Category Archives: Economic Research

Economic Research

Building Plans – March 2023

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A total of 184 building plans was approved by the City of Windhoek in March, a 10.2% m/m increase from the 167 approved in February. In monetary terms, the approvals were valued at N$102.6 million, a 41.1% m/m increase from the N$72.67 million approved in February. The first quarter of the year saw 430 building plans worth N$197.3 million approved, a contraction of 27.5% in number terms and 52.2% less in value terms compared to the first quarter of 2022. On a twelve-month cumulative basis, 2,304 buildings worth N$1.53 billion were approved, a decline of 6.8% in number- and 21.9% in value terms over the comparative 12-month period a year ago. 75 building plans worth N$41.86 million were completed during March.

March saw 136 additions to properties approved valued at N$33.81 million, 3 more than in March 2022 but N$22.43 million less in value terms. On a year-to-date basis, 319 additions to properties worth N$88.6 million were approved in the first quarter of 2023, representing a 12.4% decline in number terms and a 57.5% contraction in value terms compared to the first quarter of last year. On a 12-month cumulative basis, the number and value of additions to properties continued to decline and dropped below the levels seen for the corresponding 12-month period a year earlier. 29 Additions, worth N$8.03 million were completed during the month.

46 new residential units valued at N$48.75 million were approved in March, the highest monthly new residential unit approvals reported so far this year. Year-to-date, 103 new residential units worth N$86.6 million have been approved, down 53.2% from the 220 units worth N$165.7 million approved over the first quarter of 2022. The slump is also reflected in the 12-month cumulative figures which came in at 618 units worth N$624.9 million, a drop of 26.6% y/y in number terms and a contraction of 35.7% y/y in value terms. A total of 45 residential units worth N$31.83 million were completed during the month.

2 new commercial and industrial units worth N$20 million was approved in March. This brings the year-to-date approvals to 8 commercial buildings worth N$22.1 million, representing a 42.9% y/y drop from the N$38.8 million worth of commercial and industrial units approved over the first quarter of last year. On a rolling 12-month perspective, the number of commercial and industrial approvals remained unchanged at 56 units but dropped in value terms to N$146.2 million from N$156.2 million a month earlier. Only 1 commercial and industrial unit was completed for the second month in a row.

March’s building plans data showed a slight improvement from February but continue to decent compared to the data from a year ago. The graphs above and below depict that the planned construction activity in the capital has gotten off to a weak start in 2023, like the previous lows of 2009, marking it the weakest start to a year in the past decade.  More hardship is expected over the shorter term with local interest rates almost certain to rise even further in April which will make borrowing cost for new construction projects even more expensive in an already tepid economy. Meanwhile, the Construction Industries Federation of Namibia (CIF) continue its efforts in encouraging the government to establish a Construction Council which it believes will assist in stemming unwanted practices in the sector which arguably will improve competition and drive down construction costs – one of the factors deterring growth in this sector.

New Vehicle Sales – March 2023

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1,226 new vehicles were sold in March, an increase of 11.4% m/m and 16.3% y/y, and the highest monthly total since July 2017. 3,134 new vehicles were sold during the first quarter, of which 1,606 were passenger vehicles, 1,363 light commercial vehicles, and 165 medium- and heavy commercial vehicles. By comparison, the first three months of 2022 saw 2,645 new vehicles sold, indicating a robust start to 2023 for new vehicle sales. On a 12-month cumulative basis, a total of 11,412 new vehicles were sold as at March 2023, representing an increase of 19.3% y/y from the 9,567 sold over the comparative period a year ago.

575 new passenger vehicles were sold during March, representing an increase of 3.2% m/m and 8.7% y/y. Year-to-date, new passenger vehicle sales rose to 1,606 in the first quarter, 16.8% higher than during the same period in 2022 and 42.0% higher than the first quarter of 2021. On a 12-month cumulative basis, new passenger vehicle sales climbed to 5,805, a 22.8% y/y increase from the 4,728 over the corresponding period a year ago.

New commercial vehicle sales were similarly strong in March, with 651 units sold during the month the highest monthly figure since November 2018. New commercial vehicle sales rose 19.7% m/m and 24.0% y/y. 580 light commercial vehicles, 23 medium commercial vehicles, and 48 heavy and extra heavy commercial vehicles were sold during the month. All categories recorded increases on a year-on-year basis, with light commercial vehicles being 24.2% higher than in March 2022, medium commercial vehicles up 53.3% y/y, and heavy and extra heavy up 11.6% y/y. On a twelve-month cumulative basis, light commercial vehicle sales are 20.1% higher than during the corresponding period a year ago, medium commercial vehicle sales are up 21.8% y/y, while heavy commercial vehicle sales contracted by 16.5% y/y.

