Unproductive debt of N$16b

For two years running, personal loans and credit-card debt have grown alarmingly.

02 January 2019 | Economics

Namibians are increasingly relying on credit cards and personal loans and by the end of November 2018 this debt totalled N$6.3 billion.

That is almost N$1.3 billion more than in 2017.

Moreover, overdrafts on personal accounts stood at N$3.1 billion and instalment debt at N$6.7 billion at the end of November last year.

According to the latest figures released by the Bank of Namibia (BoN) “other loans and advances” from banks, which include credit-card debt and personal loans, was 19.6% higher at the end of November than at the same time in 2017. Year on year, this is the highest growth in debt since May 2017.

Personal loans and credit-card debt have been growing in double figures for two years. Up to the end of November, consumers' debt had increased by N$88 million every month.

During November, consumers racked up N$128.7 million in credit-card debt and personal loans: the third highest for 2018. The highest debt levels were recorded in August 2018 (N$201.1 million), followed by N$162.4 million in July 2018.

Other debts

The rate at which overdrawn accounts and instalment debt are growing is not yet alarming. Compared to November 2017, the total overdrawn account debt stood at N$26.7 million, or, 0.9% higher, in November 2018.

After measures implemented by the BoN, including compulsory deposits and shorter repayment periods on vehicle purchases, instalment debt has dropped. At the end of November 2018, this debt stood at N$491 million, 6.8% lower than in November 2017.

Home loans, considered as productive debt by the central bank, stood at N$38.3 billion in November 2018, roughly N$2.5 billion or 6.9% more than in November 2017.

In total, Namibian consumers owed commercial banks N$56.3 billion at the end of November 2018, almost N$3.3 billion or 6.1% more than in November 2017.

The latest figures available from Namfisa indicate that registered micro-lenders were owed N$5.6 billion in March 2018 - N$1.2 billion or 27% more than in March 2017.

The financial stability report of the BoN, published in April 2018, indicates that consumers spend N$83.30 out of every N$100 of disposable income on paying their debts.

Both the central bank and the International Monetary Fund have expressed concern over the Namibian consumer's debt burden.


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