Category Archives: Economic Research

Economic Research

Building Plans – May 2022

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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

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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.  

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.