PSCE – October 2019


Private sector credit (PSCE) increased by N$510.1 million or 0.5% m/m in October, bringing the cumulative credit outstanding to N$101.9 billion. PSCE grew at a slower pace of 6.14% y/y in October compared to 6.24% y/y in September. On a rolling 12-month basis N$5.89 billion worth of credit was extended to the private sector, down 16.0% y/y. Individuals took up N$3.79 billion while N$2.30 billion was extended to corporates, and the non-resident private sector decreased their borrowings by N$193.7 million.

Credit Extension to Individuals

Credit extended to individuals increased by 6.7% y/y in October, a slight slowdown from the 6.8% y/y growth recorded in September. Mortgage loans extended to individuals increased by 0.6% m/m and 6.5% y/y. Installment credit continued to contract, by 0.1% m/m and 6.1% y/y. Other loans and advances (which is made up of credit card debt, personal and term loans) grew by 2.0% m/m and 24.2% y/y in October. Household demand for overdraft facilities declined in October, contracting by 2.0% m/m, although rising by 8.6% y/y.

Credit Extension to Corporates

Credit extension to corporates grew by 0.3% m/m and 6.0% y/y. On a rolling 12-month basis N$2.30 billion was extended to corporates as at the end of October, a decrease of 9.1% y/y. Although the uptick in the general demand for credit by corporates over the last year seems positive, the biggest driver of the increase in credit extended to corporates was shorter-term debt. Overdraft facilities extended to corporates decreased by 0.6% m/m but rose 5.4% y/y, while other loans and advances to corporates increased by 1.3% m/m and 12.3% y/y. The increase in these categories indicates that businesses continue to rely on other short-term debt to keep the lights on. Mortgage loans by corporates contracted by 0.7% m/m but rose 5.8% y/y, while installment credit increased by 0.5% m/m, but contracted by 5.2% y/y.

Banking Sector Liquidity

The overall liquidity position of commercial banks declined by N$227.3 million in October to reach an average of N$2.77 billion. The Bank of Namibia attributed the decline in liquidity to lower domestic Government spending mainly due to lower economic activity coupled with higher foreign currency outflows as a result of import payments during October 2019.

Reserves and Money Supply

As per the BoN’s latest money statistics release, broad money supply rose by N$7.16 billion or 6.7% y/y in October, following an 8.3% y/y increase in September. Foreign reserve balances rose by N$203.6 million to N$32.47 billion in October from N$32.27 billion in September. According to the BoN, the increase was mostly due to an inflow of SACU receipts as well as lower government payments during the period under review.


Private sector credit extension continues to languish, increasing by 6.14% y/y during October compared to the 6.24% y/y growth rate recorded in September. It has been 36 months since PSCE last recorded double digit growth on an annual basis. As expected, the 25-basis point rate cut in August has not resulted in higher demand for credit as consumers are already over-indebted. With low economic activity and lack of demand, growth opportunities for businesses remain limited.

As mentioned earlier, corporates continue to rely on short-term debt to keep the lights on instead of taking on longer-term credit to invest in capital projects to expand operations. We do not expect conditions to improve in the short- to medium-term.

NCPI – October 2019

The Namibian annual inflation rate edged lower, moderating to 3.0% y/y in October, following the 3.3% y/y increase in prices recorded in September. On a month-on-month basis, prices rose by 0.2% following a 0.3% price change recorded in September. On an annual basis, prices in two of the twelve basket categories rose at a quicker rate in October than in September. Prices in two categories grew at a steady pace, while the rate of price increases in eight categories slowed during the month of October. Prices for goods rose by 2.7% y/y while prices for services increased by 3.4% y/y.

Food & non-alcoholic beverages, the second largest basket item in weighting, accounted for 0.7% of the total annual inflation figure. Prices in this category rose by 4.0% y/y, a slowdown from inflation of 4.4% y/y recorded in September. Most of the sub-categories of food and non-alcoholic beverages continue to show relatively low monthly price increases, while three of the sub-categories showed monthly price decreases. The largest increases were observed in the prices of fruits which increased by 14.5% y/y and vegetables which increased by 12.8% y/y.  Meat prices increased by 1.9% y/y, compared to the 0.2% y/y decrease recorded in the previous month. Due to the ongoing drought over the past months there has been a large-scale slaughtering of cattle. This has reduced the number of livestock in the country and going forward meat prices will likely increase as restocking of farms will cause an upward pressure on prices.

The housing and utilities category was the second largest contributor to annual inflation in October, accounting for 0.5% of the total 3.0% inflation figure. Price inflation for this category came in at 1.9% y/y but remained relatively flat month-on-month. Annual inflation for rental payments remained unchanged at 2.3% y/y in October and will likely remain this low for the rest of the year. The regular maintenance and repair of dwellings subcategory recorded an increase in prices of 2.5% y/y, which is a lower rate of increase than the 3.4% y/y registered the previous month. Month-on-month, prices in this subcategory increased by -0.01%.

