Staff Writer
Corporates continued to make net repayments in January 2026 despite lower lending rates and contained inflation, reducing overall credit uptake, according to Standard Bank Namibia economist Helena Mboti.
Private Sector Credit Extension (PSCE) slowed to 4.2% year-on-year in January, down from 4.4% in December 2025. Mboti said the slowdown reflected subdued demand rather than tighter financial conditions.
Business credit growth declined by 1.0 percentage point to 3.8% year-on-year in January. Household credit edged up by 0.3 percentage points to 5.8%.
Inflation eased from 3.6% year-on-year to 3.4% in November 2025. Lending rates also declined under an accommodative monetary policy stance. Mboti said corporates used lower borrowing costs to reduce debt rather than increase credit uptake.
Instalment and leasing credit remained the main driver of PSCE growth. It expanded by 17.4% year-on-year in January 2026, slightly lower than 18.5% in December. Growth came mainly from vehicle purchases by households and businesses. Vehicle sales increased by 4.7% year-on-year, supported by a 6.9% rise in passenger vehicle sales and a 2.1% increase in commercial vehicle sales.
Overdraft lending strengthened to 7.2% year-on-year in January from 4.3% in December. The increase was largely household-driven after months of contraction in 2025. Household overdraft demand improved from a contraction of 10.7% in December to positive growth of 1.4% in January. Business overdraft demand declined as companies in manufacturing, financial and telecommunications sectors reduced existing debt.
Demand for other loans and advances slowed to 4.7% year-on-year in January from 6.6% in December. Household growth in this category fell by 2.9 percentage points to 3.4%. Business demand eased to 6.9%. Mboti said households are using lower lending rates to reduce term loan exposure while continuing to use instalment credit and overdrafts.
Mortgage credit showed slight improvement but remained weak. Overall mortgage growth stood at 0.1% year-on-year in January, up from a 0.1% contraction in December. Business mortgage demand remained in contraction at 0.3%, though this was better than negative 0.9% previously. Household mortgage demand rose to 0.3%.
Mboti said the low but improving mortgage growth may signal gains in household confidence and willingness to commit to long-term borrowing. She linked this to lower lending rates, regulatory signals on fees and interest rates, optimism around emerging sectors and fiscal support. The planned 5% government salary increase could support mortgage demand, though house prices and borrowing costs may still weigh on growth.
Banking sector liquidity declined by 11.8% to an average of N$4.5 billion in January, in line with seasonal trends in the first quarter. Liquidity remains adequate to support credit conditions.
International reserves increased by 0.6% to N$51.9 billion in January, mainly due to SACU receipts. Mboti noted that the downward trend in import cover during 2025 points to narrowing reserve buffers, which could limit central bank flexibility if shocks arise from South Africa or the global economy.
Reserves stand at 9.6 times currency in circulation, indicating capacity to meet short-term debt obligations and support macro-financial stability.
