WINDHOEK, Oct. 2– Namibia’s central bank said on Thursday that it has successfully guided commercial banks to reduce the margin between its repo rate and their prime lending rates, in a move aimed at lowering borrowing costs for consumers and businesses.
The Bank of Namibia (BoN) welcomed steps by lenders to narrow the spread by 25 basis points, to be implemented in two phases: a 12.5-basis-point reduction effective Sept. 30, followed by another 12.5-basis-point cut on Dec. 31.
“This policy measure aims to narrow Namibia’s historically wide interest rate margins, thereby making credit more affordable for households and businesses,” BoN Acting Deputy Director for Corporate Communications and Sustainability Naufiku Hamunime said in a statement.
“By lowering borrowing costs, the bank seeks to stimulate domestic economic activity, support investment, and ease financial pressures on consumers.”
Within the Common Monetary Area (CMA), which comprises Namibia, South Africa, Lesotho, and Eswatini, Namibia has historically maintained wider spreads between repo and prime rates, Hamunime said, adding that while the other three countries have kept the margin at 3.50 percentage points, Namibia’s has stood at 3.75 points since 2010.
“By reducing its spreads, Namibia is aligning more closely with its CMA peers, contributing to a more predictable and consistent banking environment across the region,” she said, adding that this alignment not only strengthens Namibia’s position within the CMA but also signals progress in addressing structural factors that have previously resulted in higher intermediation costs for Namibian consumers and businesses.
BoN Governor Johannes Gawaxab commended the banking sector for responding positively to the guidance. “This is a significant and necessary step towards ensuring a more equitable and inclusive financial system.
At a time when concerns over the cost of financial services are growing, these actions reflect the sector’s willingness to contribute constructively to national economic objectives and to address public concerns,” he said. (Xinhua)
