Business Reporter
THE credit environment shows continued signs of diverging growth paths, with most of the growth observed in corporate lending, while household credit remains constrained.
Relative to September 2024 (3.0% y/y), credit extended to the private sector rose slightly to 5.9% y/y in September 2025, from the 5.8% y/y growth recorded in August 2025.
This is according to FNB Namibia economic analyst Cheryl Emvula, who said that corporate credit growth slowed to 9.5% y/y in September, down from 10.3% y/y in the previous month. In contrast, household credit growth showed a marginal improvement in borrowing activity, rising modestly to 3.4% y/y in September, up from 2.8% y/y in August.
“Across credit categories, Private Sector Credit Extension (PSCE) growth was mainly supported by increases in other loans and advances, as well as in instalment and leasing credit. Growth in other loans and advances accelerated to 10.3% y/y in September, compared to 9.4% a month ago, with households driving growth in the category as corporate credit appetite remained relatively weak. Instalment and leasing credit further supported the overall growth, rising by 18.8% y/y in September from 17.5% y/y recorded a month ago. This aligns with the increase in vehicle sales, where total units sold (both commercial and passenger vehicles) grew by 31.9% y/y in September, compared to 26.7% y/y in the previous month,” Emvula said.
She added that household credit showed a modest improvement, rising to 3.4% y/y in September from 2.8% y/y in August, and slightly above the 3.4% y/y recorded in the same period a year earlier.
“The growth was supported by moderate increases in other loans and advances, a slight uptick in instalment and leasing credit, and a gradual improvement in overdraft credit,” Emvula said.
On the other hand, overdraft credit continued to contract, declining by 10.5% y/y in September from 13.0% y/y in August.
“The decline was mainly due to corporate debt repayments, while household demand for overdrafts remained subdued. Expectedly, mortgage credit continued to weigh on total PSCE growth, contracting by 0.3% y/y in September following a slight 0.1% y/y increase in August. According to the FNB House Price Index 2Q25, rising housing costs, coupled with limited housing supply, continue to constrain access to mortgages,” Emvula said.
The analyst further analysed the monetary policy, adding that on 15 October 2025, the Monetary Policy Committee (MPC) voted to cut the policy rate to 6.50% from 6.75%.
“The decision was motivated by weaker-than-expected domestic activity, with the Bank of Namibia (BoN) aiming to stimulate economic growth while ensuring that capital inflows are not disrupted. This rate cut follows BoN’s earlier guidance for banks to lower lending rates by 0.125 percentage points (ppts) in September, with a further reduction of 0.125 ppts expected by December. While this easing may not immediately trigger a significant rise in borrowing for households and corporates, it is expected to support PSCE growth, particularly in unsecured lending,” Emvula said.
The BoN is expected to maintain this rate in the near term, given weak domestic conditions as reserve pressures unfold.
