Chamwe Kaira
The recent increase in civil servant wages is expected to provide some support to household purchasing power and household credit demand in the near term, according to FNB Namibia economist Cheryl Emvula.
“However, while these improvements may provide modest relief, they are unlikely to drive a substantial acceleration in household Private Sector Credit Extension (PSCE) growth. This is largely due to persistent structural constraints facing households such as sluggish income growth, elevated living costs, and limited affordability, pressures that remain particularly acute in the mortgage segment, which accounts for the largest share of household credit. As a result, household credit growth is anticipated to remain relatively subdued, averaging around 2.8% year on year in 2026,” Emvula said.
Private sector credit extension (PSCE) growth eased to 4.2% year on year in January 2026, down from 4.4% recorded in December 2025.
Emvula said the data shows a slower start to the year, although credit growth remained slightly above the 4.1% recorded in January 2025.
The slowdown was mainly linked to weaker corporate credit demand. Corporate credit growth declined by one percentage point to 5.8% year on year in January.
“Despite this moderation, corporates continued to contribute the largest share of overall credit growth. In contrast, household credit growth gained further momentum, rising to 3% year on year in January from 2.7% year on year in December,” he said.
Corporate credit growth is expected to remain the main contributor to overall credit expansion.
He said corporate lending is projected to average about 3.3% in 2026.
“Nonetheless, growth will likely remain restrained as businesses navigate a softer economic outlook by prioritising debt reduction and liquidity preservation over new borrowing amid ongoing uncertainty,” Emvula said.
FNB Namibia expects the Bank of Namibia to maintain its current monetary policy stance during the first half of 2026.
The bank expects one 25-basis-point interest rate cut later in the year if inflation remains stable and foreign reserves improve.
Emvula said such conditions would support borrowing by households and businesses while maintaining stability under the Namibian dollar currency peg.
Looking ahead, activity in the oil and gas sector is expected to support money supply growth and improve liquidity in the financial system.
He said improved economic conditions could increase demand for private sector credit and support deposit growth in the banking system.
