Category Archives: Economic Research

Economic Research

New Vehicle Sales – January 2019

By | | ,
Comments Off on New Vehicle Sales – January 2019

A total of 666 new vehicles were sold in January, which represents an 8.8% m/m decrease from the 730 vehicles sold in December, and a drop of 21.7% from the 851 new vehicles sold in January 2018. On a twelve-month cumulative basis, a total of 11,721 new vehicles were sold at January 2019 representing a contraction of 9.9% from the 13,007 sold over the same period a year ago. 2019 is thus off to a sluggish start as illustrated by the lowest monthly sales number since May 2009.

330 new passenger vehicles were sold during January, 6.5% higher than the 310 passenger vehicle sales sold in December. From a year-on-year perspective however, January 2019 new passenger vehicle sales were 18.3% lower than the 404 sold a year ago. Passenger vehicle sales have been impacted by amendments to the Credit Act that requires tighter credit conditions, as well as by reduced government expenditure and depressed consumer confidence in the current economic climate.

Commercial vehicle sales declined to 336 units in January, representing a contraction of 20.0% m/m and 24.8% y/y. During the month 301 light commercial vehicles, 14 medium commercial vehicles, and 21 heavy commercial vehicles were sold. On an annual basis, light commercial sales have dropped by 21.2%, medium commercial sales rose by 27.3%, and heavy and extra heavy sales have declined by 22.2%. On a twelve-month cumulative basis, light commercial vehicle sales fell 11.2% y/y, while medium commercial vehicle sales rose 11.4% y/y, and heavy commercial vehicle sales dropped 7.3% y/y.

Toyota started the year off with a 31.5% market share of new passenger vehicles sold, followed closely by Volkswagen with a 30.0% market share. They were followed by Kia and Mercedes with 6.4% and 5.8% of the market respectively, while the rest of the passenger vehicle market was shared by several other competitors.

Toyota also started the year off with a firm grip on the light commercial vehicle market with a 75.7% market share, with Isuzu in second place with a 5.6% share. Ford and GWM claimed 4.7% and 3.7% of the number of new light commercial vehicles sold for the year, respectively. Hino and Mercedes jointly lead the medium commercial vehicle category, each with 28.6% of the sales, while Man was number one in the heavy and extra-heavy commercial vehicle segment with 47.6% of the market share in January.

The Bottom Line

12-month cumulative new vehicle sales have been declining since December 2015, amounting to 11,721 at the end of January, a decline of 48.3% from the peak of 22,664 cumulative new vehicle sales recorded in April 2015. While January new vehicle sales have historically been low when compared to most other months, 2019’s January figure was the lowest since 2006. The prospects for new vehicle sales remain dim in the short- to medium-term as government remains committed to fiscal consolidation and the economy remains in a recession, putting pressure on demand and investment.

Building Plans – January 2019

By | | ,
Comments Off on Building Plans – January 2019

A total of 162 building plans were approved by the City of Windhoek in January, representing a 78.0% m/m increase from the 91 in December. The value of building plans approved increased by N$207.8 million from N$64.9 million in December to N$272.7 million in January. 87 Buildings with a value of N$54.2 million were completed in January, versus 78 buildings worth N$16.4 million completed in December. January 2019 is off to a slightly better start in terms of both number and value of approvals, compared to January 2018 when 153 building plans worth N$269.3 million got the nod. On a twelve-month cumulative basis, 2,127 building plans worth approximately N$1.84 billion were approved, an increase in number of 11.8% y/y, but a decrease of 16.3% in value terms over the prior 12-month period.

In terms of number of approvals, additions to properties made up the largest portion of approvals. For the month of January, 131 additions to properties were approved with a value of N$34.8 million, N$197.9 million less in value terms than in January 2018, but 2 more than the number of additions observed in the first month of 2018.

New residential units were the second largest contributor to the total number of building plans approved in January. 29 new units worth N$167.9 million were approved in January, representing a 580.2% increase from the N$24.7 million approved in the first month of 2018. It is however worth noting that one of these approvals is a N$125.0 million residential project approved for the city centre.

The number of commercial and industrial units approved in January only amounted to 2, valued at N$70.0 million. This compares to 7 units valued at N$11.9 million approved in January 2018. On average over the last 20 years, 4 commercial units valued at N$19.6 million were approved in the first month of the year.

The 12-month cumulative number of building plans approved ticked up slightly in January with an 11.8% y/y increase. A total of 2,127 building plans to the value of N$1.8 billion were approved over the last 12 months which represents a decrease in value terms of 16.3% y/y. The majority of these approvals are additions to properties which are typically of low relative value. Growth in commercial and industrial construction activity remains extremely subdued as the decrease (on a 12-month cumulative basis) in credit extended to corporates also reflects.

