Category Archives: Economic Research

Economic Research

Building Plans – January 2022

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A total of 176 building plans were approved by the City of Windhoek in January, representing a 79.6% m/m increase from the 98 building plans approved in December. In monetary terms, the approvals were valued at N$128.7 million. 2022 is off to a better start in both number and value terms compared to January 2021 when 122 building plans worth N$84.0 million got the nod. On a twelve-month cumulative basis, 2,505 building plans worth approximately N$2.01 billion were approved, an increase in number of 9.7% y/y and 14.9% y/y in value terms over the prior 12-month period.

In terms of both number and value, additions to properties made up the largest portion of approvals. For the month of January, 99 additions to properties were approved with a value of N$75.4 million, 28 more than the number of additions approved in January 2021. The value of approvals is however slightly skewed by a single large approval of N$21.1 million during the month. 40 Additions worth N$9.2 million were completed during the month.

New residential units were the second largest contributor to the total number of building plans approved in January. 74 New units worth N$47.7 million were approved during the month, representing a 6.9% decrease from the N$51.3 million worth of approvals in the first month of 2021. On a 12-month cumulative basis, residential units recorded a 20.7% y/y increase in value. 30 New residential units worth N$17.1 million were completed during the month. 

3 New commercial units, valued at N$5.5 million, were approved in January. This compares to 1 unit valued at N$7.0 million approved in January 2021. On average over the last 20 years, 4 commercial units valued at N$26.5 million were approved in the first month of the year. On a rolling 12-month perspective, the number of commercial and industrial approvals have increased to 39 units worth N$169.9 million as at January, compared to the 36 approved units worth N$202.2 million over the corresponding period a year ago. 1 Commercial unit worth N$140,000 was completed in January.

The 12-month cumulative number of building plans approved increased by 9.7% y/y in January. A total of 2,505 building plans to the value of N$2.01 billion were approved over the last 12 months which represents an increase in value terms of 14.9% y/y. Additions to properties, which are generally smaller projects, continue to make up the lion’s share of building plan approvals, although residential units are encouragingly starting to make up a larger portion of overall approvals. Since March 2020, the number of commercial and industrial approvals have remained in the low single digit territory, signalling a lack of investment from businesses. It is evident that the Namibian construction industry continues to tread water as the value of approvals continues to decline in real terms, as the chart above shows. 

NCPI January 2022

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Namibia’s annual inflation rate ticked up to 4.6% y/y in January, following the 4.5% y/y increase in prices recorded in December. Prices in the overall NCPI basket increased by 1.1% m/m. On a year-on-year basis, overall prices in eight of the twelve basket categories rose at a quicker rate in January than in December, while the other four recorded slower rates of inflation. Prices for goods increased by 5.8% y/y while prices for services increased by 3.0% y/y.

Transport was once again the largest contributor to the annual inflation figure, contributing 1.9 percentage points to the total 4.6% y/y inflation rate. Prices in this category remained steady month-on-month, following the Ministry of Mines and Energy’s decision to leave fuel pump prices unchanged in January, but increased by 13.5% y/y. The purchase of vehicles sub-category recorded somewhat slower inflation at 3.9% y/y while the prices of public transportation services rose by 9.7% y/y. The operation of personal transport equipment recorded a rise in prices of 19.0% y/y.

Rising tensions between Russia and Ukraine has put markets on high alert for possible disruptions of Russian energy supplies. Coupled with a rebound in the global economy from the pandemic, has resulted in oil prices now trading at 2014 highs. A lack of production capacity and limited investment in the sector will likely result in fuel prices remaining elevated for the majority of 2022. The Ministry’s decision to increase fuel prices by 30 cents- and 40 cents per litre for petrol and diesel, respectively, in February will keep the transport basket item’s inflation rate elevated going forward.

Food & non-alcoholic beverages, the second largest basket item by weighting, contributed 0.9 percentage points to the annual inflation rate in January. Prices in this basket item rose by 0.4% m/m and 5.6% y/y. All 13 sub-categories recorded price increases on an annual basis. The biggest increases were recorded in the prices of fruits which rose by 12.8%, followed closely by the prices of oils and fats, increasing by 12.7%, and meat at 10.6% y/y.

