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

 

Local content top priority

1 day - 22 March 2019 | Economics

A 'buy local' policy with local content requirements will, in the long run, help smaller businesses to sell goods and services to government.This was the...

Elando lyiilongomwa yomoshilongo olya simana

1 day - 22 March 2019 | Economics

Omulandu gwokulanda iilongomwa yomoshilongo monakuyiwa otagu ka kwathela aanangeshefa aashona moshilongo opo ya landithe iilongomwa nomayakulo gawo kepangelo.Ngoka omaiyuvo gOminista yIipindi, Tjekero Tweya...

Millions unaccounted for at NDC, says AG

3 days ago - 20 March 2019 | Economics

The Namibia Development Corporation (NDC) has failed to submit documentary evidence to prove how it spent N$90.1 million between 2015 and 2017, the latest report...

Africa Briefs

3 days ago - 20 March 2019 | Economics

No end date for Eskom’s power cutsSouth Africa's public enterprises Minister Pravin Gordhan said yesterday he cannot say yet when rolling blackouts will end, as...

Authorities still can’t do own financials

4 days ago - 19 March 2019 | Economics

Despite being exempted from paying audit fees and to use this money to develop skills, the majority of local authorities still fail to draw up...

Ghana bets on rejuvenated railways for growth

4 days ago - 19 March 2019 | Economics

Stacey Knott - As Ghana's urban landscape gently slides by the train window, Shaibu Amoah swells with pride.The 37-year-old has been helping to renovate railway...

New Era pays millions in tax penalties

5 days ago - 18 March 2019 | Economics

The New Era Publication Corporation (NEPC) has attributed its insolvency to the debts it owes to the receiver of revenue, printing cost and escalation of...

Boost Africa investment to win climate fight

1 week ago - 15 March 2019 | Economics

Patrick Galey - Governments and business must help countries in Africa deal with the fallout of climate change, the head of the World Bank said...

Calle: ‘Nothing sinister about budget delay’

1 week ago - 14 March 2019 | Economics

Finance minister Calle Schlettwein told Market Watch this morning that the tabling of the 2019/20 national budget has been moved to 27 March purely for...

Overall inflation down, food rate up

1 week ago - 14 March 2019 | Economics

Annual overall inflation in February was 4.4%, down from 4.7% the previous month, according to the latest data released by the Namibia Statistics Agency (NSA)...

Latest News

Namibians first!

1 day - 22 March 2019 | Business

The Construction Industries Federation (CIF) of Namibia has proposed that bidders with less than 100% ownership by Namibian citizens should be disqualified from bidding for...

2019 ‘to-do’ lists for business...

1 day - 22 March 2019 | Columns

Getting your business off to a great start in a new year requires planning, critical thinking and dedication to executing your strategy.We asked Forbes Coaches...

A fierce corporate climber

1 day - 22 March 2019 | People

Carlota David-Howoses was born and grew up in Rundu.She attended Noordgrens Secondary School in Rundu, then moved over to Etosha Secondary School in Tsumeb and...

We are at a crossroads

1 day - 22 March 2019 | Opinion

I remember when I turned 29. The battle scars were starting to show. There were hard decisions. The hangovers of 'nice times' and the gay...

Pupkewitz Megaboards opens door

1 day - 22 March 2019 | Business

Pupkewitz Megabuild recently opened a new subsidiary, Pupkewitz Megaboards. “Pupkewitz Megabuild continues to expand its product and service offering in line with the Pupkewitz Group’s...

Satrix lists ETFs on local...

1 day - 22 March 2019 | Business

Satrix on Tuesday announced its secondary listing of its global exchange traded funds (ETFs) suite on the Namibian Stock Exchange (NSX).The listing is the first...

Corruption - A social disease...

1 day - 22 March 2019 | Columns

Johan Coetzee - One of the most popular indices used by investors to provide them with an indication of the level of corruption and governance...

Government pharmaceutical plant on hold

1 day - 22 March 2019 | Health

Government's plan to construct a pharmaceutical plant is on hold until various agreements are reached with private sector partners involved in the project.This is according...

Local content top priority

1 day - 22 March 2019 | Economics

A 'buy local' policy with local content requirements will, in the long run, help smaller businesses to sell goods and services to government.This was the...

Load More