Credit uptake unresponsive to low rates

The successful procurement and quick rollout of Covid-19 vaccination in Namibia will be critical for speed of the economic recovery.

15 April 2021 | Economics

The economy remains weak and requires some support. Johannes !Gawaxab, Governor: Bank of Namibia (BoN)

PHILLEPUS UUSIKU

Despite the repo rate being at a historical low of 3.75% to making borrowing attractive, credit uptake by businesses and households remain weak.

Private sector credit extension (PSCE) averaged 2% during the first two months of 2021, much lower than the 6.7% recorded during the same period in 2020.

The Bank of Namibia (BoN) held their second monetary policy announcement for the year and decided to leave the repo rate unchanged at 3.75%. This implies that the prime lending rates for local commercial banks will also remain at 7.50%.

The monetary policy committee (MPC) of the BoN is of the view that the rate remains appropriate to continue supporting domestic economic activity, while at the same time safeguarding the one-to-one link between the Namibia dollar and the South African rand.

In an interview with Market Watch, central bank governor, Johannes !Gawaxab notes that the domestic economy remains weak and requires some support.

He adds that inflation is well contained and the outlook for the rest of the year will be around 3.2%.

Some of the financial developments that led to decision to leave the rate unchanged is the domestic economic activity that contracted severely by 8% in 2020, compared to a contraction of 0.6% in 2019.

Contractions were observed in key sectors such as tourism, transport, mining, agriculture, manufacturing, construction, wholesale and retail trade, as well as the public sector, !Gawaxab pointed out.

The contraction was mainly due to the devastating effects of the Covid-19 pandemic, with the sharpest declines in output recorded in the tourism and transport sectors.

Green shoots

On the contrary, activity in the electricity and water, as well as information and communication sectors, recorded positive growth during the same period.

Recent developments in the domestic economy also pointed to subdued activity in most economic sectors during the first two months of 2021, compared to the same period of 2020. Going forward, the domestic economy is expected to grow by 2.7% in 2021, he added.

Annual average inflation increased to 2.7% during the first two months of 2021, compared to 2.3% for the corresponding months in the previous year.

The increase in inflation was mainly reflected in the food and beverages categories during the period under review.

On a monthly basis, overall inflation stood at 2.7% in February 2021, the same as the previous month. Overall inflation is projected to average around 3.2% for 2021, he said. The next meeting of the MPC will be held on the 15th of June 2021.- [email protected]

Similar News

 

Trade surplus with China contracts

11 hours ago | Economics

Jo-Maré Duddy – China remained Namibia’s biggest export destination in March, but unlike a year ago, the destination clinched the top position because of re-exports...

Africa Briefs

11 hours ago | Economics

Zim inflation to fall to 55%Zimbabwe's central bank said it expects annual inflation to further decline and reach a low of 55% by July.The bank...

'Open Namibia-Angola border'

11 hours ago | Economics

The continued closure of the Namibia-Angola border due to measures put in place to combat Covid-19 obstructs the legal free movement of people and goods...

Home not for ‘those who want to hustle'

11 hours ago | Economics

Elizabeth Dilts Marshall - Working from home does not work for everyone, especially those who want "to hustle," JPMorgan Chase & Co's chief executive said...

More than N$10 bn in debt holidays

1 day - 05 May 2021 | Economics

Jo-Maré Duddy – Commercials banks last year granted clients severely impacted by the Covid-19 pandemic debt relief to the tune of N$10.3 billion in total.About...

Africa Briefs

1 day - 05 May 2021 | Economics

Zambia, Angola ink oil pipeline dealZambia and Angola have signed an agreement aimed at constructing a pipeline for the transportation of finished petroleum product between...

A decade of solar plants at Tsumkwe, Gam

3 days ago - 03 May 2021 | Economics

TSUMKWE – The 10-year-old Tsumkwe and Gam solar plants continue to provide reliable electricity supply to the settlements of nearly 6 000 people.The two solar...

CoW to install traffic lights in Katutura

3 days ago - 03 May 2021 | Economics

The City of Windhoek (CoW) has secured N$1.6 million to install traffic lights at three different intersections in Katutura, including the four-way at the Havana...

Consumer crippled by debt

6 days ago - 30 April 2021 | Economics

Jo-Maré Duddy – Out of every N$100 disposable income in 2020, consumers on average could call only N$10.90 their own as they owed N$89.10 in...

Ongwediva road upgrade faces delay

6 days ago - 30 April 2021 | Economics

ONGWEDIVA – The Ongwediva town council has terminated a tender awarded to Neu Olulya Trading to upgrade Church Street to bitumen standard, following non-performance on...

Latest News

Trade surplus with China contracts

11 hours ago | Economics

Jo-Maré Duddy – China remained Namibia’s biggest export destination in March, but unlike a year ago, the destination clinched the top position because of re-exports...

Govt ‘forced’ NTB into Kora...

11 hours ago | Justice

ELLANIE SMIT WINDHOEK The legal team of Kora All Africa Music Awards founder Ernst Adjovi says the Namibian Tourism Board (NTB)...

N$278m payment for Air Namibia...

11 hours ago | Transport

OGONE TLHAGE WINDHOEKGovernment has paid part of N$278 million reserved for ex-gratia payments to...

Africa Briefs

11 hours ago | Economics

Zim inflation to fall to 55%Zimbabwe's central bank said it expects annual inflation to further decline and reach a low of 55% by July.The bank...

Kora exposing political rot

11 hours ago | Opinion

The ongoing Kora trial is not just a civil matter between two parties contesting contractual interpretations and millions of dollars lost.Preliminary evidence points to a...

Pappa Chef winners announced

11 hours ago | Business

Yochanaan Coetzee - The exciting Channel 7 and Checkers Pappa Chef competition is in full swing, with ten excited winners each walking away with N$1...

'Open Namibia-Angola border'

11 hours ago | Economics

The continued closure of the Namibia-Angola border due to measures put in place to combat Covid-19 obstructs the legal free movement of people and goods...

No corruption at fisheries –...

11 hours ago | Ministries

OGONE TLHAGE WINDHOEKNew fisheries minister Derek Klazen says the ministry is not plagued with corruption, contrary to public opinion.He made the comment...

UN highlights midwife shortage

11 hours ago | Health

JEMIMA BEUKES WINDHOEKA recent United Nations (UN) report has raised alarm over a...

Load More