Photo: Contributed
By: Nghiinomenwa-vali Hangala
By the end of June 2026, companies operating in Namibia have borrowed N$155 billion cumulatively, driven by intercompany lending.
The figure represents 55.5% of what Namibia produces in a year (2025 Nominal GDP), raising concerns of foreign exchange risks.
According to the 2026 Namibia Financial Stability Report, which covered the first half of 2026, total corporate debt rose 10.3% to N$219.3 billion at the end of June 2026, up from N$198.9 billion at the end of 2025.
The increase was largely underpinned by foreign corporate debt, which expanded by 13.1% to N$164.4 billion during the period under review.
“This increase was primarily driven by higher direct investment intercompany borrowing, particularly among companies operating in the mining sector,” the report read.
The report also found that the increased uptake of trade credits by corporates in other sectors, together with higher non-resident currency and deposits with domestic banks, also contributed to the rise in foreign debt.
State-Owned Enterprises (SOEs) are also borrowing outside, using government guarantees.
From 31 December 2025 to June 2026, SOEs increased borrowing from N$8,9 billion to N$9,4 billion.
Borrowing outside is not an issue until it comes to repayment. Repayment not only draws on the country’s foreign reserves but it also enables foreign financiers to benefit from local operations.
The total value of foreign debt repayments by the private sector decreased to N$21.5 billion by the end of June 2026, from N$23.7 billion recorded at the end of the corresponding period of 2025.
According to the report, the decline largely reflected a high base effect associated with a sizeable repurchase agreement repayment by resident deposit-taking corporations in the first half of 2025
As well as lower repayments on trade credits within the other sectors category during the period under review.
DOMESTIC CORPORATE DEBT
On the domestic front, corporate debt increased by 2.8% to N$54.9 billion at the end of June 2026 from N$53.4 billion recorded at the end of December 2026.
The Financial Stability Report has explained that the increase in domestic corporate debt reflects higher credit uptake by corporates.
In particular, installment and leasing credit increased by 11.1%, while overdrafts and other loans and advances rose by 4.7% and 3.5%, respectively.
Overall, developments in corporate debt during the first half of 2026 were characterised by a stronger increase in external funding relative to domestic borrowing, with intercompany lending remaining the main driver of the increase in foreign debt.
Corporate debt as a percentage of GDP increased during the first half of 2026, mainly driven by external corporate debt.
Namibia’s corporate debt-to-GDP ratio rose from 69.8% at the end of 2025 to 74.5% at the end of June 2026.
The financial system’s custodians have indicated that domestic corporate borrowing remains of relatively less concern, as it is largely associated with sectors supporting economic activity.
However, they have raised red flags on foreign corporate debt levels.
“The continued rise in foreign corporate debt warrants close monitoring, as greater reliance on external borrowing increases corporates’ exposure to exchange rate risk,” the report read.
A sustained depreciation of the Namibian dollar could increase the domestic-currency cost of servicing foreign-denominated debt; other factors such as weakened corporate balance sheets and repayment capacity also pose risks.
These pressures could, in turn, have implications for foreign exchange reserves and broader financial stability.
erastus@thevillager.com.na
