Namibia credit growth accelerates, driven by businesses
STAFF REPORTER
Namibia’s private sector credit extension (PSCE) strengthened in the first half of 2025, expanding by 5.7% year-on-year (y/y) in the second quarter of 2025, up from 5% in the first quarter and 4% in the fourth 2024.
“The acceleration was driven by a 10.6% increase in business borrowing, reflecting renewed corporate confidence and a supportive interest rate environment, while household credit slowed to 2.4%, signalling affordability pressures and cautious consumer sentiment,” the Economic Association of Namibia (EAN) said in its quarterly review.
“Mortgage lending, though still the largest component at 49.2%, declined from 52.2% a year earlier, amid weak demand and high housing costs. Instalment and leasing credit rose to 12.8%, supported by vehicle demand, and overdrafts increased to 10.4%, highlighting reliance on short-term financing,” it added.
The share of other loans and advances remained stable at around 27.6%, indicating resilience in diversified lending outside traditional mortgages, the EAN said.
“Namibia’s credit landscape is undergoing a structural shift from long-term, asset-based lending toward more flexible, consumption- and liquidity-driven financing. This transition provides short-term stimulus through higher spending and business turnover but raises concerns about the sustainability and quality of credit growth if it is not linked to productive investment.”
According to the EAN, the situation highlights the need for targeted financial policies that direct credit toward high-impact sectors such as SMEs, agriculture, manufacturing, and renewable energy, which can strengthen the growth base and create employment opportunities.
“Policymakers could support this shift by expanding credit guarantees, blended finance instruments, and cooperative lending models, particularly in rural and underserved areas. At the same time, enhancing bank competition, credit risk assessment, and interest rate pass-through would improve lending efficiency and safeguard financial stability,” the EAN said.
“Balancing short-term consumption support with long-term investment is critical for inclusive, sustainable growth, while financial innovation and prudent governance remain key to deepening capital access and economic resilience,” it added.
Namibia’s private sector credit extension (PSCE) strengthened in the first half of 2025, expanding by 5.7% year-on-year (y/y) in the second quarter of 2025, up from 5% in the first quarter and 4% in the fourth 2024.
“The acceleration was driven by a 10.6% increase in business borrowing, reflecting renewed corporate confidence and a supportive interest rate environment, while household credit slowed to 2.4%, signalling affordability pressures and cautious consumer sentiment,” the Economic Association of Namibia (EAN) said in its quarterly review.
“Mortgage lending, though still the largest component at 49.2%, declined from 52.2% a year earlier, amid weak demand and high housing costs. Instalment and leasing credit rose to 12.8%, supported by vehicle demand, and overdrafts increased to 10.4%, highlighting reliance on short-term financing,” it added.
The share of other loans and advances remained stable at around 27.6%, indicating resilience in diversified lending outside traditional mortgages, the EAN said.
“Namibia’s credit landscape is undergoing a structural shift from long-term, asset-based lending toward more flexible, consumption- and liquidity-driven financing. This transition provides short-term stimulus through higher spending and business turnover but raises concerns about the sustainability and quality of credit growth if it is not linked to productive investment.”
According to the EAN, the situation highlights the need for targeted financial policies that direct credit toward high-impact sectors such as SMEs, agriculture, manufacturing, and renewable energy, which can strengthen the growth base and create employment opportunities.
“Policymakers could support this shift by expanding credit guarantees, blended finance instruments, and cooperative lending models, particularly in rural and underserved areas. At the same time, enhancing bank competition, credit risk assessment, and interest rate pass-through would improve lending efficiency and safeguard financial stability,” the EAN said.
“Balancing short-term consumption support with long-term investment is critical for inclusive, sustainable growth, while financial innovation and prudent governance remain key to deepening capital access and economic resilience,” it added.
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