Alcohol & tobacco inflation ticked up from 3.8% y/y in December to 3.9% y/y in January. On a monthly basis, prices in this basket item rose by 0.9%. The alcoholic beverages sub-category recorded a price increase of 1.1% m/m and 3.5% y/y. Tobacco prices were up 0.3% m/m and 5.7% y/y.

Despite January’s inflation print ticking up for a fifth consecutive month, the differential between Namibia and South Africa’s inflation rates remain steady at around 1.4 percentage points, as the chart above indicates. According to the NSA, the prices for the rental payments for dwellings subcategory rose by 1.4% y/y in January. As rental payments make up a large portion (23.3%) of the CPI basket, the low inflationary adjustment means that Namibian annual inflation in 2022 is likely to remain relatively contained. IJG’s inflation model currently forecasts an average inflation rate of 4.2% y/y in 2022, with risks tilted to the upside, particularly stemming from higher food costs and elevated fuel prices. 

Following the SARB’s MPC decision to increase rates by 25 bps last month, we expect the BoN to follow suit at their February MPC meeting after the buffer that has been in place since the start of the pandemic was closed in November.

New Vehicle Sales – January 2022

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A total of 705 new vehicles were sold in January, which is 29 fewer than were sold in December, but represents a 1.7% y/y increase from the 693 new vehicles sold in January 2021. On a twelve-month cumulative basis, a total of 9,440 new vehicles were sold up to the end of January 2022, representing an increase of 23.7% from the 7,633 new vehicles sold over the same 12-month period a year ago. 2022 is thus off a somewhat better start than January 2021, however, new vehicle sales remain sluggish.

404 New passenger vehicles were sold during January, an increase of 11.6% m/m from the 362 sold in December, and 14.1% higher y/y from the 354 new passenger vehicles sold in January 2021. On a rolling 12-month basis, new passenger vehicle sales rose 38.6% y/y at the end of January, although the figure is from a very low base. 12-month cumulative passenger vehicle sales were down 53.9% from the peak in April 2015.

Commercial vehicle sales declined to 301 units in January, representing a contraction of 19.1% m/m and 11.2% y/y. During the month 266 light commercial vehicles, 5 medium commercial vehicles, and 30 heavy commercial vehicles were sold. On a year-on-year basis, light commercial sales fell by 11.6% y/y, medium commercial vehicles contracted by 44.4% y/y, and heavy and extra heavy vehicle sales grew by 3.4% y/y. Encouragingly, all categories have recorded growth on a twelve-month cumulative basis with light commercial vehicle sales increasing by 8.0% y/y, medium commercial vehicles rising by 19.2% y/y and heavy commercial vehicle sales growing by 27.3% y/y. 

Toyota started the year off on a strong foot with a 37.6% market share of new passenger vehicles sold, followed by Volkswagen with a 21.0% market share. They were followed by Kia and Suzuki who each had a 7.7% and 5.9% market share, respectively, while the rest of the passenger vehicle market was shared by several other competitors.

Toyota also started the year off with a solid grip on the light commercial vehicle market with a 56.4% market share, with Nissan in second place with a 11.3% market share. Volkswagen and Ford claimed 7.5% and 6.0% of the number of new light commercial vehicles sold during the month, respectively. Hino was number one in the medium commercial vehicle category with 40.0% of sales, while Mercedes, UD Trucks and Volvo Trucks collectively led the heavy and extra-heavy commercial vehicle segment, each with a 16.7% market share during the month.

The Bottom Line  

New vehicle sales started the year off stronger than the first month of the prior three years, but not materially so. As pointed out in last month’s report, the growth has largely been driven by a rebound in new passenger vehicle sales, with total commercial vehicles sales still hovering around 2009 levels. The relatively strong heavy commercial vehicle sales are however encouraging as it suggests that some fleets are being upgraded indicating business optimism. While we do expect to see new vehicle sales come in slightly higher than the prior two years as the economy starts recovering, we expect overall sales to remain sluggish and a far cry from the levels seen in 2014 – 2016.