With the economy in a slowdown, the financial and retailer industries are offering incentives to stimulate consumer spending.
“Banks certainly always look for new markets and opportunities to attract consumers in particular during times when the disposable income of consumers is constraint,” Economic Association of Namibia (EAN) Executive Director, Klaus Schade said.
He, however, forecasts loan defaults to increase since there is no social safety net in place to cushion people who lose their jobs.
“Lower interest rates and relatively low inflation rates bring a little bit of relief to consumers who are financially under pressure.”
Schade expects the retail sector to feel the drop in disposable income and the increase in unemployment this festive season.
“However, consumers are usually quite generous in their spending behaviour during the festive season and only wake up to reality in January.”
Last week, Nedbank Namibia noted that the Namibian economy is still in recovery with consumers finding it difficult to move forward and to meet their obligations.
“This is a time for consumers to be wise about their financial decisions; to consolidate and pay off their debt and to restructure debt to ease monthly repayments until their situation improves.”
The green bank has launched a campaign to inform consumers that they are able to restructure their home loans over longer repayment periods, to ease the monthly payments.
“The longer-term total repayment will increase as a result, but consumers can also restructure their home loans to shorter repayment periods when their situation improves. The aim is to provide relief in the current economic environment,” the lender said.
The bank also announced a transactional account with one flat fee of N$120 per month, inclusive of all transactions, in order to help Namibians save on banking fees and have more money in their pockets.
Nedbank also said it was shifting its focus to the pre-owned vehicle market, where consumers will still be expected to pay the 10 percent deposit, but allow them to pay the outstanding amount back over 54 months just like new vehicle purchases.
The offer is valid up until 31 December.
“There is unfortunately no published data available on the sale of pre-owned cars. However, it can be assumed that with the current economic climate more people turn to pre-owned cars since they are more affordable than new cars,” Schade said.
Etienne Steenkamp, Deputy Managing Director of the Pupkewitz Motor Division said in an interview that the company has opened five second hand car showrooms this year, emphasising the growing demand for used cars.
He said in a ‘flat economy’ business was down, adding that at this time of the year both manufacturers and car dealers tend to offer discounts so as to meet targets because January is normally a tough month.
“We are hoping to sell cars until 20 December, after that no one buys cars because people are in the north or at the coast,” he said.
The amendment to the Credit Agreement Act in mid-2016, which requires a payment of 10 percent on hire purchases, has also dampened consumer spending on vehicles.
Bank of Namibia statistics released early this month confirmed that consumer borrowing has slowed down. Growth in private sector credit extension (PSCE) slowed at the end of September 2017.
The annual growth in total PSCE slowed to 5,4 percent at the end of September, as reflected in the lower demand for credit by both the household and corporate sectors during the review period.