By:Nghiinomenwa-vali Erastus
The commercial banks have loaned out N$1,6 billion to resident businesses and N$2,9 billion to households by the end of 2022 compared to December 2021.
According to the December 2022 monetary and financial statistics released by the Bank of Namibia end of January 2023.
This is amid risk aversion in commercial lending from the banking sector after several sluggish and negative economic growth domestically.
While risk aversion among local commercial banks has been and remains a risk to the country’s economic outlook, an analysis done by Simonis Storm, however, indicated that the risk aversion vibe can change with improved domestic economic activities beyond the medium term.
Simonis Storm explained that the sentiment among banks will improve if they are convinced that higher economic growth rates can be sustained in the medium term.
“We could see more loan applications being accepted and so support higher credit and economic growth,” Simonis Storm said.
The firm also indicated that with Namibia’s weak savings culture, the country needs much investment financed by credit to stimulate economic activity and development.
By the end of December 2022, the commercial banks financed various economic activities domestically to the tune of N$118,2 billion compared to N$106,4 billion by the end of 2021.
This money is divided between households and businesses. Households were given/borrowed N$64,7 billion by the end of December 2022.
In December 2022, households borrowed N$424,5 million to fund their consumption and investments.
Most of this money was extended under loans and advances, with households borrowing N$207,8 million in that particular.
Households have received N$131,2 million from commercial banks to build, extend or buy houses. Others approached commercial banks for short-term loans or overdraft facilities. Overdraft extended amounted to N$43,3 million in December 2022.
By the end of December 2022, the business sector received N$45,8 billion to fund their activities. And for December 2022 alone, the businesses borrowed N$299,7 million.
Simonis Storm said businesses borrowed funds through the Other Loans and Advances category, but when it comes to commercial mortgages and overdrafts, businesses did not borrow any for the month of December as they just paid more back to the banks for the month.
Despite that, the banks have allowed the businesses to buy and lease assets by using the banks’ money.
Banks have extended capital through instalment and the leasing category to the private sector worth N$24,8 million, Simonis Storm pointed out.
Annually (2021-2022), the banks have allowed the business to acquire assets through leasing and paying in instalments to the total of N$511,5 million.
Despite some positive green shoots, accessing credit can be affected by the cost of money-given that various central banks are still on strict monetary policy, the stockbroker firm said.
Simonis Storm expects one last 25 basis points repo rate hike by BoN, taking it from 6.75% to 7%, and then for interest rates to remain unchanged at elevated levels until the second half of 2024 when it expects the first rate cut.
The firm forecasts credit uptake to average 4.7% in 2023, compared to 3.6% in 2022.
Email: erastus@thevillager.com.na
