Category Archives: Economic Research

Economic Research

New Vehicle Sales – May 2022

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A total of 767 new vehicles were sold in May, down 15.25% m/m from the 905 vehicles sold in April 2022 and down 2.9% y/y from the 790 vehicles sold in May 2021. Year-to-date 4,317 new vehicles have been sold, of which 2,243 were passenger vehicles, 1,800 light commercial vehicles, and 272 medium and heavy commercial vehicles. In comparison, 4,050 new vehicles were sold during the first 5 months of 2021. On a twelve-month cumulative basis, a total of 9,695 new vehicles were sold at the end of May, representing a 9.0% y/y increase from the 8,912 new vehicles sold over the comparable period a year ago.

402 new passenger vehicles were sold in May, the lowest monthly sales figure so far this year, and down 13.7% from the 466 passenger vehicles sold in April, but up 12.3% when compared to the 358 sold in May 2021. Year-to-date, 2,243 new passenger vehicles have been sold, an increase of 21.4% from the 1,847 new passenger vehicles sold over the same period in 2021. On a twelve-month cumulative basis, a total of 4,880 new passenger vehicles were sold, up 26.0% y/y when compared the 3,872 passenger vehicles sold over the comparable period last year. Despite being a somewhat weaker month for new passenger vehicle sales, May’s sales figure is not far off the average monthly sales figure for the past 12 months.

365 new commercial vehicles were sold in May, down 16.9% m/m from the 439 commercial vehicles sold in April and down 15.9% y/y when compared to the 432 commercial vehicles sold in May 2021. Light commercial vehicle sales continue to make up the bulk of the new commercial vehicle sales with 309 sold in May, followed by 47 heavy and extra heavy commercial vehicles and 9 medium commercial vehicles sold during the month. Light- and medium commercial vehicle sales fell by 21.2% m/m and 47.1% m/m, respectively, while heavy and extra heavy commercial vehicle sales rose by 56.7% m/m. On a twelve-month cumulative basis, light commercial vehicle sales fell by 6.5% y/y, while medium commercial vehicle and heavy and extra heavy commercial vehicle sales rose by 0.5% y/y and 12.4% y/y, respectively.

Toyota retained its lead in the new passenger vehicle sales segment with 33.0% of the segment sales year-to-date, despite the significant decline in its monthly vehicles sales figure in May following the closure of its plant in KwaZulu-Natal due to flood damage. Volkswagen, with a 19.8% of the passenger vehicle market share, was second, followed by Kia and Suzuki with 8.8% and 7.8% of the market, respectively, leaving the remaining 30.6% of the market share to other brands.

On a year-to-date basis, Toyota maintained its dominance in the light commercial vehicle space with a 54.9% market share despite also recoding significantly lower sales in this segment, followed by Nissan with 12.1% of the market. Hino continues to lead the medium commercial vehicle segment with 33.9% of sales year-to-date. Scania retains its position as the leader in the heavy and extra-heavy commercial vehicle segment with 31.6% of the market share year-to-date, an increase from last month.

The Bottom Line  

12-month cumulative new passenger vehicle sales continue to increase, rising for the 18th consecutive month, while 12-month cumulative commercial vehicle sales continue to hover around the 4,800 level, where it has been for the last 14 months. While the month of May has historically been a relatively weaker month for new vehicle sales in Namibia, this year’s decline in May was to an extent driven by the closure of the Toyota plant in KwaZulu-Natal, as the manufacturer recorded an over 50% decline in sales in all segments when compared to its monthly average over the past 12 months. Overall year-to-date new vehicle sales are still roughly in line with those of 2021.

PSCE – April 2022

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Overall

Private sector credit (PSCE) increased by N$1.78 billion or 1.6% m/m in April, bringing the cumulative credit outstanding to N$116.2 billion. On a year-on-year basis, private credit sector credit grew by 10.5% y/y, compared to the 8.7% y/y growth recorded in March. While this was another relatively large monthly increase, this month’s increase was primarily driven by an increase in corporate credit demand versus the prior three months’ increases which were driven by increases in claims on non-resident private sectors. Normalising for the increases in claims on non-resident private sectors the past three months sees annual PSCE growth at 3.4% y/y. On a 12-month cumulative basis N$11.0 billion worth of credit was extended to the private sector. The non-resident private sector has taken up the bulk of this issuance with debts over the past 12 months summing to N$7.05 billion, while corporates have taken up N$2.58 billion and individuals have taken up N$1.37 billion. 

Credit Extension to Individuals

Credit extended to individuals increased by 0.5% m/m and 2.2% y/y in April. Mortgage loans to individuals rose by 0.6% m/m and 2.3% y/y. Overdraft facilities increased by 1.8% m/m, but contracted by 1.0% y/y. Other loans and advances (consisting of credit card debt, personal- and term loans) rose by 0.4% m/m and 4.1% y/y.