With government still in a fiscal consolidation cycle and spending less on capital and infrastructure projects, we expect the sector to remain under pressure for most part of the year. The mid-term budget released late last year pointed to little additional public funds flowing into the sector. In fact, funds were prioritised to operational expenditure with the African Development Bank loan replacing the funding for larger infrastructure projects in 2019. Infrastructure funding from outside Namibia as well as public private partnerships are now necessary to drive the infrastructure investment that Namibia so desperately needs. We may see more efforts to attract and deploy funds from external sources in 2019 due to it being an election year, which may provide some potential for industry growth.

Building Plans – December 2018

By | | ,
Comments Off on Building Plans – December 2018

Building plans statistics for the remaining two months of 2018 were recently released by the City of Windhoek. A total of 91 building plans were approved in December, which is a 9.9% m/m decline from the 101 plans approved in November. In value terms, however, approvals increased by 58.3% m/m to register N$65 million worth of approvals in December compared to N$41 million in November. A total of 78 buildings with a total value of N$16.4 million were completed during December, representing declines of 57% m/m and 56% m/m in the number and value of completions, respectively. A total of 2,118 building plans were approved in 2018, 195 more than in 2017. However, in value terms approvals declined by 16.1% in 2018, falling to N$1.84 billion from N$2.19 billion in 2017.

Additions to properties once again made up the majority of building plans approved in 2018. Of the 2,118 building plans approved in 2018, additions accounted for 1,595 of those approvals, 12 more than in 2017. In value terms however, approvals of additions for the year declined by N$145 million or 14.0% y/y. The value of additions approved has been contracting for the past three years, with the 2018 decline less pronounced than the 41.9% contraction in 2016 and the 36.7% contraction in 2017. 77 additions were approved in December, only 2 more than in November, although 170.4% higher in value terms at N$55.6m.

New residential units were the second largest contributor to the total number of building plans approved with 480 approvals registered in 2018, 190 more than in 2017. In value terms new residential units approved increased from N$422.4 million in 2017 to N$532.2 million in 2018. Residential approvals were the third largest contributor of the total building plans approved in 2017 but returned to second in 2018 due to a slowdown in commercial and industrial approvals. On a month to month basis, the number and value of new residential approvals declined by 15.4% and 44%, respectively.

The subdued level of business confidence is on display in terms of the commercial and industrial building plans approved in 2018. A total of 43 commercial and industrial units were approved in 2018 compared to the 50 approved in 2017. In value terms commercial and industrial approvals fell by N$317 million or 45.5% for the year in 2018 from the N$697.3 million in 2017. This highlights the lack of capital expenditure in the Windhoek area. On a month-on-month basis, a total of three commercial and industrial projects worth N$1.1 million were approved in December, which represents a 59% m/m increase from November.

Although there has been a 10.1% increase in the number of building plans approved in 2018 compared to 2017, the cumulative number of plans is almost 40% down from its peak in 2013. The value of approvals has slowed to only N$1.84 billion worth of approvals in 2018 compared to the N$2.19 billion worth of plans approved a year ago. The biggest driver of approvals remains additions, which are enhancements and refurbishments to existing properties. The number of additions has increased by 0.8% y/y, but in terms of value, additions have declined 13.5% y/y. We’ve been concerned by the lack of commercial and industrial approvals in 2018, noting that these were signs of businesses not making capital investments. The largest commercial project approvals in 2018 were recorded in August and September of N$248 million and N$78 million, respectively. These two approvals alone make up 86% of the total commercial approvals registered in 2018.

Bank of Namibia in its December Economic Outlook Update noted that it expects the domestic economy to rebound in 2019 and register growth of 1.5% following two contractionary years. 3Q2018 GDP data released by the NSA shows that growth in the construction industry is still in negative territory, contracting 6.5% y/y as at 3Q2018. Year-to-date figures do however show a 13.5% improvement in construction when compared to the corresponding three quarters of 2017.   The year-to-date improvement is owed largely to base effects, but the outlook for the sector is certainly focused more to the upside rather than the downside. Risks to the outlook of building plans also hinges on service delivery from the City of Windhoek, and reports that the municipality’s capital budget for the current financial year has been slashed by 88% are worrisome. The budget has been reduced to only N$83 million for 2018/19, which pales in comparison to the N$716 million approved the previous year. The City of Windhoek has stated that current plot servicing projects are undertaken through public-private partnerships and as such are not affected. However, future projects and new developments will be affected by the budget cut, and thus provides some pessimism for the 2019 outlook for building plans.