WINDHOEK, Dec 15 (The African Portal) – Namibian banks will soon be changing the way they lend money to clients with the introduction of a new lending policy.
The change in the interbank rate will completely change the way interest rates on homes, cars, properties and all types of loans are charged.
Announced by the central bank earlier this month, Nicholas Mukasa, the director of financial markets at the Bank of Namibia, says: “Namibia will be moving away from the Windhoek Interbank Agreed Rates (Wibar), which are benchmark interest rates used in the Namibian financial market.”
However, the central bank is yet to announce what the new rate to be used will be.
“We are still having a discussion with the industry on the readiness and best approach, and an announcement will hopefully be made next year,” Mukasa says.
The Wibar was introduced in 2011, which allowed banks to lend, depending on a set prime rate.
The prime rate is calculated by adding 3.50% to the repo rate, which is set by the Bank of Namibia.
In South Africa, the country is set to change from Johannesburg Interbank Average Rate (Jibar) to the South African Rand Overnight Index Average (Zaronia) in 2026, with the complete phasing out of Jibar expected by 31 December 2026.
Financial expert Mesias Alfeus says if Namibia decides to change to Zaronia, the country will be globally recognised as risk free.
“Moving from Wibar to Zaronia would put Namibia on the same, globally recognised risk-free footing as South Africa, improving consistency, robustness and market integration,” he says.
Alfeus says the change will mean that the prime rate will no longer solely depend on the repo rate.
“This does not mean it will be cheaper or more expensive to borrow, but the price of lending will no longer be solely depending on the repo,” he says.
However, it will be very costly for the banking sector as a lot of loan agreements will need to be renegotiated.
“This will not be an overnight change. It will take time and banks will feel the the pinch, because if the rates change, past contracts will need to be renegotiated,” Alfeus says.
Overall, the move to Zaronia introduces widespread adjustments across financial institutions, investors and consumers, underscoring the scale and complexity of this benchmark transition.
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Credit: The Namibian
