Business and households take up more credit …As banks liquidity stagger a little

After a prolonged period of a lack of appetite for credit due to an economic dry-spell, businesses and households managed to take up more credit by the end of August.

Latest money and banking statistics show that the annual growth in credit extended to businesses stood at 5.2% at the end of August 2018, 1.8% higher than the previous month.

The higher growth was mainly reflected in the rise in commercial and term loans extended to the agricultural sector during the month under review.

In the same breath credit extended to the household sector slightly went up in the same period to 7.0% from a growth of 6.7% at the end of July 2018.

The growth in credit extended to the household sector improved on the back of an increase in most of the major credit categories, with the exception of instalment sales, which contracted further during the period under review.

According to the Bank of Namibia, the annual growth in total overdraft credit improved slightly during August 2018, growing by 0.6% to reach 1.3% at the end of August 2018.

The higher growth was due to an increase in the uptake of overdrafts by the household sector during the period. 

The annual growth in other loans and advances increased to 19.5% at the end of the period under review, from 17.8% at the end of July 2018.

The improved growth during the month under review is reflected in the increased demand for this credit category, by both the household and business sectors, most notably by the business sector.

 On an annual basis, growth in mortgage credit rose slightly by 0.5% to 7.2%.

The higher growth was reflected in the mortgage loans extended to both the business and household sectors. 

As far as the liquidity of banks is concerned, the BoN said it tilted down to N$4.4 billion at the end of August 2018, slightly lower from N$4.7 billion at the end of July 2018.

The observed decline was due to an increase in the uptake of BoN Bills during the period under review.

At the same time, the stock of foreign reserves tilted down at the end of August 2018 and stood at N$32.2 billion at the end of August 2018 compared to N$32.5 billion at the end of July 2018.

 The slightly lower level of reserves is due to increased government payments made during the period under review

The overall inflation rate slowed slightly during August 2018 and stood at 4.4 percent in August 2018, lower than 4.5 percent in July 2018.

The decline in inflation is reflected in the food and non-alcoholic beverages category and further supported by the alcoholic beverages and tobacco category.

 Inflation in all other categories, however, rose during the period under review.