Category Archives: Economic Research

Economic Research

PSCE – May 2022

By | | ,
Comments Off on PSCE – May 2022

Overall

Private sector credit (PSCE) rose by N$351.3 million or 0.3% m/m in May, the slowest month-on-month increase so far in 2022, bringing the cumulative credit outstanding to N$116.6 billion. On a year-on-year basis, private sector credit grew by 11.0% y/y in May, compared to the 10.5% y/y growth recorded in April. Normalising for the large increases in claims on non-resident private sectors recorded between January and March, sees PSCE growth at 3.9% y/y in May. On a 12-month cumulative basis N$11.6 billion worth of credit was extended to the private sector. Of this cumulative issuance, individuals took up N$1.48 billion, corporates increased their borrowings by N$3.21 billion and the non-resident private sectors took up N$6.86 billion.

Credit Extension to Individuals

Credit extended to individuals increased by 0.3% m/m and 2.4% y/y in May. Mortgage loans to individuals posted growth of 0.2% m/m and 2.4% y/y. Overdraft facilities to individuals grew by 0.4% m/m but contracted by 1.7% y/y. Other loans and advances (consisting of credit card debt, personal- and term loans) rose by 0.8% m/m and 5.2% y/y.

Credit Extension to Corporates

Credit extended to corporates grew by 7.4% y/y in May, following the 5.9% y/y increase recorded in April. On a month-on-month basis, credit extension to corporates rose 0.2% m/m in May. The growth was primarily driven by an increase in ‘other loans and advances’ of 4.5% m/m and 18.2% y/y. Instalment credit by corporates rose by 1.4% m/m and 16.6% y/y, albeit from a low base. Mortgage loans contracted by 1.2% m/m but rose 3.6% y/y, while overdrafts fell by 4.9% m/m and 5.2% y/y.

Banking Sector Liquidity

The overall liquidity position of the commercial banks rose significantly in May, rising by N$778.3 million to an average of N$3.79 billion. The BoN partly ascribed the increase to an increase in diamond sales proceeds during the month. The repo balance fell to N$438.9 million at the end of the month, after ending April at N$1.97 billion.

Reserves and Money Supply

Broad money supply (M2) rose by N$5.8 billion or 4.8% y/y to N$127.6 billion, according to the BoN’s latest monetary statistics. Foreign reserve balances rose by 2.0% m/m or N$879.2 million to a total of N$43.9 billion. The rise was attributed to revaluation gains in the form of foreign currency investments during the period.

Outlook

Although May’s PSCE growth figure was the slowest on a month-on-month basis so far this year, it was the fifth consecutive month Namibian PSCE grew. As noted earlier in this report, normalising for the large increases in claims on non-resident private sectors recorded between January and March, sees PSCE growth at 3.9% y/y in May. Overall credit demand, and the willingness of commercial banks to extend credit thus remain low. Corporate credit growth continues to be driven by up the uptake of short-term credit, whereas the growth in credit to individuals was largely driven by the uptake of mortgage loans over the last 12 months.

Building Plans – May 2022

By | | ,
Comments Off on Building Plans – May 2022

A total of 146 building plans were approved by the City of Windhoek in May, representing a 15.6% m/m decrease from the 173 building plans approved in April. In value terms, the approvals were valued at N$118.1 million, an 11.4% m/m increase from the N$106.0 million approved in April. Year-to-date 912 building plans were approved worth N$637.1 million, a 9.5% y/y decrease in the number of plans approved and a 21.6% y/y decrease in value terms. On a twelve-month cumulative basis, 2,355 buildings with a value of N$1.79 billion were approved, a 12.3% decrease in the number of plans approved and an 11.3% decrease in value terms over the prior 12-month period. 43 building plans worth N$55.7 million were completed during the month.

In terms of both the number and value of approvals, additions to properties once again made up the largest portion of approvals. For the month of May, 114 additions to properties were approved with a value of N$67.8 million, the same number of approvals recorded in April. The value of the additions approved is 7.7% higher than last month and 22.4% higher than during the same month last year. 13 Additions worth N$5.9 million were completed during the month.

New residential units were the second largest contributor to the number and value of building plans approved with 30 approvals registered in May, 28 fewer than in April. In value terms N$47.0 million worth of residential units were approved in May, a 10.1% m/m increase. On a year-on-year basis, the value of approvals is however 49.3% lower than registered in May 2021. On a 12-month cumulative basis, the number of residential units approved decreased by 17.3% y/y to 772, the lowest since February 2021. 29 New residential units worth N$24.8 million were completed in May.

