Category Archives: Economic Research

Economic Research

New Vehicle Sales – April 2022

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A total of 905 new vehicles were sold in April, a 14.1% m/m contraction but an increase of 19.9% y/y from the 755 vehicles sold in April 2022. Year-to-date 3,550 new vehicles have been sold, of which 1,841 were passenger vehicles, 1,491 light commercial vehicles, and 218 medium and heavy commercial vehicles. By comparison, the first four months of 2021 saw 3,260 new vehicles sold. On a twelve-month cumulative basis, a total of 9,718 new vehicles were sold at the end of April, representing a 13.0% y/y increase from the 8,602 sold over the comparable period a year ago.

466 new passenger vehicles were sold during April, 11.9% lower than the 529 passenger vehicles sold in March, but an increase of 30.2% from the 358 sold in April 2021. Year-to-date, passenger vehicle sales rose to 1,841, an increase of 23.6% than during the same period last year. On a rolling 12-month basis, passenger vehicle sales rose to 4,836, 29.2% higher than over the same period in 2021.

New commercial vehicle sales displayed a similar trend, declining month-on-month, but are up from the same month last year. 439 new commercial vehicles were sold in April, representing a month-on-month contraction of 16.4%, but a year-on-year increase of 10.6% y/y. 392 Light commercial vehicles, 17 medium commercial vehicles, and 30 heavy and extra heavy commercial vehicles were sold during the month. Light- and heavy commercial vehicle sales fell by 16.1% m/m and 30.2% m/m, respectively, while medium commercial vehicle sales rose by 13.3% m/m. On a twelve-month cumulative basis, light commercial vehicle sales are down 2.0% y/y, while medium commercial vehicle sales rose by 6.7% y/y, and heavy commercial vehicles climbed by 21.1% y/y.

Toyota continues to lead the new passenger vehicle sales segment with 36.8% of the segment sales year-to-date, followed by Volkswagen with 20.4% of the market share. The two top brands maintained their large gap over the rest of the market with Kia and Suzuki following with 7.9% and 6.1% of the market, respectively, leaving the remaining 28.8% of the market to other brands.

On a year-to-date basis, Toyota maintained its dominance in the light commercial vehicle space with a 60.6% market share, followed by Nissan with 10.7% of the market. Hino leads the medium commercial vehicle segment with 37.7% of sales year-to-date. Scania remained number one in the heavy and extra-heavy commercial vehicle segment with 27.3% of the market share year-to-date. 

The Bottom Line  

We noted in last month’s report that March new vehicle sales generally have a seasonal effect of being slightly higher than the surrounding months, and that we expect to see April’s new vehicle sales to return to the levels witnessed in the last 18 months. This has now transpired with new vehicle sales being 14.1% lower than last month. New vehicle sales were however 19.9% higher than during the same month a year ago and 13.5% higher than the average monthly sales figure over the past twelve months. On a 12-month cumulative basis, new passenger vehicle sales continued to increase, rising for the 17th consecutive month. New commercial vehicle sales however continue to hover around the 4,800 level where it has been trending for the past year.

PSCE – March 2022

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Private sector credit (PSCE) rose by N$1.35 billion or 1.2% m/m in March, bringing the cumulative credit outstanding to N$114.4 billion. On a year-on-years basis, private sector credit grew by 8.7% y/y, compared to the 7.1% y/y growth recorded in February. The growth was however again largely driven by a substantial increase in claims on non-resident private sectors. Normalising for this sees March PSCE growth at -0.9% m/m and 1.7% y/y. On a 12-month cumulative basis N$9.17 billion worth of credit was extended to the private sector. N$1.40 billion worth of credit has been extended to individuals on a 12-month cumulative basis, while corporates took up N$835 million. The non-resident private sector increased their borrowings by N$6.94 billion.

Credit Extension to Individuals

Credit extended to individuals fell by 0.2% m/m, but rose 2.3% y/y in March. On a monthly basis, only the instalment credit subcategory posted growth, increasing marginally by 0.2% m/m and 1.5% y/y. Mortgage loans to individuals contracted by 0.2% m/m but rose 2.2% y/y, while overdraft facilities fell by 1.3% m/m and 1.0% y/y. Other loans and advances (consisting of credit card debt, personal- and term loans) declined by 0.2% m/m, but rose 4.0% y/y.

