Allexer Namundjembo
The Bank of Namibia (BoN) has welcomed the decision by commercial banks to reduce the spread between the repo rate and prime rates, including mortgage and other lending rates.
The move follows the central bank’s guidance to cut the margin by 25 basis points. The adjustment is being rolled out in two phases. The first reduction of 12.5 basis points took effect on 30 September 2025.
A further 12.5 basis point cut is expected by 31 December 2025.
“This policy measure aims to narrow Namibia’s historically wide interest rate margins, thereby making credit more affordable for households and businesses. By lowering borrowing costs, the Bank seeks to stimulate domestic economic activity, support investment, and ease financial pressures on consumers,” the central bank said.
Within the common monetary area (CMA), which includes Namibia, South Africa, Lesotho, and Eswatini, Namibia has long recorded higher spreads between the repo and prime rates than its peers.
While South Africa, Lesotho, and Eswatini have kept the spread at 3.50 percentage points, Namibia’s has stood at 3.75 percentage points since 2010.
“By reducing its spreads, Namibia is aligning more closely with its CMA peers, contributing to a more predictable and consistent banking environment across the region. This alignment not only strengthens Namibia’s position within the CMA but also signals progress in addressing structural factors that have previously resulted in higher intermediation costs for Namibian consumers and businesses,” the Bank said.
BoN governor Johannes !Gawaxab commended commercial banks for their response.
“This is a significant and necessary step towards ensuring a more equitable and inclusive financial system. At a time when concerns over the cost of financial services are growing, these actions reflect the sector’s willingness to contribute constructively to national economic objectives and to address public concerns.”
The central bank said it will continue to monitor developments to ensure that the benefits of this intervention are realised and that cost savings are passed on to consumers and businesses.
Caption
Johannes !Gawaxab
– Photo: BON
