Household debt increases by 15 per cent

07 Feb 2014 10:10am
WINDHOEK, 07 FEB (NAMPA) – The total household debt at the end of December was nearly N.dollars 37 billion, compared to about N.dollars 32 billion a year ago.
This translates to a 15.18 per cent increase over the 12-month period, the Money and Banking Statistics for December 2013 issued by Simonis Storm Securities showed on Thursday.
“Annualised figures have once again shown record highs in household debt numbers. With year-on-year growth of 15.18 per cent, there are looming fears that the Namibian consumer is highly-indebted, and will therefore have to brace him/herself as the markets align towards a higher interest rate environment.
Instalment credit grew by 16.62 per cent, which represents a year-on-year high, while the other loans and advances’ (other loans) category grew by 24.37 per cent,” it stated.
Credit extended to the private sector (corporate and households) grew to more than N.dollars 59 billion in November.
The annual growth in credit extension remains moderate, with growth attributed mainly to other loans and advances and instalment credit groups.
The two categories grew by 15.44 per cent and 27.86 per cent, respectively.
On a monthly basis, the private sector credit extension (PSCE) grew by 1.18 per cent, lower than November’s monthly growth rate of 2.61 per cent.
On a yearly basis, the PSCE edged higher to 14.38 per cent, mainly on the back of increased credit uptake from households.
Meanwhile, statistics indicated that South Africa’s PSCE has been slowly declining during the course of 2013, with a year-on-year peak of 9.05 per cent in May, followed by a steady decline to the current growth levels of 6.14 per cent.
Conversely in Namibia, the PSCE growth has averaged 14.86 per cent during the course of 2013.
“The growth in this sector is expected to decline with warranted fears of increasing interest rates,” it cautioned.
On corporate debt, the analysis indicated that it stood at N.dollars 22.68 billion in December 2013.
The 12-month credit extension growth has slowed from 30.2 per cent in November 2012 to the current levels of 13.11 per cent. Corporate debt seems to be centralised amongst the other loans and advances’ (other loans) category, which has recorded an annualised increase of 30.42 per cent.
On Government debt, the analysis highlighted that the total Namibian government debt has grown steadily since August, increasing by an estimated N.dollars 300 million each month.
The total Government debt has grown to N.dollars 29.33 billion in December, a 11.45 per cent growth year-on-year.
The government continues to reduce the proportion of its domestic short-term paper (TBs) as longer-term internal revenue services (bonds) remain favourable.
Currently, TBs account for 42.73 per cent of the total domestic debt issued, while the Internal Registered Stock (IRS) accounts for the remaining 57.27 per cent.
Estimates showed that foreign debt stock had grown by 17.56 per cent year-on-year as a depreciated rand continues to impact Namibia’s bilateral and multilateral debt agreements.