Government debt increased to N$35.74 billion by 15.71% annually with projected figures for foreign debt representing a growth of 3.81% year-on-year (y-o-y) mainly due to the weakness in rand.
Head of Research at Simonis Storm Securities (SSS), James Cumming said that they estimate Bond and Treasury Bill (TB) issuance to remain strong over the medium term, adding, that the government has thus committed itself to a number of strategic infrastructure projects for which funding will be required.
Meanwhile, the total debt encompassing domestic and foreign government, corporate and household debt stands at N$108.18 billion, recording a positive monthly growth rate of 1.12% in April, this was up from N$91.69 billion a year ago.
However, total debt as a % of GDP stood at 23.11% in April up from 22.98% in the prior month, with Cumming adding that foreign debt has steadily increased due to the devaluing Rand, currently estimated at N$11.45b.
He also noted that the TB stands at N$10.51b, a 25.11% growth on a yearly basis while the Internal Revenue Service (IRS) stood at N$13.77b in April. Total debt as a % of GDP is mainly fuelled by increasing growth in domestic debt
“Total debt grew by 16.50% to N$108.18bn on a yearly basis. Government debt issued in April amounts to N$35.74b. Corporate debt moderately increased by 1.16% to N$30.55b while household debt currently stands at N$41.89b. Household debt growth picked up to 0.92% m-o-m compare to negative numbers recorded in March,” Cumming said.
In addition, the Private sector credit extension growth (PSCE) stands at 16.89% y-o-y and the growth stands at N$72.44b.
Cumming said this category is currently fuelled by 18.35% y-o-y increase in instalment credit while mortgage loan growth stands at 16.62% on an annual basis.
“Credit extended to the private sector (corporate and households) grew to N$72.44b in April from N$61.97b in the prior year. Other loans and advances grew by 21.48% and Instalment credit grew by 18.35% y-o-y. On a monthly basis, we find that PSCE grew by 1.02% while y-o-y it stands at 16.89%,” He said.
Cumming reiterated that corporate debt grew by 27.98% to N$30.52b in April, adding that instalment credit has grown by 47.65% y-o-y and 13.16% m-o-m, which amounts to N$5.17bn lower compared to N$6.47bn the previous month.
However, corporate debt continues to accelerate faster by 27.95% y-o-y compared to the other components as economic conditions within the country continue to be favourable.
“Mortgages growth stood at 24.50%, overdrafts by 8.83% and other loans by 37.51% on annual basis,” he said.
To add on, household debt grew by 9.96% y-o-y as credit uptake increased from N$38.10b to N$41.89b, while government debt grew by 15.71%, from N$30.88b to N$35.74b over the past 12 months.
“Household debt growth has eased to 9.96% y-o-y as the rising interest rate environment continues to curb spending in major sub categories. On a monthly basis, other loans increased by 2.39% as consumers seemed to curtail spending and a negative growth of 5.95% y-o-y. Instalment credit recorded a negative growth of 8.02% m-o-m resulting to a 3.51% growth for the last 12 months. Overdraft facilities have grown by 11.18% y-o-y and while mortgage growth stands at 14.41%,” Cumming added.
As the repo rate remained unchanged at 6.25% within the market reducing consumer spending through their overdraft facilities and through acquisition of other loans, unsecured lending growth rates continue to decline.
Cumming expressed that generally, growth in unsecured lending has dropped to 16.67% from 20.49% over the 12 month while growth in secured lending stands at 17.01% up from 14.25% the previous month mainly on the back of increase in instalment credit.
“The steady decline in the growth of unsecure lending has resulted in the annual decrease in Other Loans and Advances from 28.81% to 21.48%,” Cumming said.