Windhoek: Namibia's private sector credit extension (PSCE) growth slowed to 4.2 per cent in January 2026, reflecting weaker corporate borrowing despite a modest pickup in household credit demand.

According to Namibia Press Agency, the Namibia January PSCE report released by First National Bank (FNB) Namibia on Tuesday shows that the growth rate declined slightly from 4.4 per cent recorded in December 2025.

The report, compiled by FNB Namibia Economist, Cheryl Emvula, attributed the slowdown mainly to a deceleration in corporate credit demand, which declined by one percentage point to 5.8 per cent in January. Despite the moderation, corporate borrowing continued to contribute the largest share to overall credit growth.

Household credit demand, however, showed some improvement during the period. Growth in household credit increased to 3.0 per cent in January from 2.7 per cent recorded in December, largely supported by stronger demand for overdraft facilities and mortgage credit. Overdraft lending to households recorded a recovery, rising to 1.4 per cent and exiting a year-long contraction. 'The rebound likely reflects post-holiday financial strain, compounded by weak wage growth and constrained household purchasing power,' the bank noted.

Across the general credit categories, instalment sale and leasing credit remained the fastest-growing segment, although growth slowed slightly to 17.4 per cent in January from 18.5 per cent in the previous month. Total vehicle sales declined by 11 per cent during the month to 1,005 units, reflecting a typical seasonal slowdown. On an annual basis, however, sales remained 4.4 per cent higher, indicating continued resilience in demand.

Mortgage credit growth remained subdued, posting marginal growth of 0.1 per cent in January. According to the report, activity in this category continues to be constrained by structural challenges in the housing market that limit new mortgage uptake. Headline inflation also eased to 2.9 per cent in January from 3.2 per cent in December, supported by softer food prices and stable transport inflation.

The repo rate remained unchanged at 6.50 per cent following the Bank of Namibia's monetary policy decision in February. FNB Namibia expects the monetary policy stance to remain unchanged during the first half of 2026, with the possibility of a rate cut in the latter half of the year. The report further noted that Namibia's official stock of international reserves remained stable at N.dollars 51.9 billion.