Credit Growth Trends
Private Sector Credit Extension (PSCE) growth accelerated to 5.0% y/y in March 2025, up from 3.9% y/y in February, marking the strongest expansion since March 2020. This sharp improvement was underpinned by robust growth in corporate credit, while household credit showed a slight uptick. The data suggests that overall credit appetite is gradually recovering, supported by more confident business borrowing patterns and sustained instalment credit demand.
Business Credit Expansion
Corporate credit growth surged to 8.2% y/y in March, from 5.9% y/y in February, the highest rate since December 2019. This acceleration was driven by strong uptake in other loans and advances (14.8% y/y), instalment and leasing credit (20.6% y/y), and a return to positive overdraft credit growth (4.6% y/y) after 13 consecutive months of contraction. Key sectors driving demand included mining, energy, tourism, manufacturing, and financial services, indicating a broad- based recovery in economic activity.
Mortgage credit within the business segment remained on the contraction side at -2.3% y/y, reflecting ongoing caution in the commercial real estate market. Despite improved borrowing conditions, firms appear to be prioritising asset- light strategies and managing risk more conservatively, especially amid global uncertainty and rising import costs.
Overall, the rebound in business credit signals renewed investment momentum. However, with interest rates still relatively high and broader economic headwinds persisting, businesses continue to balance credit expansion with financial prudence.
Household Credit Remains Stagnant
Household credit growth edged higher to 2.8% y/y in March, from 2.6% y/y in February, but remains subdued by historical standards. Growth was mainly supported by instalment and leasing credit, which rose to 14.5% y/y, echoing continued strength in the vehicle market and consumer durables segment.
In contrast, mortgage credit growth declined to 0.6% y/y (from 0.7% y/y in February), indicating softness in the residential property market. While overdraft credit for households did show some recovery nationally, the overall expansion remains modest, suggesting persistent structural constraints, including affordability issues and slow income growth.
The growth in other loans and advances remained solid at 7.9% y/y, with uptake concentrated among mid-income households seeking flexible financing solutions.
Corporate Credit Trends
Namibia’s total corporate debt stock rose further in March 2025, reaching a new high, reflecting renewed momentum in business borrowing. Corporate credit grew by 8.2% y/y, up significantly from 5.9% y/y in February, marking the strongest annual expansion since December 2019. On a month-on- month basis, the stock increased by N$1 billion, underscoring improved corporate sentiment and liquidity demand across several sectors.
- Instalment and Leasing Credit grew by 20.6% y/y, up slightly from February’s 20.4%, but still indicative of strong investment activity, particularly in transport, mining, and equipment-related sectors. The elevated uptake points to capital expenditure among firms upgrading vehicle fleets and acquiring durable assets.
- Other Loans and Advances surged to 14.8% y/y in March (up from 9.6% in February), with demand concentrated in manufacturing and energy. This suggests strategic credit usage for project financing and working capital needs.
- Overdraft Facilities posted 4.6% y/y growth in March, recovering from 0.3% in February. The return to growth after over a year of contraction signals improved operational cash flow requirements and a tentative return to flexible credit lines.
- Mortgage Loans decreased to -2.3% y/y, slipping from -0.2% the previous month. This indicates that the commercial property market remains weak, with businesses continuing to delay large real estate investments in favour of more liquid or short-term financing structures.
Overall, the business credit environment is showing clear signs of recovery, supported by improved confidence in key sectors and demand-side tailwinds. Structural reforms, such as corporate tax reductions (from 32% to 30%) and favourable credit conditions, are likely to sustain the upward trajectory into Q2 2025.
Households
- Mortgage Credit growth decelerated to 0.6% y/ y, reversing the modest momentum seen earlier in the year. This stagnation highlights persistent affordability challenges amid elevated home prices and weak wage growth.
- Other loans and advances held steady at 7.9% y/y in March, following a notable increase in February. The sustained growth points to continued reliance on flexible credit facilities, particularly among middle-income households seeking accessible financing options.
Short-Term Credit Trends: Overdrafts vs. Instalment Sales
- Overdraft Facilities for households continued to show recovery, with a 12.5% y/y growth in March. The rebound from declines seen earlier in the year indicates shifting sentiment and a need for short-term liquidity support.
- Instalment and Leasing Credit stood firm at 14.5% y/y, rising from 12.3% y/y in February. The strength of this segment is underpinned by high vehicle sales and growing consumer demand for durables.
Liquidity and Foreign Reserves
The liquidity position of Namibia’s banking sector remained robust in March 2025, though slightly lower than the previous month. Commercial bank liquidity averaged N$9.4 billion, down from N$9.9 billion in February. This modest decline was largely attributable to increased foreign payments during the review period, including higher import- related outflows.
Despite the dip, liquidity levels remain elevated by historical standards, indicating that banks continue to be well-capitalised and capable of supporting credit extension across sectors. The prevailing conditions provide a buffer against potential financial tightening, especially as interest rates remain high.
In contrast, international reserves fell to N$59.7 billion by the end of March 2025, a 7.4% month- on-month decrease. The drop was mainly driven by a rise in imports and increased foreign expenditure by the government. This brought import cover down to 3.9 months, or 4.8 months when excluding oil exploration and appraisal activities, which are largely funded externally.
Broad Money Supply (M2): A Deceleration Reflecting External Factors
The growth of the broad money supply (M2) moderated further in March 2025, decelerating to 10.1% y/y, down from 10.6% y/y in February and 11.1% in January. The slowdown was primarily driven by a decline in domestic claims, which eased to 9.2% y/y (from 14.6% y/y), despite a significant improvement in Net Foreign Assets (NFA), which rose sharply to 19.8% y/y, up from 4.2% y/y.
On the liabilities side:
- Currency outside depository corporations slowed to 6.0% y/y from 8.0% y/y,
- Transferable deposits growth eased to 4.9% y/y (from 8.2% y/y),
- While other, longer-term deposits grew more strongly, accelerating to 17.4% y/y (from 13.9% y/y).
The trend suggests a shift in financial behaviour toward longer- dated savings instruments, possibly reflecting increased caution and higher nominal deposit rates in a high-interest- rate environment.
The cooling in M2 growth signals a potential moderation in liquidity-fuelled inflationary pressures, though the system remains liquid enough to support continued credit growth, particularly to businesses. Sustained deposit growth also reinforces financial system stability amid heightened global uncertainty.
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