Category Archives: Economic Research

Economic Research

Building Plans – September 2019

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A total of 202 building plans were approved by the City of Windhoek in September. This is a 4.7% increase in the number of plans approved on a monthly basis when compared to the 193 building plans approved in August. In monetary terms, the approvals were valued at N$432.2 million, an increase of N$296.7 million or 218.9% compared to last month. The number of completions for the month of September stood at 225, valued at N$110.0 million. The year-to-date value of approved building plans currently stands at N$1.57 billion, 0.7% lower than as at the end of the third quarter of 2018. On a twelve-month cumulative basis, 1,986 building plans worth approximately N$1.83 billion were approved, a decrease in number of 9.1% y/y, but a contraction of 5.6% in value terms over the prior 12-month period.

The largest portion of building plan approvals was once again made up of additions to properties, from a number perspective. 160 additions to properties were approved in September, a 3.9% increase over the number of additions approved in August. Year-to-date 1,221 additions to properties have been approved with a cumulative value of N$579.2 million, a decline of 22.6% y/y in terms of value compared to the same period in 2018. Completed additions amounted to 206, valued at N$85.6m, increasing by 171.1% y/y in number and 69.1% y/y in value. Year-to-date 813 additions have been completed to a value of N$395.0m, decreases of 55.4$ y/y in number and 36.2% y/y in value.

New residential units were the second largest contributor to the number of building plans approved with 35 approvals registered in September, compared to 34 in August. In value terms, N$43.6 million worth of residential units were approved in September, a 2.5% m/m increase. 285 New residential units valued at N$442.0m were approved in the first nine months of 2019, 28.2% y/y less in number and 3.9% y/y less in value than during the corresponding period in 2018. The year-to-date value of residential approvals reached N$442.0 million, 3.9% lower than during the corresponding period in 2018. 19 residential units valued at N$24.3m were completed in September bringing the year-to-date number to 225, up 275.0% y/y, and value to N$323.2m, up 216.2% y/y.

Commercial and industrial building plans approved in September amounted to 7 units, worth N$311.1 million. The number of approvals for commercial and industrial properties has been languishing in single digit territory since September 2016 and has an average approval rate of less than 4 approvals per month over the last 12 months. On a 12-month cumulative basis, the number of commercial and industrial approvals has decreased by 15.4% y/y in September to 44 units, worth approximately N$557.5 million, an increase of 34.5% in value terms over the prior 12-month period. It should however be noted that a single commercial building plan approved in September, a N$250.0 million project by Nedbank approved for the city centre, propped up the value approved year-to-date, saving the category from recording another contraction. No commercial and industrial building plans were recorded as completed in September.

During the last 12 months, 1,986 building plans have been approved, decreasing by 9.1% y/y. These approvals were worth a combined N$1.83 billion, a decrease in value of 5.6% y/y. The number of building plans approved, on a cumulative 12-month basis, has been contracting over the last three months. The overall decrease in both number and value of cumulative plans approved is concerning as, even in nominal terms, this indicates a continuing decrease of construction activity in the capital. Low consumer and business confidence means that growth in construction activity will likely remain subdued for the short- to medium-term.

NCPI – September 2019

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The Namibian annual inflation rate slowed to 3.3% y/y in September, following the 3.7% y/y increase in prices recorded in August. On a month-on-month basis, prices rose 0.3% following a 0.1% price change recorded in August. On an annual basis, prices in seven of the twelve basket categories rose at a quicker rate in September than in August. One category remained unchanged, while the rate of price increases in four categories slowed for the month of September. Prices for goods rose by 3.0% y/y while prices for services increased by 3.5% y/y.

Food & non-alcoholic beverages, the second largest basket item in weighting, accounted for 0.8% of the total annual inflation figure. Prices in this category rose by 4.4% y/y, faster than the 4.1% recorded in August. Most of the sub-categories of food and non-alcoholic beverages showed relatively low monthly increases, while four of the sub-categories showed monthly decreases. The largest increases were observed in the prices of vegetables which increased by 15.1% y/y and fruits which increased by 11.7% y/y. The price of meat saw a price decrease of 0.2% y/y. The decline in meat prices is not expected to last however, as it is largely driven by high supply of animals as farmers slaughter more during the drought. Restocking farms in the future will likely lead to upward pressure on meat prices.

The housing and utilities category was the second largest contributor to annual inflation in September, accounting for 0.5% of the total 3.3% inflation figure. Price inflation for this category came in at 2.0% y/y, but remained relatively flat month-on-month, increasing only 0.1%. Annual inflation for rental payments remained unchanged at 2.3% in September 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 3.4% y/y, which is a somewhat lower rate of increase than the 3.6% y/y registered the previous month. Month-on-month, prices in this subcategory decreased by 0.3%.

The education basket category recorded inflation of 12.0% y/y, with the cost of pre-primary and primary education growing at a rate of 12.6% y/y, while secondary- and tertiary education recorded price increases of 11.0% y/y and 12.7% y/y, respectively. All three subcategories printed no price increases on a month on month basis.

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 2.7% in September, with the mixed zone 3 covering the south, east and west of the country recording the highest rate of inflation at 4.4% y/y. Inflation in the northern region of the country increased to 3.0% y/y.

The Namibian annual inflation rate continued to slow, reaching 3.3% in September, and is the lowest annual rate since November 2015. The moderation in September’s annual figure was mostly a result of base effects, as the increase in prices of public transportation services in September 2018 no longer influences the annual inflation figure. The ongoing recession, coupled with low business and consumer confidence, has dampened the demand for goods and services, translating to lower overall inflation. IJG’s inflation model forecasts an average inflation rate of 3.8% y/y in 2019 and 3.9% y/y in 2020. The largest upside risk to this forecast is higher food costs, as the drought affects local food production.