2 New commercial units valued at N$3.4 million were approved in May, compared to 1 approval worth N$380,00 in April and 4 units worth N$25.0 million approved in May 2021. Year-to-date there have been 12 commercial building approvals valued at N$42.5 million, which translates to a 25.0% y/y decrease in the number of plans approved and a 16.8% y/y decrease in value terms. On a rolling 12-month perspective, the number of commercial and industrial approvals remained steady at 33 units worth N$162.8 million, compared to the 33 units approved worth N$135.3 million over the corresponding period a year ago. Only 1 commercial and industrial unit worth N$25.0 million was completed in May.

As illustrated in the figure above and below, the cumulative value of building plans approved and completed continues to trend downward in both nominal and inflation-adjusted terms. Completed building plans decreased by 34.4% y/y in value terms to N$999.7 million on a 12-month cumulative basis. A total of 2,355 building plans to the value of N$1.79 billion were approved over the last 12 months which represents a decrease in value terms of 11.3% y/y and a 12.3% y/y decrease in the number terms. Additions to properties continue to contribute the majority of the cumulative approvals at 65.8% in number terms. The 12-month cumulative number of commercial and industrial approvals remains in the single digit territory which have been the case since June 2016, indicating a dearth of investment by enterprises. Building plans approved is a leading indicator of economic activity in the country and the above data implies that the Namibian economy is still showing signs of hardship.

NCPI May 2022

By | | ,
Comments Off on NCPI May 2022

The Namibian inflation rate slowed to 5.4% y/y in May from 5.6% y/y in April. Prices in the overall NCPI basket rose by 0.1 % m/m, slower than the 1.4% m/m increase recorded in April. On a year-on-year basis, overall prices in four of the twelve basket categories rose at a faster rate in May than in April, with five categories recording slower rates of inflation and three categories recording prices consistent with April. Prices for goods increased by 7.1% y/y while prices for services increased by 3.1% y/y in May.

Transport continues to be the largest contributor to the annual inflation rate, contributing 2.4 percentage points to the total 5.4% y/y inflation rate in May. Overall, prices in the transport category declined by 1.2% m/m, but rose 16.7% y/y. The three sub-categories in the transport basket item all recorded slower inflation on both a monthly and annual basis in May, except for the public transport services category which recorded steady inflation on an annual basis. The slower inflation follows the Ministry of Mines and Energy’s decision at the beginning of May to temporarily reduce the levies imposed on fuel products for a period of three months and to decrease the petrol price by 120 cents per litre and the diesel price by 30 cents per litre in May. According to the Namibian Statistics Agency (NSA) data, prices of public transport services rose by 9.8% y/y in May, unchanged from April. Prices of operating personal transport equipment declined by 2.1% m/m but rose by 24.4% y/y, while the prices of purchasing vehicles rose 0.5% m/m and 3.5% y/y in May. The Ministry of Mines and Energy’s decision to increase fuel prices again in June negates the fuel levy relief granted and will result in even higher fuel prices in August should the reduction in fuel levies not be extended beyond July.

The food & non-alcoholic beverages basket item was the second biggest contributor to the annual inflation rate in May, contributing 1.2 percentage points. Prices in this basket item rose by 1.5% m/m and 6.6% y/y in May. All thirteen sub-categories in this basket recorded price increases on an annual basis, as has been the case since January this year. The largest increase was again recorded in the prices of oils and fats which rose by 27.4% y/y, followed by fruit, which saw price increases of 16.5% y/y. The prices of bread and cereals rose by 7.6% y/y, milk, cheese, and eggs by 5.4% y/y, vegetables by 3.9% y/y, and meat by 3.4% y/y in May.

The alcohol & tobacco basket item, the third-largest contributor to the annual inflation rate, recorded higher inflation at 4.7% y/y in May, compared to the 4.5% y/y observed in April. On a monthly basis, prices in the basket item remained steady. The prices of tobacco products rose by 0.1% m/m and 6.3% y/y, while the prices of alcoholic beverages declined by 0.1% m/m but rose 4.3% y/y in May.

Namibia’s annual inflation rate of 5.4% in May was slightly slower than the rate recorded last month and was mainly the result of relatively lower fuel costs in May. The Inflation rate for petrol and diesel slowed from 47.7% y/y in April to 42% y/y in May. Despite this decline, rising food and transport prices remain the primary drivers of the Namibian inflation rate, with the two categories alone contributing over two-thirds to the country’s annual rate in May. The persistent inflationary pressures, and the SARB’s MPC decision to hike rates in May, necessitated the Bank of Namibia’s MPC to also raise interest rates by 50 basis points in June. The MPC noted in its announcement that it will continue to monitor developments in inflation to ensure price stability in the interest of the sustainable economic development of the country. IJG’s inflation model currently forecasts inflation to average between 5.0% and 6.2% in 2022.