Category Archives: Economic Research

Economic Research

New Vehicle Sales – August 2021

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In August 764 new vehicles were sold, a 4.5% m/m decrease from the 800 sold in July, bringing the total number of vehicle sales in 2021 to 6,457. Total new vehicle sales have declined for the second month running. On a 12-month cumulative basis, vehicle sales have grown by 14.1% y/y to 9,296. However, it is the historically low base of 2020’s new vehicle sales, rather than exceptional sales growth in 2021, that explains the relatively high  12-month cumulative sales increase. On a year-on-year basis, new vehicle sales rose 30.4% in August. All told, 2021 remains on track to be the second worst year for new vehicle sales in the past decade.

340 new passenger vehicles were sold in August, a 12.6% m/m decrease from the 389 sold in July. Year-on-year passenger vehicle sales increased by 70.9%. Year-to-date vehicle sales have increased by 53.4%. On a 12-month cumulative basis, the number of passenger vehicles sold increased by 28.8% in August to 4,257. However, the equivalent 2019 figure is 4,678, meaning that while new passenger vehicle sales have ticked up from 2020 lows, the 2019 benchmark is yet to be reached.

Commercial vehicle sales increased by 3.2% m/m to 424 in August. New commercial vehicle sales increased by 9.3% y/y. 354 light and 16 medium commercial vehicles were sold in August, a 5.9% m/m decrease and 23.1% m/m increase respectively. 54 heavy commercial vehicles were sold, more than double the amount sold in July. On a 12-month cumulative basis, light commercial vehicle sales increased by 2.8% y/y, medium commercial vehicles fell by 15.2% y/y, and heavy commercial vehicles increased by 27.7% y/y.

Volkswagen and Toyota now have an all but equal split of the market for passenger vehicles in 2021, with Volkswagen taking 29% and Toyota 28%. Kia solidified its position as the next largest player in the market, marginally upping its share to 9%. Hyundai and Suzuki round off the top 5 with 6% and 5% passenger vehicle market share respectively.

On a year-to-date basis, Toyota remains the biggest seller of light commercial vehicles with a 55% share of the market. Ford comes in second at 13%. Mercedes has taken 33% of the market for medium commercial vehicles, followed closely by Hino with 31%. The heavy and extra heavy commercial vehicle market is the most competitive of the vehicle markets. Scania currently has a 22% market share and Volvo has 19%.

The Bottom Line

August was another sluggish month for vehicle sales in Namibia. Despite a marginal increase in the number of commercial vehicles sold compared to June and July’s figures, a dip in passenger vehicle sales cancelled out any overall vehicle sales gains that might have been made. Global automotive production remains under significant strain as variable demand and a well-documented shortage of semiconductors slow production. The extent to which these supplier-facing costs are passed down to the Namibian consumer is an open question. So long as the automotive market remains sufficiently competitive prices of new vehicles should not increase drastically.

PSCE – July 2021

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Overall

Private sector credit (PSCE) decreased by N$318.7 million or 0.30% m/m in July. This decrease brings the total cumulative credit outstanding to N$105.0 billion. On a year-on-year basis, private sector credit increased by 2.72%. Over the past 12 months, N$2.78 billion in credit was extended to the private sector. Cumulative 12-month issuance is therefore up 47% from the N$1.89 billion issued by this time in 2020. Individuals have taken up the bulk of this issuance with debts over the past 12 months summing to N$2.18 billion or 78% of the total debt issuance.

Credit Extension to Individuals

Credit extension to individuals increased by 3.69% y/y, but fell by 0.05% m/m in July. This month-on-month decrease was driven by 1.0% m/m and 0.4% m/m contractions in other loans and advances (credit card debt, personal- and term loans) and instalment credit, respectively, offsetting a 0.2% m/m increase in mortgage loans. However, instalment credit expanded by 0.6% y/y in July. Mortgage loans extended to individuals increased by 4.4% y/y, slightly slower than the 4.9% y/y increase recorded in June. Individual overdrafts rose by 8.7% y/y, but by only 0.1% m/m. This comes after overdrafts fell 0.9% m/m in June.

