Category Archives: Economic Research

Economic Research

Building Plans – July 2017

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A total of 129 building plans were approved in July, falling by 53 approvals from the 182 recorded in June. In dollar terms approvals fell by N$154.9 million to N$140.9 million in July from N$295.8 million approved in June. Completions showed more encouraging signs, registering 36 completions to the value of N$91.1 million in July. An increase of N$54.5 million from N$36.6 million worth of completions in June. Year to date value of approved building plans currently stands at N$1.60 billion, 41% higher than the corresponding period in 2016. On a twelve-month cumulative basis, 1,856 building plans were approved worth approximately N$2.43 billion, 17.1% higher than the preceding twelve-month period.

Of the total 129 plans approved in July, additions to properties accounted for 105 of those approvals. Additions to properties amounted to 159 in June and perennially make up the majority of approvals, a sign that property owners continue to invest in improvements and extensions to property. Year to date, 860 additions to properties were approved with a value of N$672 million, 21% more in value terms than the corresponding period in 2016.

New residential units accounted for 16 of the total 129 approvals registered in July. Year to date 174 residential units have been approved, 51 more than in the corresponding period in 2016. In dollar terms, N$297.3 million worth of residential plans were approved year-to-date, 14.8% higher than in the corresponding period in 2016. The continued increase in the volume of residential units approved is encouraging and suggests that demand and affordability is present, and consumers should feel some relief with commercial banks set to pass on the effects of the repo rate reduction towards the loans that finance these eventual acquisitions.

The number of commercial and industrial approvals thus far in 2017 amount to 25 units, valued at N$628 million. This compares to 45 units valued at N$322 million approved over the same period in 2016. Eight building plan approvals valued at N$66 million were approved in July. On a 12 month-cumulative basis, commercial and industrial property approvals have risen by 34% in value terms in July compared to the corresponding period in 2016, even though the number of plans approved fell by 23 units.

 

The value of building plan approvals fell by almost 20% y/y for the month of July. However, looking over a 12-month rolling basis, approvals have fared better in July than during the corresponding period in 2016. Approvals increased by 17% on a rolling 12-month basis in value terms in July 2017, N$356 million more than the N$2.08 billion recorded for July 2016.  While the value of building plans completed remains depressed on a year-on-year and 12-month cumulative basis, the corresponding measures of value for building plan approvals point toward some recovery in the construction industry going forward. These developments in building plans follow on the backdrop of a weak economy, and moderating inflation that gave room for the SARB and then Bank of Namibia to reduce their respective repo rates by 25 basis points each. As alluded to earlier, this adjustment to BoN’s policy rate will be followed by commercial banks adjusting lending rates lower. This adjustment in turn provides consumers with relatively slight, but welcome relief.

Bank of Namibia cuts Repo rate by 25 basis points to 6.75% – 16 August 2017

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Bank of Namibia’s Monetary Policy Committee (MPC) decided to cut the Repo rate by 25 basis points to 6.75% today (16 August 2017). This is the first meeting of the MPC since the South African Reserve Bank (SARB) effected its first rate cut in five years by 25 basis points in July 2017 with the two MPC rates once again on par.

New Vehicle Sales – July 2017

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Vehicle sales of 1,346 units was recorded in July, with overall sales falling by 12.8% from the 1,544 new vehicles sold in July 2016, and a 10.3% m/m increase on the 1,220 vehicles sold in June. Year to date, 8,178 vehicles have been sold, 22% less than the corresponding period in 2016. Of the 8,178 vehicles sold this year, 3,578 were passenger vehicles, 4,198 were light commercial vehicles, and 402 were medium or heavy commercial vehicles.

Passenger car sales have decreased by 15.7% y/y, to 533 cars, while commercial vehicle sales have declined by 10.9% y/y. Of the 813 commercial vehicles sold in July: 771 were classified as light, 12 as medium and 30 as heavy. Heavy commercial vehicle sales contracted by 50.8% y/y after showing an uptick y/y of 66.0% in June, which did provide some optimism as increased capital spending pointed toward improving business confidence. Light commercial vehicles was the standout performer this month, exhibiting a positive monthly increase in sales of 29.6%, although still down 8.1% y/y.

 

On a twelve-month cumulative basis, vehicle sales continue to wane, contracting by 23.8% y/y. Installment credit, which is mainly used to finance vehicle purchases, has slowed considerably. Instalment credit advances contracted by 0.7% y/y in June, entering negative territory for the first time in our database.

Year to date Toyota and Volkswagen continue to hold a strong market share in the passenger vehicle market based on the number of new vehicles sold, claiming 36% and 26% of the market respectively. They were followed by Ford and Mercedes at 6% and 4% respectively, while the rest of the passenger vehicle market continues to be shared by several competitors. Toyota also remains the leader in light commercial vehicle sales with 47% of the market, followed by Nissan at 17%. Ford and Isuzu claimed 12% and 9% of the number of light commercial vehicles sold in 2017.

 

Hino leads in medium commercial vehicles with 31% of the market, with Iveco marginally less with 30%. In the heavy and extra heavy category, Scania and Mercedes have sold the most vehicles, claiming 29% and 18% of the market respectively. UD Trucks came in at third, with 15% of the number of vehicles sold in this category in 2017.

The Bottom Line

Overall vehicle sales remained sluggish in July, continuing on almost the same trend as in 2016, showing some positive signs before trending downwards midway through the year. Continued fiscal tightening, evident through lower government spending on capital assets, slower economic growth, waning consumer discretionary income as well as the credit agreement act have been the main impediments on new vehicles sold. Positive heavy vehicle sales figures in June have this month been supported by encouraging sales data for light commercial vehicles, though overall vehicle sales for 2017 remain under pressure. While there has been a sizable increase in total vehicle sales since April this year, year-to-date and year-on-year data is still depressed compared to previous years.