Chamwe Kaira
Private sector credit extension (PSCE) growth is expected to exceed 6% year-on-year in the fourth quarter, supported by lower lending rates and improved affordability, according to Simonis Storm Securities analyst Almandro Jansen.
“The repo rate has been reduced to 6.50% and commercial banks are expected to lower their prime lending rates further by 12.5 basis points before year-end, easing financing costs across mortgages, overdrafts, and installment credits,” Jansen said.
PSCE grew by 5.9% year-on-year in September, the highest rate since early 2020.
The growth was driven by strong corporate borrowing in mining, manufacturing, and agriculture, as well as a steady recovery in household credit.
The Bank of Namibia (BoNI will hold its final monetary policy committee meeting for the year in December, with a 60% chance of another 25 basis points cut.
“This expectation is supported by external conditions: the US Federal Reserve reduced its policy rate by 25 basis points in October and is likely to implement another similar cut before December, while the South African Reserve Bank is also signaling a 25 basis points reduction at its upcoming MPC meeting,” Jansen said.
He said corporate investment activity remains strong, with firms in the mining, logistics, and renewable energy sectors continuing to expand borrowing for capital and working-capital needs.
This reflects better liquidity and confidence in the country’s medium-term economic outlook.
Jansen added that households are also expected to recover gradually, with vehicle and asset-linked lending likely to rise as lower rates reach consumers and cost-of-living pressures ease heading into the festive period.
He noted that the October 2025 eurobond redemption may cause a short-term liquidity adjustment.
“With local banks participating in funding the US$750 million repayment, some liquidity that would typically support household and corporate lending is being redirected toward government financing. This may cause a mild crowding-out effect in the final quarter. Nonetheless, credit activity is expected to normalise early in 2026, once SACU receipts and export inflows replenish banking system liquidity,” he said.
Simonis Storm Securities said Namibia’s monetary and credit conditions going into late 2025 will depend on domestic policy easing and external funding flows.
“Lower borrowing costs should continue to stimulate credit demand, while careful management of the eurobond redemption and foreign reserves will remain vital in maintaining confidence and safeguarding the currency peg,” Jansen said.
He added that the firm maintains a positive outlook for the rest of 2025, expecting credit growth above 6% year-on-year, inflation to remain within the 3% to 6% range, and a smooth post-eurobond adjustment that supports Namibia’s record of sound monetary and fiscal management.
