A total of 198 building plans worth N$219.8m were approved by the city of Windhoek in April. On a year-to-date basis, 642 plans were approved, significantly less when compared to the 878 plans approved over the same period last year. In value-terms however, approved plans on a year-to-date basis are worth N$749.3 million, 30.9% more than the value recorded over the same period last year. This year to date increase in value of plans approved is mostly due to base effects as large commercial projects have been approved by the municipality thus far in 2016.
The city of Windhoek approved 52 more building plans this month than in March. The equivalent value for the plans approved in April came in at N$219.9m, 16.4% above the March figure. 22 residential units and 161 additions were approved by the municipality during April. The total value for residential units and additions approved in April stood at N$70.07 million and N$105.85 million respectively. Only 6 commercial and industrial plans were approved in April, to the value of N$42.43 million, exactly the same figure as reported in March which suggests that this is a duplication instead of an addition for the month.
The subdued trend in the 12-month cumulative number of plans approved continued in April, bringing the number down to 2,231 units from 2,239 in March. This is reflected in the 12-month cumulative growth rate which was down 21.3% in April, posting negative growth for the 24th consecutive month. As shown in the graph below, the level of the 12-month cumulative number of plans approved has fallen far below the 20-year average for this measure.
We have experienced a massive boom in the construction industry since 2010, especially over the last 4 years, with an average of N$2.265 billion worth of building plans approved over this period. From a GDP perspective, the Namibian construction industry contributes about 4% to total GDP.
As the construction at the B2Gold mine and the Tschudi copper mine has been completed during 2015 and construction of the Husab mine is nearing completion, the growth contribution from the construction sector is expected to have topped out somewhat.
Of major concern are the current water restrictions in the central part of Namibia. NamWater announced on 18 February 2016 that water supply to Windhoek will be cut by 20% in an attempt to postpone dams running dry from August this year to April 2017. Cabinet has also approved a water tariff increase of 10% during the current financial year. NamWater has given no indication as to when the implementation date for the hike will be. Although the decision to increase the tariff was made in March, the minister of communication and technology, Mr Tjekero Tweya, only made the announcement on 11 April. NamWater is only required to give a months’ notice before any hike is implemented.
Water restrictions and tariff hikes will directly affect economic activity in Namibia, impacting water dependent industries, such as construction. If further water restrictions and new tariffs are implemented, it would have a severe impact on the construction industry as they are heavily reliant on water supply and given the magnitude of construction activity in Windhoek, a standstill of construction activity in the capital would have a significant impact on the economy.