Business confidence slowly picking up

Overdrafts by businesses operating in the wholesale and retail trade sector as well as the agriculture sector contributed to the slight increase of 0.7% year-on-year.

05 January 2021 | Business

PHILLEPUS UUSIKU

Despite interest rates being low to make borrowing attractive, credit extended to businesses in November last year rose by as little as 0.7% year-on-year.

According to IJG Research, the increase is attributed by a rise in demand for overdrafts by businesses operating in the wholesale and retail trade sector as well as the agriculture sector which registered growth of 7.7% month-on-month and 15.0% year-on-year.

Mortgage loans to corporates increased by 0.8% month-on-month but declined by 7.2% year-on-year.

Furthermore, Instalment credit extended to corporates, which has been contracting since February 2017 on an annual basis, remained depressed, contracting by 1.2% month-on-month and 17.2% year-on-year in November, the lowest level since early 2019.

Credit extended to individuals increased by 0.7% month-on-month and 4.1% year-on-year in November, growing at a slightly slower pace than the 4.2% year-on-year increase recorded in October, IJG pointed out.

The month-on-month growth has mostly been driven by an increase in overdrafts which grew by 5.8% month-on-month and 9.4% year-on-year indicating continued use of short-term credit by individuals.

The uptake of longer-term credit agreements like mortgages and instalment credit by individuals continued to slow. The value of mortgage loans extended to individuals rose by only 0.4% month-on-month and 4.4% year-on-year. Instalment credit grew by 0.4% month-on-month but was down by 4.1% year-on-year as new vehicle sales continue to fall, IJG added.

LIQUIDITY, RESERVES

The overall liquidity position of commercial banks deteriorated during November, contracting by N$764.5 million to reach an average of N$2.34 billion during the month. The decline can mainly be attributed to cross-border transfers, funds mainly designated for investments.

Broad money supply rose by N$9.90 billion or 8.5% year-on-year in November while foreign reserve balances fell by N$3.84 billion or 11.2% month-on-month to N$30.52 billion in November. The fall is due to a decline in net government payments, foreign currency purchases by commercial banks and exchange rate revaluations during the period, IJG said.

Broad money includes both notes and coins, but also more illiquid forms of money such as bank deposits and treasury bills. They are also considered as 'near money' because it can easily be changed to cash.

OVERALL STATISTICS

Private sector credit (PSCE) increased by N$1.09 billion or 1.05% month-month in November, bringing the cumulative credit outstanding to N$104.68 billion. On a year-on-year basis, private sector credit increased by 2.31% in November, compared to 1.65% year-on-year in October, IJG said.

On a rolling 12-month basis, N$2.37 billion worth of credit was extended to the private sector. Of this cumulative issuance, individuals took up N$2.38 billion while corporates took up N$321.6 million. The non-resident private sector decreased their borrowings by N$337.8 million.

“With economic conditions unlikely to improve materially in 2021, we expect the trend of reliance on short-term debt by both consumers and businesses to continue.

With businesses continuing to repay their longer-term debt and de-levering their balance sheets, we are unlikely to see meaningful growth in private sector credit extension and could even see a contraction on an annual basis in the coming months”, IJG concluded.

Similar News

 

Trustco scrambles to meet JSE deadline

21 hours ago | Business

PHILLEPUS UUSIKUTrustco Holdings Limited is scrambling to finalize and submit its financials as a Johannesburg Stock Exchange’s deadline, less than two weeks away, looms. JSE...

New vehicle sales moving in reverse gear

21 hours ago | Business

PHILLEPUS UUSIKUVehicle sales contracted by 2.0% year-on-year in December 2020, compared to a contraction of 2.2% year-on-year in December 2019, with 714 units sold in...

COMPANY NEWS IN BRIEF

21 hours ago | Business

Amazon to open two new hubs in Italy Amazon will open two new logistics centres in Italy this year, investing over 230 million euros (US$278...

