Windhoek:The Bank of Namibia (BoN) has issued a warning about the heightened risk of drought during the 2026/27 rainy season, attributing this to the emerging El Niño episode and the likelihood of below-normal rainfall throughout Namibia.
According to NAMPA, the bank's October 2026 Financial Stability Report, released on Monday, highlights an increase in climate-related risks since its previous report in April 2026. These risks are expected to materialize during the fourth quarter of 2026, with the El Niño episode anticipated to strengthen later in the year.
The report further reveals that the latest Southern African Development Community (SADC) seasonal outlook forecasts a higher probability of below-normal rainfall and above-normal temperatures across much of southern and central SADC, including Namibia, during the upcoming rainy season. This scenario poses a significant risk of drought, potentially impacting agricultural production, household and business incomes, and increasing credit losses in the banking sector.
Additionally, the report notes a decline in banks' direct exposure to the agricultural sector, with loans and advances decreasing from 5.1% in the fourth quarter of 2025 to 4.8% by the end of June 2026. However, the BoN cautioned about potential indirect exposures through interconnected sectors and the broader economic effects on food prices, economic activity, and borrower affordability.
Despite these concerns, the Bank of Namibia affirmed that the country's banking sector remained resilient during the first half of 2026.