Namibian banks have invested so much in non-productive sectors, leaving out small businesses and manufacturing - a model that will not support long-term economic growth.
This is the view of the International Monetary Fund (IMF), contained in detailed findings and recommendations following the conclusion of Article IV country consultations, which ended in June this year.
"Credit is concentrated in household mortgages and in corporations operating in the non-tradable sectors, thus having limited effects on long-term growth dynamics. Enhancing credit allocations towards more productive sectors would support stronger growth," the IMF said.
The tradable sector largely consists of the manufacturing industry, while the non-tradable sector consists of locally-rendered services, including health, education, retail and construction.
Data from the central bank shows that by December last year, mortgage loans from commercial banks for both individuals and businesses stood at N$50,4 billion, about 52% of the N$96,9 billion aggregate loan book.
Sector-wise, the banks only advanced N$2,2 billion towards manufacturing, a mere 2,1% of the loan book. The construction sector as of 2018 took up N$3,9 billion, the fishing sector N$5,1 billion, while the mining sector only received N$2 billion worth of loans.
Individuals took up N$47,8 billion of the entire N$96,9 billion loan book.
The government has been calling for manufacturing to be a key sector of the country's economy by offering tax incentives, which finance minister Calle Schlettwein said were maintained at a burden to treasury.
Recent gross domestic figures show that the manufacturing sector grew by 18,8% in the second quarter of 2019, from 3,6% during the first quarter of 2019.
Speaking at the central bank's 20th annual symposium yesterday, governor Ipumbu Shiimi said Namibia must move away from selling minerals and primary products, and produce complex goods to move from middle-income status to being an advanced economy.
Equally denied funding, the IMF stated, is the small business sector.
"Although levels of financial inclusion compare favourably to other upper-middle income countries and have recently improved, access to credit is limited, particularly for SMEs," the fund said.
At an event held in Windhoek last month, local economist Rowland Brown urged the government to create a conducive environment for small players to grow with minimum regulation.
The Namibian reported that Cabinet had approved the establishment of a skills-based lending facility for the youth, which will ensure increased access to affordable finances by potential and emerging entrepreneurs.