South African Breweries cancels US$165 mln investment

1 day - 19 January 2021 | Business

South African Breweries, part of Anheuser-Busch InBev, has cancelled a further 2.5 billion rand (US$165 million) of investment earmarked for 2021 following a third local...

COMPANY NEWS IN BRIEF

1 day - 19 January 2021 | Business

Twitter locks account of Marjorie GreeneTwitter Inc, on Sunday, locked the account of Republican US Representative Marjorie Taylor Greene, a political newcomer known for promoting...

DBN keen to fast track loan payments SME's

2 days ago - 18 January 2021 | Business

PHILLEPUS UUSIKUTo avoid delays in loan payments as previously experienced in other relief packages, the Development Bank of Namibia (DBN) has a plan to ensure...

Bank Windhoek ranked as the best bank in Namibia

2 days ago - 18 January 2021 | Business

PHILLEPUS UUSIKUPSG Namibia’s 2020 Banking Review has again ranked Bank Windhoek as the best bank in the country for the second consecutive year.The ranking system...

COMPANY NEWS IN BRIEF

2 days ago - 18 January 2021 | Business

GM to invest C$1 bln in Canada plant General Motors Co and labour union Unifor said they have reached a tentative deal for the automaker...

Shoprite Tsumeb closed by community members

5 days ago - 15 January 2021 | Business

Trading at Shoprite’s Tsumeb branch was halted by community members Tuesday morning when they joined the striking employees of the shop in their demands for...

Shoprite Tsumeb closed by community members

5 days ago - 15 January 2021 | Business

Trading at Shoprite’s Tsumeb branch was halted by community members Tuesday morning when they joined the striking employees of the shop in their demands for...

Latest News

RTE and Slaughterhouze part ways...

7 hours ago | Art and Entertainment

STAFF REPORTER WINDHOEKNamibian record label Remember The Eagle (RTE) Records has agreed to part ways with local group Slaughterhouze.While the group consists of DJ Spuzza,...

Trustco scrambles to meet JSE...

21 hours ago | Business

PHILLEPUS UUSIKUTrustco Holdings Limited is scrambling to finalize and submit its financials as a Johannesburg Stock Exchange’s deadline, less than two weeks away, looms. JSE...

New vehicle sales moving in...

21 hours ago | Business

PHILLEPUS UUSIKUVehicle sales contracted by 2.0% year-on-year in December 2020, compared to a contraction of 2.2% year-on-year in December 2019, with 714 units sold in...

Nekongo breaks silence on Fishrot...

21 hours ago | Crime

STAFF REPORTERWINDHOEKSwapo Party Youth League (SPYL) secretary Ephraim Nekongo yesterday said he did not know that the N$65 000 allegedly deposited into his personal account...

15 350 pupils ‘lost in...

21 hours ago | Education

ESTER KAMATIOTJIWARONGOWith the ministry of education taking a blended approach through online efforts and remote teaching and learning, about 15 350 learners did not return...

Shangula looking beyond Covax for...

21 hours ago | Health

OGONE TLHAGEWINDHOEKNamibia is looking beyond the Covax facility to procure additional stock of Covid-19 vaccine, health minister Kalumbi Shangula has said.The Covax facility, an initiative...

Namibia more of a consumer...

21 hours ago | Economics

PHILLEPUS UUSIKUNamibia recorded a trade deficit to the tune of N$1.4 billion in November 2020. The recent figure shows that the deficit improved by...

Going back to the original...

21 hours ago | Opinion

It's not too late to salvage Namibia from the jaws of predatory tendencies threatening our existence as a nation.Think of the ideal Namibia we had...

Groundwater threatened by drilling

21 hours ago | Environment

FRANK STEFFENWINDHOEKIn 2011, a hydrological study dating back to 2001 was republished.Together with the Federal Institute for Geosciences and Natural Resources (BGR in Hanover, Germany),...

Load More