Chamwe Kaira
Simonis Storm Securities said higher energy import costs could place pressure on Namibia’s reserves despite current buffers.
The firm said banking-sector cash balances of N$6.3 billion and international reserves of N$51.7 billion recorded in February provide support.
“However, higher energy import costs will draw on reserves more rapidly and the Bank of Namibia (BoN) will need to monitor the adequacy of import cover closely, particularly as the Strait of Hormuz disruption has already stranded vessels and pushed insurance and freight costs sharply higher,” the firm said.
Data from BoN shows that credit growth has improved. Private sector credit extension rose to 4.7% year-on-year, the highest level in five months.
“The rebound was driven by a sharp recovery in corporate credit demand, while household credit held broadly stable. M2 growth accelerated to 8.7%, banking liquidity recovered strongly to N$6.3 billion, and headline inflation fell to 2.4%. However, this constructive domestic picture must now be read against a fundamentally altered global backdrop,” the firm said.
The firm said expectations for interest rate cuts have changed. Earlier forecasts pointed to two or three cuts in 2026. This outlook has shifted due to global developments and decisions by the South African Reserve Bank.
Simonis Storm said the next monetary policy committee meeting will have to balance domestic conditions with global risks.
“Our base case shifts from a Q2 rate cut to a prolonged hold at 6.50%, with the risk distribution now tilted toward possible tightening if second-round energy effects materialise,” the firm said.
The firm said global trends are also changing, with central banks delaying rate cuts due to inflation risks.
Corporate credit growth remained strong in February, driven by instalment sales and leasing. Vehicle financing increased, with 1 163 new vehicles sold and annual growth of 4.1%.
“This reflects a durable preference for productive, asset-backed investment. However, sustained energy price elevation will increase vehicle operating costs and compress business margins, particularly in transport-dependent sectors such as logistics, agriculture, and construction. Higher fertiliser costs up 35% globally pose a direct risk to agricultural sector credit demand, which was a key contributor to the February corporate credit rebound,” the firm said.
The firm said households remain under pressure.
“With the April fuel price increase and electricity tariff adjustment set to raise the cost of living, the affordability relief delivered through previous monetary easing will be partially offset by rising transport, grocery, and utility costs, hitting lower-income households hardest. The UN has warned that poorer, fuel-importing economies face acute stress, and Namibia as a net energy importer is not immune. The prospect of a further rate cut to support revolving credit users has diminished significantly, and consumer credit performance could deteriorate if cost pressures persist beyond the second quarter,” the firm said.
