A total of 174 building plans were approved in January with a value of N$259.5 million, while 30 buildings with a value of N$7.85 million were completed. Thus far 2017 is off to a better start than 2016, where only 116 plans were approved in the first month and 25 were completed. The value of the approved buildings is nearly double the value witnessed in January 2016. However, on a twelve month, cumulative basis, 1819 building were approved worth approximately N$2.1 billion, 5.7% less than the preceding twelve-month period.
The largest portion of building plan approvals were made up of additions to properties, from both a number and value perspective. For the month of January 143 additions to properties were approved with a value of N$ 156.5 million, 148.3% more in value terms than in January 2016, and 48 more than the number of additions observed in the first month of 2016.
New residential units were the second largest contributor to building plans approved: 25 residential units were approved, 10 more than January 2016. In dollar terms, N$62.2 million worth of residential plans were approved, 162.2%% higher than the previous January.
The number of commercial units approved in January only amounted to 6, valued at N$40.8 million. This compares to 6 units valued at N$42.0 million approved in January 2016. On average over the last 20 years, 4 commercial units valued at N$13.5 million were approved in the first month of the year.
The 12-month cumulative number of building plans approved has ticked up slightly for the last two months. However, in the last year 1819 building plans were approved, 24.1% less than the same measure for January 2016. This figure has nearly halved from the peak in September 2013 to the current lows.
The construction industry has been a major driver of growth in the Namibian economy in the past. Private and public sector investment in infrastructure was complemented by the construction of three large mines. Between 2010 and 2015 construction took centre stage in the Namibian economy and created a substantial base off which continued growth was always going to be a challenge.
As a leading indicator for economic activity in the country this implies that the whole economy could remain under severe pressure. With government spending on infrastructure slowing and the current interest rate environment making it increasingly difficult for banks to extend credit, we expect further contractions in the construction sector in 2017 and possibly beyond. This is cause for concern as the sector provides a substantial amount of jobs and those employed in the sector earn low wages on average while supporting large families in many cases.