Chamwe Kaira
The Bank of Namibia’s (BoN) stock of international reserves increased by 13.6% in April to N$58.8 billion, supported by inflows from the Southern African Customs Union (SACU) and Customer Foreign Currency (CFC) placements.
The reserve level translated into an estimated import cover of 3.7 months. Excluding oil and gas exploration and appraisal-related imports, the cover stood at 4.1 months.
At the end of April, reserves were estimated to be 10.5 times the value of currency in circulation. The Bank of Namibia said this level remains sufficient to support the peg between the Namibian dollar and the South African rand while meeting the country’s short-term international obligations.
The cash position of the overall banking industry also improved during the month. Cash balances increased to N$8.4 billion in April from an average of N$7.8 billion in March, representing a 7.9% increase.
The increase was mainly driven by diamond sale proceeds and government spending.
Growth in private sector credit extension (PSCE) also picked up during April. Loans extended to the domestic private sector reached N$124.1 billion, representing annual growth of 4.8%, compared to 4.3% in March.
Credit extended to businesses grew by 5.5% in April, up from 4.4% in the previous month. The increase was driven by higher demand for overdrafts, installment sales and leasing credit from companies in the mining and construction sectors.
Credit extended to households rose by 4.2% in April from 4.1% in March. The increase was supported by higher uptake of mortgages, overdrafts, and installment and leasing credit.
Instalment sales and leasing credit remained the fastest-growing credit categories. Annual growth stood at 20.6% in April, slightly lower than the 21.2% recorded in March. The growth continued to reflect strong demand for new vehicles.
Mortgage credit growth slowed during the month. Annual growth eased to 1.2% in April from 1.4% in March.
Mortgage credit extended to businesses contracted by 1% due to repayments, while mortgage credit growth among households remained largely unchanged at 1.9%.
Other loans and advances recorded annual growth of 1.6% in April, down from 4.3% in March. The decline reflected lower demand from businesses and repayments by companies in the commercial and service sectors.
Overdraft credit recorded a turnaround during the month. Annual growth increased to 11.4% after declining in the previous month. The increase was driven by higher borrowing from businesses, particularly in the mining sector.
BoN also reported growth in money supply, with higher M2 growth reflected across all major components, including currency outside depository corporations, transferable deposits and other deposits.
