The number of loans taken out by Namibians but not paid on time increased massively from N$1,3 billion to N$2,3 billion in 2017, a sign that more people are drowning in debt than in the previous five years.
These figures are contained in the Bank of Namibia's 2017 annual report made public last week. The Bank of Namibia made these conclusions based on the information it obtained from all the commercial banks in Namibia.
"The year 2017 saw non-performing loans increase from N$1,3 billion to N$2,3 billion," the report said, adding that this represents an increase of around 77%.
The Bank of Namibia said a transaction becomes a non-performing loan when the borrower fails to pay for 90 days or more.
"The increased in non-performing loans is attributed to a slowdown in the growth of the Namibian economy which put pressure on corporate and household income, particularly given the elevated levels of debt in 2017," the annual report stated.
The central bank said the latest debt figures are the highest in the past five years.
According to the report, the increase in non-performing loans is visible in all the credit product types such as overdrafts that increased by 98% to N$317,3 million.
"The other unsecured lending categories, such as personal loans and credit cards also performed poorly, with non-performing personal loans increasing by 58% to N$112 million and non-performing credit cards increasing by 21% to N$18,8 million."
Around 57% mortgage loans were non-performing, followed by overdrafts at 14%. The least reported was credit cards with less than 1%.
"The dominant non-performing loans were mortgages at 57%, followed by overdrafts at 14%, instalment sales and leases at 10%, other loans and advances at 12,8 %, and credit cards at 0,8%," the report said.
Even though the ratio of unpaid loans increased from 1,5% to 2,5% of total loans, the central bank said the situation is still manageable because it's within the allowable 4% limit.
The report said the non-performing loans category for the individual sector increased by N$378 million to N$1,2 billion while real estate and business services unpaid debt went up from N$272 million to around N$369 million.
The undue loans in the trade and accommodation sector went up from N$192 million to N$350 million; for the agriculture sector, by N$24 million to N$82 million, while the finance and insurance sector rose by around N$62 million to N$98 million.
Poor performing loans were also recorded in the transport services sector, from N$54 million to N$79 million while the construction sector rose by N$12 million to N$66 million.
Fishing, mining, manufacturing, government services and other sectors showed a reduction in non-performing loans, the report said.
The report about unpaid loans comes at a time when there has been an increase in the repossession of vehicles and houses.
Namibians were in a similar situation during the 2009 financial crisis when overdue bank loans in Namibia ballooned by around 18% to N$2,1 billion in six months as the economic crisis continued to cripple consumers' ability to pay their debts.
