GROWTH in total Private Sector Credit Extension (PSCE) edged slightly up at the end of September 2019.
According to most Money and Banking statistics recently released by the Bank of Namibia (BoN), the annual growth in total PSCE rose moderately to 6.5% at the end of September 2019, from 6.4% in August 2019.
The rising growth in PSCE emanated from an increase in demand for credit by both the household and business sectors during the period under review.
The annual growth in credit extended to businesses edged up to 6.25% in September 2019 from 6.0% a month earlier.
According to BoN, the increase mainly stemmed from an increase in overdraft credit and other loans and advances extended to businesses in the manufacturing, services, construction and fishing sectors during the month under review.
Furthermore, credit extended to individuals also rose to 6.8% at the end of September 2019, compared to 6.7% at the end of August 2019.
BoN explained that this was largely due to a rise in the short-term credit facilities such as overdraft credit and other loans and advances, which rose during the period under review.
Annual growth in overdraft credit rose to 6.6% at the end of September 2019 from a growth of 5.9% in August 2019.
The increase in overdraft credit was mainly driven by an increase in demand for short term credit by the household sector.
Lending extended to businesses in the manufacturing, services, construction and fishing sectors during the review period also contributed to the rise in overdraft credit.
The report further stated that the overall liquidity position of the banking sector trended lower in September 2019.
The liquidity balances of commercial banks decreased by 18.2% to an average level of N$3 billion in September 2019.
BoN stated that the decline in liquidity is as a result of lower domestic Government spending mainly ascribed to lower economic activity, coupled with higher foreign currency outflows as a result of import payments during the review period.