“Since [the] second quarter of 2013, private sector credit extensions have been averaging between 13 and 15 per cent. This has mainly been attributed by an uptick in household debt as opposed to corporate debt, which has ranged much lower between nine and 10 per cent,” Daniel Kavishe, an economist at Simonis Storm Securities, told CNBC Africa.
Total Namibian debt grew by 1.05 per cent during December to 88 billion Namibian dollars. This represents an annualised growth rate of 13.39 per cent.
“Consumers and businesses were trying to take advantage of the fact that they were facing a period where they were [in] a very low interest rate environment and therefore, the most prudent thing to do was for them to take up more credit during this period as opposed to a period when the interest rates would possibly start rising,” Kavishe said.
He added that, as a result of this and the parallelism between Namibia’s and South Africa’s rates, there was also a possibility of the Bank of Namibia raising the country’s interest rates.
“Namibia will have to look at a lot of factors such as economic growth and our current inflation levels but at the same time, it will also have to look at the household indebtedness of consumers. During the next monetary policy committee, the Bank of Namibia will have to consider the fact that South Africa has already increased their repo rate by about 50 basis points and right now, the two of them are on par,” Kavishe explained.
“We believe that there will be an uptick or an increase of between 25 and 50 basis points for the mere reason that the interest rate increase is inevitable so the Bank of Namibia will want to do it much earlier in the year as opposed to during later monetary policy committee meetings.”