Toyota continues to enjoy a strong lead in the new passenger vehicle sales segment, claiming 38.0% of the sales on a year-to-date basis, followed by Volkswagen with a 25.1% share. They were followed by Kia and Haval with 8.1% and 5.1% of the market, respectively, leaving the remaining 23.7% of the market to other brands.

Toyota also has a dominant lead in the light commercial vehicle segment with 54.6% of the sales year-to-date. Ford came in second place, claiming a market share of 10.7%. Mercedes leads the medium commercial vehicle segment with a 26.7% market share, while Scania is number one in the heavy- and extra heavy commercial segment with 25.7% of the market share year-to-date.

The Bottom Line  

Demand for new vehicles remained strong in March among all segments. The uptick in March was primarily driven by a 107 unit increase in commercial vehicle sales, supported by a strong passenger figure. The 2023 Q1 new passenger vehicle sales figure is the highest since 2017 and the 12-month cumulative sales figure is trending at its highest level since mid-2017. Q1 new commercial vehicle sales were the highest since 2018 and the 12-month cumulative sales figure is at its highest since March 2020. 

NCPI March 2023

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Namibia’s annual inflation rate remained unchanged at 7.2% y/y in March. On a month-on-month basis, prices in the overall NCPI basket rose by 0.6%, compared to a 0.4% m/m increase in February. On an annual basis, overall prices in five of the twelve basket categories rose at a quicker rate in March than in February, four categories recorded slower rates of inflation and three recorded inflation rates consistent with those in February. Inflation on goods and services remained steady at 10.1% y/y and 3.1% y/y, respectively.

Inflation Attribution
 
Food and non-alcoholic beverages remain the largest contributor to inflation, contributing 2.7 percentage points to March’s annual inflation print. Food and non-alcoholic beverage prices rose by 0.9% m/m and 14.6% y/y, the highest annual inflation print for this category since March 2009. Most of the sub-categories in this basket item posted higher annual inflation compared to February. Fruit again posted the highest inflation print of all the sub-categories. Fruit prices rose by 1.4% m/m and 29.1% y/y. Breads and cereals were the only sub-category registering slowing inflation. Prices in this sub-category, however, remained elevated after rising by 0.9% m/m and 20.8% y/y in March.
 
Transport was the second largest contributor to the annual inflation print in March, contributing 1.4 percentage points. Prices in this basket category rose by 1.9% m/m and by 9.2% y/y in March.  Operation of personal transport equipment inflation continued to decelerate with prices in this sub-category rising by 12.5% y/y compared to 14.2% y/y in February. The Ministry of Mines and Energy’s decision to leave the price of petrol and diesel unchanged for April means we could see the trend continue into next month’s inflation print. Purchase of vehicles inflation accelerated. Prices in this subcategory rose by 1.1% m/m while annual inflation increased to 6.0% from 5.3% in February. Public transportation services inflation decelerated slightly to 1.0% y/y from 1.1% y/y a month earlier while prices remained steady month-on-month.

As the graph above shows, the largest contributor to inflation among the remaining categories was the alcohol and tobacco basket item. Prices in this category rose by 0.2% m/m and 6.9% y/y in March compared to increases of 0.4% m/m and 7.1% y/y in February. Both alcohol and tobacco sub-categories posted slightly slower rates of inflation. Alcoholic beverage inflation slowed to 7.4% y/y from 7.6% y/y in February. White spirits continue to be a notable driver of inflation pressure in this sub-category with annual inflation on white spirits accelerating for the fourth consecutive month to 28.3% from 26.0% a month ago. Tobacco products inflation slowed to 4.8% y/y from 5.1% in February. Inflation on cigarettes remained steady at 5.8% y/y while pipe tobacco inflation slowed to 1.8% y/y from 2.9% y/y. in February. As noted in last months’ NCPI report, we anticipate more price pressures to come from this sub-category following the announcement of a steep rise in “sin taxes” on alcoholic beverages and tobacco products during February’s annual budget speech.

Outlook

March’s sticky inflation print of 7.2% comes as a surprise given that we expected some easing like we have seen from recent CPI prints in other parts of the world. This means that the much-anticipated disinflationary cycle has yet to come into effect, setting the stage for a prolonged restrictive monetary policy stance as was alluded to during last month’s report. 

The SARB raised its lending rate by a further 50bps in March, implying that its monetary policy committee is of the view that more needs to be done in terms of curbing inflation and bringing it within the target range. The Bank of Namibian (BoN) will almost certainly respond in kind when it holds its MPC meeting on 19 April. Namibia’s inflation has been trending slightly higher than South Africa’s in recent months as the graph above shows and this trend will also be on the radar of the BoN’s MPC when it decides on the extent of further tightening required to keep price stability and the currency peg in check.

IJG’s inflation model continue to predict a gradual slowdown in Namibia’s annual inflation rate over the remainder of year, before ending the year at around 4.8%.