Category Archives: Economic Research

Economic Research

New Vehicle Sales – September 2022

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A total of 1,018 new vehicles were sold in September, which is 34 fewer than were sold in August, but represents a 32.7% y/y increase from the 767 new vehicles sold in September 2021. Year-to-date, a total of 7,932 new vehicles have been sold during the first three quarters of the year, of which 4,075 (or 51.4%) were passenger vehicles, 3,358 light commercial vehicles, and 499 medium and heavy commercial vehicles. On a twelve-month cumulative basis, a total of 10,139 new vehicles were sold up to the end of September 2022, representing an increase of 10.4% from the 9,186 new vehicles sold over the same period a year ago.

A total of 505 new passenger vehicles were sold in September, a 2.3% decrease from the 517 sold in August but a 32.9% increase compared to the same month last year. Toyota and Volkswagen’s sales accounted for 63.8% of the new passenger vehicles during the month. Year-to-date, new passenger vehicle sales are up 20.5% y/y. On a 12-month cumulative basis, sales have increased by 18.8% y/y to 5,176, the highest it has been since August 2018.

A total of 513 new commercial vehicles were sold in September, down 4.1% m/m from the 535 commercial vehicles sold in August but up 32.6% y/y when compared to the 387 commercial vehicles sold in September 2021. Light commercial vehicle sales continue to make up the bulk of the new commercial vehicle sales with 448 sold in September, followed by 44 heavy and extra heavy commercial vehicles and 21 medium commercial vehicles. On a year-on-year basis, light commercial sales rose 47.4% y/y, medium commercial vehicles rose 31.3% y/y, while heavy and extra heavy vehicle sales contracted by 34.3% y/y. On a twelve-month cumulative basis, light commercial vehicle sales rose by 4.4% y/y, while medium- and heavy and extra heavy commercial vehicle sales are down by 0.5% y/y and 8.3% y/y, respectively.

Toyota had a strong month and continues to retain its lead in the new passenger vehicle sales segment, accounting for 31.3% of the sales year-to-date, followed by Volkswagen with 23.0% market share. The two top brands have been maintaining their large gap over the rest of the market with Kia and Suzuki following with 9.0% and 7.9% of the market, respectively, leaving the remaining 28.7% of the market to other brands.

On a year-to-date basis, Toyota also maintained its dominance in the light commercial vehicle market with a 46.9% market share, with Nissan in second place with a 12.7% market share. Ford and Isuzu claimed 11.6% and 5.6% of the light commercial vehicle sales, respectively. Hino continues to lead the medium commercial vehicle segment with 27.0% of sales year-to-date. Scania retained its position as the leader in the heavy and extra-heavy commercial vehicle segment with 27.6% of the market share year-to-date.

The Bottom Line

In context, September’s new vehicle sales figure were in line with August sales, again breaching the 1,000 mark. On a 12-month cumulative basis, total new vehicle sales breached the 10,000 level for the first time since March 2020. New vehicle sales this year are trending around the levels seen in 2019. New passenger vehicle sales continue to tick up on a 12-month cumulative basis, while new commercial vehicle sales continue to hover around the 4,800 level, where it has been trending since April 2021.

NCPI September 2022

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Namibia’s annual inflation rate slowed marginally to 7.1% y/y in September from 7.3% y/y in August. Prices in the overall NCPI basket rose by 0.1% m/m. On a year-on-year basis, overall prices in nine of the twelve basket categories rose at a quicker rate in September than in August, two recorded a slower rate of inflation and one recorded prices consistent with August. Prices for goods increased by 9.8% y/y, while prices for services increased by 3.3% y/y.

Predictably, the transport category was the largest contributor to the annual inflation rate in September, contributing 2.8 percentage points to the annual inflation rate. The category recorded a price decline of 1.6% m/m, but transport prices are still 19.5% higher than a year ago. Two of the three sub-categories recorded slower inflation on a month-on-month basis with the operation of personal transport equipment sub-category recording a decrease of 2.1% m/m, but an increase of 30.0% y/y, on the back of the Ministry of Mines and Energy’s decision to decrease fuel prices at the beginning of September. Petrol prices were cut by 120 cents per litre and diesel prices by 65 cents per litre. Petrol prices were cut by a further 100 cents per litre in the beginning of October, however given that most of the economy operates on diesel (which did not see a change in price this time round), we expect inflationary pressure to persist. The purchase of vehicles sub-category recorded a decrease in inflation of 0.9% m/m, but rose 3.2% y/y. Prices of public transportation services remained steady on a month-on-month basis, but rose 6.4% y/y.

Food & non-alcoholic beverages was the second biggest contributor to the annual inflation rate in September, contributing 1.7 percentage points. Overall, prices in this basket item rose 0.6% m/m and 9.3% y/y, the quickest year-on-year increase since February 2017. All thirteen sub-categories in this basket item recorded price increases on an annual basis. The largest increases were recorded in the prices of oils and fats which rose by 25.5% y/y, followed by fruit which recorded an increase of 20.4% y/y, mainly attributable to the increase in prices of avocados, citrus fruits, and dried fruits.

