September household overdrafts beaten by celebratory August

Unlike in August where household overdrafts led the overall overdraft credit, August saw the boom in overdrafts by businesses.

08 November 2018 | Economics

NDAMA NAKASHOLE

The higher growth in overdraft credit in August was due to an increase in the uptake of overdrafts by the household sector.

However, latest money and banking statistics from the Bank of Namibia (BoN) show that the annual growth in total overdraft credit during the month of September was due to higher demand for overdraft credit by the business sector during the month of September.

In Namibia, August is known to be one of the most celebratory months, with some of the country’s biggest events taking place that month - from weddings to the Olufuko cultural festival and the Ongwediva Trade Fair.

During a recent media conference at the central bank, BoN governor Ipumbu Shiimi called on Namibians to stop borrowing for consumption and rather borrow for productive purposes such as business loans over personal loans.

Earlier data from the central bank showed that growth in overdraft credit grew to reach 1.3% at the end of August, boosted by household demand.

In September, however, although growth in overdraft credit grew, the demand was not led by households but by the business sector.

In fact, credit extended to the household sector slowed at the end of September 2018.

Last week’s statistics from the central bank show that growth in household credit slowed to 6.9% from 7.5% reported at the end of August.

The reduced growth in credit extended to the household sector was underpinned by lower uptake of mortgage credit, coupled with continued contractions in instalment credit during September.

This is unlike August, when growth in credit extended to the household sector boomed on the back of the major credit categories including overdrafts. The exception was instalment sales, which contracted during that period.

While Private Sector Credit Extension (PSCE) rose at the end of August compared to the month before, the annual growth in PSCE did not rise during the month of September.

In fact, the annual growth in PSCE stood at 6.6% at the end of September 2018, maintaining the same rate as in August 2018.

Business credit boom

As if the nation was listening to the call by the central bank to prioritise business credit over individual credit, growth in total credit extended to businesses continued an upward trend during September 2018.

Not only did business overdrafts in September top overdrafts, but the annual growth in credit extended to businesses stood at 6% the end of September 2018, compared to 5.2% at the end of the preceding month.

The increased growth was driven by an increased demand for commercial property mortgages coupled with an increased demand for overdraft credit and other loans and advances credit.

The reasons for September’s business credit boost were different from those of August, when commercial and term loans extended to the agricultural sector accounted for most of the business credit growth.

Other latest numbers

Other details on credit and contained in the latest central bank report is that annual growth in other loans and advances (such as personal and commercial loans and credit cards) increased slightly during September 2018. The annual growth in other loans and advances increased by 0.6 percentage point to reach 20.1% at the end of September 2018. The higher growth was reflected in the increased demand for this credit category by both the household and corporate sectors, although most notably the corporate sector

Instalment sales continued to decline during the period under review. Annual growth in instalment sales contracted to 6.2% at the end of September 2018. Although recording an improved contraction of 0.2 percentage point growth, instalment sales remained weak, in line with a decline number of vehicles sold.

The annual growth in mortgage credit extended to the private sector remained relatively the same at the end of September 2018 compared to August 2018. On an annual basis, growth in mortgage credit remained at 7.2% at the end of September 2018, similar to August 2018. The steady growth was supported by mortgage loans extended to the business sector, specifically for the purposes of commercial property developments.

Similar News

 

Africa news in brief

18 hours ago | Economics

IMF says optimism in South Africa's economic recovery fadingSouth Africa’s economic recovery plans face serious constraints with growing debt of state firms domestically and capital...

Land reform unlikely to influence S&P ratings decision –...

18 hours ago | Economics

The rating agency is expected to deliver its ratings decision on Friday. Previously S&P kept the rand denominated debt rating at BB+ -the first notch...

China: ‘No developing country will fall into debt trap’

1 day - 20 November 2018 | Economics

BEIJING - China's foreign ministry said on Sunday that no developing country would fall into a debt trap simply because of its cooperation with Beijing.Chinese...

Africa Briefs

5 days ago - 16 November 2018 | Economics

SA's land expropriation unnerves investorsPlans by South Africa's ruling African National Congress (ANC) to change the constitution to allow the expropriation of land without compensation...

Price monster fiercest this year

6 days ago - 15 November 2018 | Economics

Annual overall inflation in Namibia in October was 5.1%, up from 4.8% the previous month and the highest so far this year.As expected, the spike...

Standing committees ‘critical’

6 days ago - 15 November 2018 | Economics

ADOLF KAURENational Council chairperson Margaret Mensah-Williams says its standing committees have over the years contributed immensely to changing government policy in areas such as human-wildlife...

Wage bill still thorn in IMF’s side

1 week ago - 13 November 2018 | Economics

Jo-Maré Duddy – Government should place “special emphasis” on the establishment of a “well-structured policy for the public sector to better align wage dynamics with...

Africa briefs

1 week ago - 13 November 2018 | Economics

Zambia blames opposition for anti-China attacksZambia's government accused the opposition on Friday of fuelling "xenophobic" attacks on Chinese nationals after a spate of violent incidents...

Just a growth wobble or the beginning of the...

1 week ago - 13 November 2018 | Economics

Balazs Koranyi - Two of the world's biggest economies probably shrank last quarter, further proof that global growth is now past its peak and the...

Tweya talks AfCFTA benefits

1 week ago - 12 November 2018 | Economics

Trade minister Tjekero Tweya last Thursday tabled the agreement to establish the African Continental Free Trade Area (AfCFTA) for ratification in parliament.Ratification, which is the...

Latest News

Unfit and disgusting

18 hours ago | Education

Linus Shashipapo Secondary School principal Faustinus Shikukutu says they are still waiting for a promised government intervention to renovate the school at a cost of...

Councillors defy Shaningwa

18 hours ago | Politics

A group of Swapo councillors at Rundu are planning to boycott today's town council office-bearer elections due to uncertainty over whether mayor Verna Sinimbo will...

Civil society crucial for democracy...

18 hours ago | Columns

For a nation that is trapped in victimhood when it comes to fighting corruption, holding leaders accountable or simply advocating for the rights of ordinary...

Namibians feel unsafe

18 hours ago | Crime

Namibia is ranked as one of the worst countries when it comes to law and order.The global polling group Gallup has published the results of...

Africa news in brief

18 hours ago | Economics

IMF says optimism in South Africa's economic recovery fadingSouth Africa’s economic recovery plans face serious constraints with growing debt of state firms domestically and capital...

We're not anti-Aawambo - LPM

18 hours ago | Politics

The Landless People's Movement (LPM) is based on solid principles and cannot be compared with the Congress of Democrats (CoD) and Rally for Democracy and...

Kahimise fails to prove urgency

18 hours ago | Justice

Suspended City of Windhoek CEO Robert Kahimise's bid to have his suspension overturned by the Windhoek High Court on an urgent basis has failed.Kahimise now...

Rainfall welcome, but devastating

18 hours ago | Weather

The north-western parts of Namibia, extending along the western escarpment into eastern areas of the Hardap Region, received welcome, but devastating and exceptionally high rainfall...

The Benefits of sustainable investments

18 hours ago | Banking

Claire HobbsIn many first world economies, the effects of global warming continue to manifest as a business reality. In response to this crisis, the Namibian...

Load More