The alcohol and tobacco basket category recorded inflation of 3.9% y/y, alcoholic beverages recorded an increase of 1.0% m/m and 5.7% y/y and thereby caused the growth in inflation in the overall category. Tobacco prices recorded an increase of 0.6% m/m but decreased by 4.1% y/y.

The zonal data shows that on a monthly basis, prices printed flat in the southern, eastern and western parts of the country while rising elsewhere in the country. On an annual basis, the Windhoek and surrounding area recorded the lowest inflation rate of 2.4% in October, with the mixed zone 3 covering the south, east and west of the country recording the highest rate of inflation at 3.9% y/y. Inflation in the northern region of the country increased to 2.8% y/y.

The Namibian annual inflation rate continues to slow down, reaching 3.0% in October, and is the lowest annual rate since May and June 2015. The Namibian annual inflation rate has been below 4.1% for six consecutive months. The inflation rate continues to trend below that of neighbouring South Africa’s September inflation figure of 4.1% y/y. In September a lower inflation rate was recorded due to the base effects as the increase in prices of public transport rolled out of the measurement period. October’s low inflation rate is as a result of the low inflation rate in the food, and housing, water, and electricity categories.

The low business and consumer confidence continue to dampen the demand for goods and services, which results in lower overall inflation. IJG’s inflation model forecasts an average inflation rate of 3.8% y/y in 2019 and 3.4% y/y in 2020. The largest upside risk to this forecast is higher food costs as the drought affects local food production.

New Vehicle Sales – October 2019

A total of 971 new vehicles were sold in October, representing a 20.5% m/m increase from the 806 vehicles sold in September. Year-to-date, 8,812 new vehicles have been sold of which 3,889 were passenger vehicles, 4,299 were light commercial vehicles, and 624 were medium and heavy commercial vehicles. This is the highest number of new vehicles sold recorded over the last four months. On a twelve-month cumulative basis, new vehicle sales continued its downward trend. 10,739 new vehicles were sold over the last twelve months, a 9.1% contraction from the previous twelve months.

355 new passenger vehicles were sold in October, an increase of 10.9% m/m, but contracting by 12.1% y/y. Year-to-date new passenger vehicle sales rose to 3,889 units, down 11.2% when compared to the year-to-date figure recorded in October 2018. Twelve-month cumulative passenger vehicle sales fell 10.5% y/y as the number of passenger vehicles sold continued to decline.

A total of 616 new commercial vehicles were sold in October, increasing by 26.7% m/m and 21.3% y/y. Of the 616 new commercial vehicles sold in October, 536 were classified as light commercial vehicles, 25 as medium commercial vehicles and 55 as heavy or extra heavy commercial vehicles. 408  heavy vehicles were sold year-to-date, the highest sales figure for the period since October 2016. On a twelve-month cumulative basis, light commercial vehicle sales dropped 9.9% y/y, while medium commercial vehicle sales and heavy commercial vehicles rose 2.1% y/y and 13.3% y/y, respectively.  For the sixth consecutive month, there has been an increase in the sale of heavy commercial vehicles on a 12 month cumulative year-on-year basis. The steady increase in this category indicates improved demand for durable goods by businesses.

Volkswagen continues to lead the passenger vehicle sales segment with 30.4% of the segment sales year-to-date. Toyota remained in second place with 29.0% of the market-share as at the end of October. Kia, Mercedes, Hyundai and Ford each command around 5% of the market in the passenger vehicles segment, leaving the remaining 20.1% of the market to other brands.

Toyota retains a strong year-to-date market share of 58.7% and remains the market leader in the light commercial vehicle segment. Nissan remains in second position in the segment with 11.8% of the market, while Ford makes up third place with 8.9% of the year-to-date sales. Hino leads the medium commercial vehicle segment with 37.5% of sales year-to-date, while Scania was number one in the heavy- and extra-heavy commercial vehicle segment with 37.3% of the market share year-to-date.

The Bottom Line

Vehicle sales remain under pressure, with the year-to-date new vehicle sales in 2019 currently below 2010 levels, and the total new vehicle sales for the last 12 months down 9.1% from the same period in 2018. Both new commercial and new passenger vehicle sales are at their lowest year-to-date levels since 2009. However there has been an improvement in the demand for new medium and heavy commercial vehicles in 2019. Although this improvement has come off a very low base, it suggests that the sectors of the economy that rely on these categories of vehicles may have turned the corner. However, we continue to expect business and consumer confidence to remain low and thus expect subdued demand for new vehicles going forward.