Alcohol & tobacco inflation quickened to 5.6% y/y in September, from the 5.2% y/y increase recorded in August. On a month-on-month basis, prices of the basket category rose by 0.8%. The prices of alcohol beverages rose by 0.7% m/m and 5.8% y/y, while the prices of tobacco products increased by 1.2% m/m and 4.5% y/y.

Namibia’s annual inflation rate of 7.1% in September followed three consecutive months of quicker inflation prints and was mainly attributable to the decrease in fuel prices. The transport-, food- and alcohol and tobacco categories remain the largest contributors to inflation, accounting for 75% of the Namibian inflation rate in September, with the remaining 9 categories contributing the other 25%. South Africa’s annual inflation rate has similarly slowed in August, but at 7.6% y/y continues to trend above the SARB’s 3-6% target band and means that we will see further rate hikes by the SARB’s MPC. We expect the Bank of Namibia to reciprocate to any decisions taken by the SARB. IJG’s inflation model currently forecasts Namibia’s annual inflation rate to remain elevated for the remainder of 2022, and for it to end the year at around 7.0%.

PSCE – August 2022

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Overall

Private sector credit (PSCE) increased by N$505.3 million or 0.43% m/m in August, bringing the cumulative credit outstanding to N$116.7 billion. On a year-on-year basis, private credit sector credit grew by 11.2% y/y from a relatively low base a year ago. Normalising for the steep rise in claims on non-resident private sectors over the past 8 months which mainly relates to interbank swaps sees annual PSCE grow by only 4.4% y/y. We view this as a more accurate picture of credit extension and thus exclude the swap transactions from our analysis going forward. On a 12-month cumulative basis N$4.79 billion worth of credit was extended to the private sector. Corporates and individuals took up N$3.52 billion and N$1.26 billion respectively.

Credit Extension to Individuals

Credit extended to individuals grew by 0.5% m/m and 2.1% y/y to N$62.91 billion in August from N$61.65 billion a year ago. Overall, annual growth in credit extensions to individuals slowed in August when compared to the revised 2.2% y/y growth rate reported for July. The Bank of Namibia (BoN) attribute the decline to lower demand in all the credit categories but instalment and leasing sales. Mortgage loans to individuals rose by 0.3% m/m and 1.9% y/y. Overdraft facilities increased by 1.1% m/m, but contracted by 5.6% y/y. Other loans and advances (consisting of credit card debt, personal- and term loans) climbed by 1.1% m/m and 5.1% y/y. Instalment and leasing sales rose by 0.9% m/m and 1.2% y/y.

Credit Extension to Corporates

Credit extension to corporates grew by 0.3% m/m and 8.3% y/y in August, bringing the cumulative corporate credit outstanding to N$46.23 billion. Overall, annual growth in credit extensions to businesses accelerated in August when compared to the revised 6.4% y/y growth rate observed last month. The BoN ascribed the increase to rising demand for overdraft credit and other loans and advances by corporations in the mining and services sector. Overdraft facilities to corporates grew by 2.1% m/m and 0.1% y/y, following a 9-month consecutive year-over-year decline. Other loans and advances climbed by 0.8% m/m and 19.4% y/y. Mortgage Loans declined by 1.7% m/m but rose by 1.2% y/y. Instalment and leasing sales increased by 1.4% m/m while annual growth for this credit category remained steady at 14.9% y/y.

Banking Sector Liquidity

The overall liquidity position of the commercial banks saw a continued decline in August, dropping by N$6.35 billion to an average of N$6.21 billion, and ended the month at N$3.86 billion. The decline in the market cash positions is partly attributed to other financial corporations’ withdrawals, according to the BoN. The repo balance in contrast rose to N$529.7 million in August from N$293.0 at the end of July.

Reserves and Money Supply

The BoN’s latest figures show broad money supply (M2) increased by N$4.97 billion or 4.0% y/y to N$128.0 billion but slowed on an annual basis compared to the 11% y/y growth rate recorded in July. According to the BoN, the decrease in M2 growth was due to a decline in both the net foreign assets and domestic claims of the depository corporations. The drop was further attributed to a decline in transferable deposits coupled with a contraction in other deposits over the review period. The BoN’s official reserve stock contracted by 4.6% m/m or N$2.24 billion to N$47.0 billion. The BoN ascribed the decline in the international reserves stock to increased foreign currency outflows for import payments during the review period.

Outlook

Despite seeing PSCE growing at its fastest rate since the pandemic on a normalised basis, growth remains well below the levels observed prior to the pandemic. We expect PSCE growth to remain subdued over the short to medium term while the central bank maintains a restrictive monetary policy and continues to raise interest rates to fight rising inflation. We expect the BoN to hike interest rates by a further 75 basis points at its next MPC meeting scheduled for 26 October to stay at pace with the interest rate hikes by the SARB. The SARB hiked its repo lending rate by 75 basis points last month. While we should see commercial banks become more willing to extend credit in the rising interest rate environment, as they experience margin expansion, demand for credit would not necessarily follow suit. The private sector has endured a lot of financial hardship over the past couple of years and there are probably fewer households and entities with the ability to take up new credit from Banks despite debt remaining relatively inexpensive by historic standards. The private sector may also be unwilling to commit to long-term expensive debt under the current lackluster economic circumstances. Therefore, we expect demand for credit to remain low while the supply of credit is set to improve.