Category Archives: Economic Research

Economic Research

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.

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.