Staff Writer
First National Bank (FNB) economist Cheryl Emvula said recent data shows a slight improvement in credit activity after a period of slowdown.
“After four consecutive months of slower momentum, private sector credit extension (PSCE) growth improved marginally to 4.7% year-on-year in February 2026, supported primarily by stronger credit uptake in the corporate segment,” he said.
He said businesses are showing renewed demand for credit, while households remain under pressure.
“Household credit growth moderated slightly, reflecting a more cautious approach to borrowing amid tighter financial conditions and elevated living costs,” Emvula said.
Instalment sales and leasing continued to lead credit growth.
“This category remained the fastest-growing, underpinned by stronger demand for both commercial and passenger vehicles,” he said.
He said mortgage lending is improving slowly but remains constrained.
Emvula said, “We expect mortgage credit to recover gradually, but persistent affordability challenges and supply limitations will likely keep growth subdued.”
He said risks remain to the downside.
“Household credit is expected to remain relatively subdued in 2026, as inflationary pressures, slower economic growth, and geopolitical tensions weigh on purchasing power,” he said.
He said corporate borrowing will continue to support overall credit growth but will remain limited.
“Corporate credit will remain the main driver of overall PSCE, but growth is expected to stay contained as firms prioritise deleveraging and liquidity preservation in an uncertain economic environment,” Emvula said.
Emvula warned that rising fuel prices could increase inflation.
“Higher fuel costs are likely to feed into broader price pressures, particularly through transport inflation, which could dampen consumption and, in turn, credit demand,” he said.
Emvula said interest rates are expected to remain unchanged.
“We anticipate that the Bank of Namibia will keep the repo rate at 6.50% to preserve currency stability and support overall financial conditions,” he said.
