Category Archives: Economic Research

Economic Research

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.

Building Plans – December 2021

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The City of Windhoek approved 98 building plans in December, which is a 62.7% m/m decline from the 263 building plans approved in November and 14.8% y/y lower than the 115 approvals in December 2020. In value terms, approvals fell by 46.2% m/m to N$116.6 million. A total of 63 building plans worth N$317.3 million were completed during the month, representing an increase of 23.5% y/y in terms of number and 891.2% y/y in terms of value of completions. A total of 2,451 building plans were approved in 2021, 169 more than in 2020. In value terms, total approvals for the year rose by 5.9% y/y to N$1.96 billion.

Additions to properties once again made up the majority of building plans approved in 2021. Of the 2,451 building plans approved in 2021, additions accounted for 1,574 of these approvals, 27 fewer than in 2020. In value terms, approvals of additions for the year increased by N$55.5 million or 8.0% y/y. 2021 was the first year that the value of additions to properties recorded an increase on an annual basis, following three years of decline. 63 additions were approved in December, 122 fewer than in November and 66.2% lower in value terms at N$36.5 million. During the year 870 additions have been completed to a value of N$237.4 million, a drop of 1.8% y/y in number and 47.7% y/y in value terms.

New residential units were the second largest contributor to the total number of building plans approved with 840 approvals registered in 2021, 200 more than in 2020. In value terms, new residential units approved increased from N$823.5 million in 2020 to N$1.04 billion in 2021. On a month-on-month basis, the number of new residential approvals decreased by 57.3% to 32, while the value of approvals declined by 34.5% to N$69.1 million. 45 Residential units valued at N$38.7 million were completed in December bringing 2021’s total number to 611, down 15.1% y/y. The value of residential completions fell to N$562.5 million, down 46.1% y/y.

A total of 37 commercial and industrial units were approved in 2021 compared to the 41 in 2020. In value terms, commercial and industrial approvals fell by 48.2% y/y in 2021 to N$171.4 million. 3 New commercial units valued at N$11.1 million were approved in December. 3 Commercial and industrial buildings were completed during the month, bringing the year’s total to 10, two fewer than in 2020. In value terms, N$313.9 million worth of commercial and industrial units were completed in 2021, representing an increase of 690.3% y/y, although the increase is mostly driven by the N$250.0 million completion of Nedbank’s new headquarters in December.

The number of building plans approved in 2021 rose by 7.4% compared to 2020, but the cumulative number of plans remains down 28.0% from its peak in 2013. The cumulative value of approvals increased by 5.9% y/y to N$1.96 billion in 2021 and is down 24.8% from the peak in 2013 in nominal terms. Building plans approved is a leading indicator of economic activity in the country and the above data implies that the Namibian economy has shown some recovery in 2021 following the Covid-19 slump, it is still showing signs of hardship. The low number of commercial building plan approvals in 2021 is another sign of this and indicate that most businesses are not planning on expanding their existing operations.

PSCE – December 2021

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Overall

Private sector credit (PSCE) declined by N$305.1 million or 0.29% m/m in December, bringing the cumulative credit outstanding to N$106.4 billion. PSCE increased by just 1.0% y/y in 2021, following an already slow increase of 1.6% y/y in 2020, and the slowest increase on our records dating back to 2004. On a 12-month cumulative basis N$1.05 billion worth of credit was extended to the private sector. Of this cumulative issuance, individuals took up N$1.27 billion, while corporates reduced their borrowings by N$48.5 million and the non-resident private sector repaid N$173.3 million of their borrowings.

Credit Extension to Individuals

Credit extended to individuals remained steady in December. On a year-on-year basis, credit extended to individuals rose by 2.1% in December, although the growth has been slowing for four consecutive months. Overdraft facilities to individuals increased by 0.4% m/m, but declined 3.3% y/y in December. Other loans and advances (consisting of credit card debt, personal- and term loans) rose by 0.2% and 2.8% y/y. Growth in mortgage loans to individuals has been slowing since April, declining by 0.3% m/m but increasing by 2.6% y/y. 

Credit Extension to Corporates

On both a monthly and annual basis credit extended to corporates contracted for a second consecutive month, decreasing by 0.58% m/m and 0.11% y/y, as corporates continued to de-lever their balance sheets in 2021. Overdrafts declined by 5.5% m/m and 13.1% y/y. Mortgage loans to corporates fell by 0.3% m/m, but rose by 5.8% y/y. Instalment credit growth remained subdued, decreasing by 1.8% m/m, but increasing by 5.6% y/y, although it is from a very low base. Other loans and advances rose by 2.5% m/m and 3.1% y/y in December.

Banking Sector Liquidity

The overall liquidity position of the commercial banks strengthened during December, rising by N$1.01 billion to an average of N$4.86 billion. The BoN ascribed the increase to seasonal movements driven by corporates, in preparation for their annual tax payments. The strong liquidity position meant that the repo balance stood at zero at the end of the month after ending November at N$393.7 million.

Reserves and Money Supply

According to the BoN’s latest monetary statistics, Broad Money Supply (M2) rose by N$5.30 billion or 4.2% y/y in December to N$129.9 billion. The stock of international reserves increased by 6.9% m/m to N$43.9 billion in December. The increase was attributed to increased foreign asset swaps during the month, according to the BoN. 

Outlook

Overall, PSCE growth remained very subdued in 2021, with half of the months recording a contraction on a month-on-month basis. The 12-month issuance of N$1.05 billion is 35.7% lower than the issuance of 2020. Historically-low interest rates continued to provide overindebted consumers and businesses relief in the form of lower interest payments, but did not stimulate lending as consumer and business confidence remained low. 

We expect the BoN to raise rates by 25 basis points at its February MPC meeting, following the SARB’s decision to do so in January. The interest rate buffer between the two central banks that has been in place for most of 2020 and 2021 has been closed, after the BoN decided to not raise rates in December. Namibia’s reserve level remains strong, and we therefore do not expect the BoN to raise rates higher than SA’s in the short-term. Inflationary pressure is gradually picking up in both South Africa and Namibia and as a result we expect both central banks to increase rates between 75- and 125-basis points during the year.