Private sector borrowing grows

THE number of private sector borrowers grew slightly to 4.7% in February from 4.2% in January.

This comes after four consecutive months of slower borrowing in the sector.

Household credit growth eased to 2.9% year on year (y/y) in February from 3% y/y in January, reflecting a reduced uptake of other loans and advances, as well as overdraft credit, while growth across the remaining credit categories remained positive.

According to First National Bank economic analysts Cheryl Emvula and Ndateelela Amukuhu, after a notable turnaround in January, when overdraft credit growth emerged from contraction to 1.4% y/y, it fell back into contraction, declining by 1.9% y/y in February.

“This reversal was mainly driven by repayments by households, suggesting a more cautious approach to discretionary borrowing amid tighter household financial conditions,” the analysts say.

Similarly, growth in other loans and advances slowed for the fifth consecutive month, easing to 6.2% y/y in February from 6.9% y/y in January.

Instalment sale and leasing credit remained the fastest‑growing category, accelerating to 20% y/y in February, from 17.4% y/y in the previous month, underpinned by stronger demand for both commercial and passenger vehicles where growth accelerated to 13.5% y/y, from 6.9% y/y in January.

Vehicle sales growth represented a 4.1% y/y change, with 1 165 units sold in February.

Meanwhile, corporate credit growth rebounded to 7.3% y/y in February, up from 5.8% y/y in January.

“This improvement was largely driven by strong growth in instalment sale and leasing credit, as well as other loans and advances, while mortgage and overdraft credit continued to reflect subdued borrowing conditions,” the analysts say.

Growth in instalment sale and leasing credit accelerated to 28.1% y/y in February, from 22.3% y/y in the previous month. Within this category, commercial passenger vehicles recorded 14.3% m/m growth, although growth declined by 3.8% y/y, largely due to weaker demand for medium units.

Corporate overdraft credit growth slowed to 5.4% y/y in February, from 8.6% y/y in January, reflecting generally subdued demand as corporates continue to settle net repayments, particularly among firms operating in the agriculture, mining and retail sectors.

Inflation continued its disinflationary trend in February, with headline inflation easing to 2.4% y/y, down from 2.9% y/y in January.

Meanwhile, core inflation held steady in February at 3.2% y/y. The slowdown was primarily driven by softer food prices, alongside stable inflation in the transport category, which helped contain overall inflationary pressures.

Looking ahead, inflation risks have tilted upwards following fuel price increases of N$2.50 per litre for petrol and N$4.00 per litre for diesel for April, largely due to ongoing geopolitical tensions.

The official stock of international reserves declined marginally to N$51.7 billion in February, from N$51.9 billion in January, providing 3.3 months of import cover, increasing to 3.7 months when oil exploration and appraisal‑related imports are excluded, the analysts say.
– email: matthew@namibian.com.na

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