Credit Extension to Corporates

Credit demand by corporates remained subdued, with credit extended to corporates declining by 1.8% m/m. On a year-on-year basis, credit extended to corporates slowed to 1.9% y/y. Mortgage loans increased by 1.3% m/m and 6.6% y/y. Instalment credit by corporates rose by 2.0% m/m and 11.2% y/y, although the growth rate is from a low base. Overdraft facilities to corporates continued to fall, declining by 4.3% m/m, although still posted a year-on-year growth of 1.3% y/y. The Bank of Namibia (BoN) ascribed the monthly decline to repayments by businesses operating in the energy, fishing and health services sectors.

Banking Sector Liquidity

The overall liquidity position of the commercial banks deteriorated during March, falling by N$104.5 million to an average of N$2.57 billion. The BoN noted that the rise is customary during March as government offices winds up expenditure before the close of the fiscal year, coupled with an increase of some investment proceeds. The repo balance rose to N$936.8 million at the end of the month after ending February at N$862.6 million.

Reserves and Money Supply

As per the BoN’s latest money statistics release, broad money supply (M2) N$1.73 billion or 1.4% y/y to N$129.1 billion. Foreign reserve balances fell by 5.3% m/m or N$2.27 billion to N$40.8 billion. The decline was ascribed to foreign government payments coupled with net commercial bank outflows due to an increase in the import bill.

Outlook

While PSCE growth appeared strong again in March, the increase was again primarily driven by a large increase in claims on non-resident private sectors. The BoN had previously attributed these substantial increases to a loan uptake by one of the commercial banks from its parent company in South Africa. Normalising for this large increase sees PSCE remaining subdued at 1.7% y/y in March, down from a normalised increase of 2.6% y/y in February.

Corporate credit demand remains particularly low, with only two of the last six months recording increases on a month-on-month basis. A lack of corporate credit appetite indicates low business confidence and that businesses are not taking up credit to expand their operations.

As expected, the BoN hiked the repo rate by 25bps at its April MPC meeting. Our expectation remains that we will see 3-4 additional 25 bp hikes throughout the rest of the year.

Building Plans – March 2022

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A total of 198 building plans were approved by the City of Windhoek in March, representing a 9.6% m/m decrease from the 219 building plans approved in February. The total value of approvals fell by 18.1% m/m to N$128.0 million. The year-to-date value of approved building plans reached N$413.0 million, 1.7% higher than in the first quarter of 2021. On a twelve-month cumulative basis, 2,473 building plans with a value of N$1.97 billion have been approved, an increase of 4.9% y/y in number and 15.7% y/y in value terms. The number of completions for the month of March stood at 116, valued at N$74.1 million.

Additions to properties, the largest portion of approvals in both number and value terms, made up 133 of the total 198 approved building plans recorded in March, one more than registered in February. In the first quarter of the year, 364 additions to properties have been approved with a value of N$208.5 million, a 5.5% y/y increase in number and 29.9% y/y value terms. 58 additions worth N$14.5 million were completed in March.

New residential units were the second largest contributor to the total number and value of building plans approved with 63 new units worth N$41.8 million being registered, representing a 51.9% y/y decrease from the N$86.9 million worth of approvals in March 2021. On a 12-month cumulative basis, the number of residential units approved increased by 4.9% y/y to 842. While the number of new residential building plans approved during the first quarter were two more than during the same period last year, the value of these approvals fell by 28.3% y/y. 56 new residential units worth N$51.9 million were completed during the month.

2 New commercial and industrial units, valued at N$30 million were approved in March. This is 2 units fewer than approved in February, but an increase of 823.1% m/m and 328.6% y/y in value terms, although the increases are from a very low base. The increase in value is due to a N$25 million building plan submitted by Vivo Energy Namibia. Year-to-date, there have been 9 commercial and industrial building approvals valued at N$38.8 million. On a rolling 12-month perspective, the number of commercial and industrial building approvals has increased to 38 units worth N$195.7 million as at March, compared to the 25 approved units worth N$98.7 million over the corresponding period a year ago. Two commercial and industrial units worth N$7.6 million were completed in March.

The 12-month cumulative number of building plans approved increased by 4.9% y/y in March. A total of 2,473 building plans to the value of N$1.97 billion were approved over the last 12 months which represents an increase in value terms of 15.7% y/y. Additions to properties continue to make up the majority of the cumulative approvals at 64.4% in number terms. The number of commercial and industrial approvals has continuously remained in the single-digit territory since March 2020, indicating a lack of investment from businesses. The first quarter of the year saw total approvals generally in line with those of Q1 last year, recording an increase of only 3.9% y/y in number and 1.7% y/y in value terms. Completed building plans decreased by 27.7% y/y in value terms to N$1.06 billion on a 12-month cumulative basis.