacturing, and financial services, which have driven a N$1 billion month-on-month increase in corporate debt stock. Instalment and leasing credit, a bellwether for capital expenditure, soared by 26.6% y/y, reflecting investments in transport fleets, mining equipment, and durable assets. Similarly, “other loans and advances”—a category spanning project financing and working capital—jumped to 14.8% y/y, up from 9.6% in February, underscoring strategic borrowing to fuel growth.
However, the commercial real estate market remains a weak spot, with business mortgage credit contracting by 2.3% y/y. Firms continue to prioritize flexible, short-term financing over long-term property investments, a trend analysts attribute to lingering global uncertainty and elevated import costs. “Businesses are balancing expansion with caution,” noted Simonis Storm in its report. “The preference for liquidity and operational agility is clear, even as credit appetite rebounds.”
While corporate borrowing gains momentum, household credit growth remains sluggish, rising marginally to 2.8% y/y in March from 2.6% in February. This stagnation highlights persistent pressures on consumers, including high indebtedness, stagnant wage growth, and elevated living costs. Mortgage credit growth decelerated to 0.6% y/y, reflecting affordability challenges in the residential property market, where prices outpace income growth. Overdraft facilities for households, though improving, remained in negative territory at -12.5% y/y, signalling continued financial caution among consumers.
The standout in household credit was instalment and leasing finance, which climbed to 14.5% y/y, driven by robust vehicle sales and demand for consumer durables. “Mid-income households are turning to flexible credit options to manage expenses,” the report noted, with “other loans and advances” holding steady at 7.9% y/y. Yet, these gains are insufficient to offset broader weakness, as real disposable incomes remain constrained by inflation and fiscal drag from delayed tax bracket adjustments.
Namibia’s banking sector retained ample liquidity in March, averaging N$9.4 billion—down slightly from N$9.9 billion in February—but still well above historical norms. This resilience provides a cushion against financial tightening, particularly as interest rates remain elevated. However, international reserves fell sharply by 7.4% month-on-month to N$59.7 billion, reducing import cover to 3.9 months. The decline, attributed to higher government foreign expenditures and import bills, underscores vulnerabilities in a trade-dependent economy.
Broad money supply (M2) growth slowed to 10.1% y/y, down from 10.6% in February, as households and firms shifted toward longer-term savings instruments amid high deposit rates. This behavioral shift, while reinforcing financial system stability, hints at lingering caution in a high-interest-rate environment.
Consumer price inflation accelerated to 4.2% y/y in March, up from 3.6% in February, fueled by rising housing, food, and transport costs. Global pressures—including U.S.-China trade tensions and supply chain disruptions—threaten to exacerbate imported inflation, particularly through a weaker South African Rand and pricier fuel imports. These dynamics complicate the Bank of Namibia’s (BoN) policy path, as policymakers weigh growth-supportive rate cuts against inflation risks.
Market expectations suggest the BoN will hold its repo rate steady at 6.75% in June, with potential for a 25-basis-point cut later in 2025 if global conditions stabilize. Corporate credit demand is projected to remain robust, supported by banking liquidity and recent corporate tax cuts from 32% to 30%. However, household credit recovery is likely to stay uneven, hinging on future rate reductions, wage growth, and fiscal measures to alleviate cost-of-living pressures.
The rebound in business overdrafts and corporate credit signals a turning point for Namibia’s economy, which has struggled with low growth and high unemployment since the pandemic. Strategic investments in sectors like energy and manufacturing, coupled with tax reforms, offer a blueprint for sustained recovery. Yet, challenges loom. Households remain financially fragile, external reserves are under pressure, and inflation threatens to erode purchasing power.
For policymakers, the path forward demands a delicate balance: fostering credit-driven growth while safeguarding macroeconomic stability. In this fragile equilibrium, Namibia’s credit trends will serve as both a barometer of progress and a reminder of the work ahead.