Chamwe Kaira
Simonis Storm Securities says the Bank of Namibia’s monetary easing cycle is slowly filtering into the real economy, even as short-term credit growth shows signs of cooling.
Simonis Storm economist Almandro Jansen said the October 2025 data points to a more measured phase in the credit cycle.
Private sector credit extension eased to 4.7% year-on-year in October from 5.9% in September. Both households and corporates pulled back on borrowing.
Jansen linked the slowdown to tighter liquidity conditions after the government’s Eurobond repayment, which temporarily shifted funds away from private-sector lending.
“Even with the moderation, PSCE remains above the levels we saw through 2023 and early 2024, which tells us the recovery in credit demand has not reversed; it has simply cooled,” Jansen said.
Simonis Storm expects PSCE to settle between 5.0% and 5.5% for the rest of the fourth quarter.
The firm said this outlook is supported by three factors. First, mildly supportive monetary conditions, with the repo rate at 6.50%, manageable real borrowing costs, lower prime lending rates, stable inflation within the 3 to 6% target band, and global central banks moving toward easing. Jansen expects a 25 basis-point rate cut in December to support households, businesses and economic activity as the country enters 2026.
Secondly, Jansen anticipates robust corporate investment. Corporate credit growth slowed to 7.5%, but installment and leasing credit continued to rise.
Jansen said the rise reflects increased investment in vehicles, machinery and logistics assets across mining, agriculture, manufacturing and transport.
“Corporates are borrowing selectively and increasingly for expansionary, productivity-enhancing projects; this is a healthy signal for medium-term investment momentum,” he said.
The third factor is a slow and uneven recovery in household credit. Household lending remains under pressure after the eurobond redemption reduced liquidity in the financial system.
Banking-sector cash balances have fallen to around N$5.2 billion, while international reserves dropped to N$48.6 billion, covering 3.2 months of imports.
Jansen said this created a temporary, mild crowding-out effect as banks prioritised government financing.
Simonis Storm said the liquidity squeeze will not last. Expected Southern African Customs Union (SACU) revenue inflows, rising mineral-export earnings and government fiscal injections are expected to ease liquidity conditions in early 2026.
Jansen said the successful Eurobond redemption removed a major refinancing risk and strengthened Namibia’s sovereign risk profile.
The firm expects the repo rate to be cut from 6.50% to 6.25% in December.
“The adjustment phase post-Eurobond is orderly. Confidence is holding, and the credit environment remains fundamentally supportive, even if more measured than earlier in the year,” Jansen said.
Caption
Almandro Jansen
