Namibia’s commercial banks are sitting on billions of dollars in cash even as lending to the private sector remains weak.
The banking industry’s liquidity went up by more than 50% in three months, reaching N$9.8 billion in the second quarter of 2026, according to the Bank of Namibia’s quarterly bulletin.
The central bank says “the Namibian banking industry’s cash balances surged both on a quarterly and yearly basis”.
The increase was attributed to diamond sales proceeds, government expenditure and investment flows.
At the same time, annual growth in private-sector credit only went up to 4.5%, from 4.3% in the first quarter.
This means banks have more money available, but that liquidity is not translating into an increase in lending to the private sector.
Households and other borrowers accounted for 55.1% of commercial bank credit, while commercial and services businesses accounted for 31.6%.
Agriculture received just 3.0%, manufacturing 4.1%, building and construction 2.6% and mining 2.2%.
Total assets held by other depository corporations, including commercial banks, rose from N$266 billion in March to N$273 billion in June.
The stronger balance sheets mean banks have a bigger cushion against financial shocks and fewer loans are showing signs of distress.
The result is a banking system with substantial liquidity, but relatively limited credit flowing into sectors that could expand production and investment.
The weak lending comes despite signs that the financial health of borrowers has improved.
The ratio of non-performing loans to total loans fell to 4.0% in June, from 4.2% in March and 4.9% a year earlier.
Household credit growth increased to 4.5%, while business credit also grew by 4.5%.
Mortgage lending remained the largest credit category, accounting for 47.7% of private-sector credit.
The central bank also raised its policy rate by 25 basis points to 6.75% in June, taking the prime lending rate to 10.25%.
However, the average lending rate fell to 9.58%, from 9.65% in March and 9.97% a year earlier.
This shows that the banking system has liquidity, but the demand for productive credit appears much weaker than the amount of money available to lend.