Credit Extension to Corporates

Credit extension to corporates grew by 3.1% m/m, following two months of declines. Growth in credit extension to corporates accelerated to 5.9% y/y in April, compared to 1.9% y/y growth registered in March. The increase was largely driven by a 6.4% m/m increase in ‘other loans and advances’. The Bank of Namibia (BoN) ascribed the increase to increased demand by corporates in the transport-, commercial property- and agricultural services sectors. Overdraft facilities to corporates rose by 1.9% m/m, but fell 4.4% y/y. Instalment credit by corporates fell by 0.6% m/m, although still recorded growth of 14.2% y/y.

Banking Sector Liquidity 

The overall liquidity position of the commercial banks fluctuated markedly in April, with the average position increasing by N$437.2 million to N$3.00 billion, while the daily position on the 29th was down N$1.21 billion from the N$3.70 billion recorded at the end of March. According to the BoN, the change was due to increased demand at the bond auctions held during the month. The repo balance rose to N$1.97 billion at the end of the month after ending March at N$936.8 million.

Reserves and Money Supply

The BoN’s latest figures show broad money supply (M2) increased by N$1.76 billion or 1.4% y/y to N$126.4 billion. The central bank’s stock of international reserves rose by 5.6% m/m or N$2.27 billion to N$43.0 billion. The BoN noted that the increase was due to SACU revenue inflows and the depreciation of the Namibian dollar.

Outlook

As mentioned earlier in the report, the relatively strong PSCE growth in April was largely driven by an increase in corporate credit demand, specifically in the ‘other loans and advances’ category. While an increase in corporate credit demand is generally positive, the specific category that drove this increase in April is made up of shorter term debt. Short-term debt is generally used to cover short-term cash needs, and not to expand operations, thus meaning that the increase in corporate demand in April is not necessarily an indication of investment in fixed capital, but may be into working capital.

On a 12-month cumulative basis, private sector credit issuance increased by a rather substantial 292.1% y/y to N$11.0 billion. 64.1% of this increase was however due to the large increases recorded in claims on non-resident private sectors in the first three months of the year, which the BoN previously attributed to a loan uptake by one of the commercial banks from its parent company in South Africa. 

Building Plans – April 2022

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The City of Windhoek approved 173 building plans in April, representing a 12.6% m/m decline from the 198 building plans approved in March. In monetary terms, the approvals were valued at N$106.0 million, a 17.2% m/m contraction. Year-to-date 766 building plans worth N$519.0 million have gotten the nod, a decrease in number of 6.7% y/y, and 18.9% y/y in value terms. On a twelve-month cumulative basis 2,396 building plans worth N$1.84 billion were approved, a contraction of 8.1% in number, and 4.9% in value terms over the prior 12-month period. 78 building plans worth N$43.0 million were completed during the month.

Additions to properties once again made up the largest portion of approvals, in both number and value terms. For the month of April 114 additions to properties were approved with a value of N$63.0 million, compared to 133 approvals worth N$56.2 million in March. The data shows a single addition worth N$31.0 million being approved during the month, making up nearly half the total value of additions to properties approved during the month. Year-to-date 478 additions to properties have been approved with a value of N$240.4 million, a contraction of 6.5% y/y in number terms but an increase of 7.1% y/y in value terms. 35 additions worth N$10.3 million were completed in April.

New residential units were the second largest contributor to the number and value of building plans approved with 58 approvals registered in April, 5 fewer than in March. In value terms N$42.7 million worth of residential units were approved in April, a 2.1% m/m increase. On a year-on-year basis the value of approvals is however 67.1% lower than registered in April 2021. On a 12-month cumulative basis the number of residential units approved fell by 7.1% y/y to 820 and the number has been ticking down since September last year. 42 New residential units worth N$32.7 million were completed in April.

Only one commercial unit, valued at N$380,000 was approved in April. This brings the total number of commercial buildings approved in 2022 to 10, at a value of N$39.2 million. Bar one month, the number of approvals for commercial and industrial properties has been languishing in the single-digit territory since September 2016 and has an average approval rate of fewer than 3 approvals per month over the last 12 months. On a rolling 12-month basis, the number of commercial and industrial approvals increased to 35 units, worth approximately N$184.4 million, an increase of 67.2% in value terms from the period ending April 2021. One commercial building plan was recorded as completed in April, valued at N$65,000. 

As illustrated in the figure above, the cumulative value of building plans approved continues to trend downward in both nominal and inflation-adjusted terms. As approvals is a forward-looking measure of expected construction activity this does not bode well for economic activity in the capital in general. Commercial and industrial construction activity remains extremely subdued. Going forward we expect lower value additions to properties to continue making up the majority of approvals.