Credit Extension to Corporates

Credit extended to corporates contracted by 0.52% m/m while increasing by 1.78% y/y in July. This year-on-year increase in corporate credit extensions is in keeping with the trend in 2021, with only low single digit increases recorded thus far. Corporate overdrafts rose by 0.4% m/m and 8.7% y/y in July. Instalment credit increased by a more moderate 0.7% m/m and 0.6% y/y. Mortgage loans decreased by 1.7% m/m but rose by 4.4% y/y this July. This month-on-month decrease is unsurprising as new corporate mortgage loan issuance has been sporadic throughout 2021, with only January, April and June seeing month-on-month increases, while February, March and now July have seen month-on-month decreases in issuance.

Banking Sector Liquidity

The overall liquidity position of Namibia’s commercial banks was near enough unchanged in July, rising by only N$555,000 to an average of N$552.8 million. July saw a marked decrease in the balance of repo’s outstanding – as the starting balance outstanding of N$1.65 billion was cut to N$1.02 billion by the end of the month.

Reserves and Money Supply

The Bank of Namibia’s (BoN) latest figures show Broad Money Supply contracting by N$2.28 billion or 1.8% y/y in July after registering successive year-on-year contractions in May and June. As of the end of July, money supply stands at N$121.5 billion. The central bank’s stock of international reserves rose by 2.1% m/m to N$42.6 billion at the end of July. The BoN attributes the boost to the inflow of SACU receipts during the period.

Outlook

After large increases in credit extension to the private sector in the second half of 2020, with total outstanding private sector debt rising from N$102.2 billion in June 2020 to N$105.4 billion in December, PSCE growth in 2021 has been more subdued.  Total PSCE has hovered between N$105.6 billion and N$105.0 billion this year. The marginal 0.30% m/m decrease in July came off the back of a 0.29% increase the previous month. Without making too many bold inferences from the data it suffices to say that macro-economic conditions remain uncertain in Namibia. 

We expect the BoN to mirror South Africa and hold interest rates steady for the remainder of 2021 to aid overindebted consumers and to attempt to stimulate the economy. Namibian individuals continue to take on the most debt in this low-interest rate environment. Until larger businesses are in a financial position, and develop an appetite, to take on more debt it is unlikely that low interest rates and moderate increases in private sector credit extension will have a major positive impact on the macro economy.

Building Plans – July 2021

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The City of Windhoek approved 211 building plans in July, a 77.3% m/m increase from the yearly low of 119 approvals in June. The value of the approvals increased by 13.4% m/m to N$145.6 million, compared to the N$128.4 million recorded in June. 2021 has now seen 1,338 approvals, valued at N$1.09 billion, 19.4% higher in number terms and 12.5% higher in value terms than during the same period last year. The increase is from a low base due to the strict lockdown measures early last year. On a twelve-month cumulative basis, building plan approvals rose by 24.5% y/y to 2,499, while the value of approvals rose 0.7% y/y to N$1.97 billion. A total of 36 completions to the value of N$24.4 million were recorded in July. Year-to-date, 838 building plans, valued at N$449.5 million have been completed, a 23.3% decline in number terms, and a 50.1% contraction in value terms, compared to the same period a year-ago.

Additions to properties made up most approvals. In July, 137 additions valued at N$64.9 million were approved, breaking a two-month streak of consecutive declines in both number and value terms. Year-to-date, 818 additions have been approved with a value of N$408.9 million, a 4.9% decrease in number, but a 4.9% y/y increase in value terms. Only 6 additions to properties were completed in July at a value of N$3.27 million, a 80.4% m/m decrease in value.

New residential units were the second largest contributor to the number of building plans approved with 73 approvals registered in July, 22 more than in June. In value terms, N$80.4 million worth of residential units were approved in July, a 4.0% m/m and 11.2% y/y increase. So far in 2021 500 units worth N$610.8 million have been approved. This translates to a year-to-date increase in value of 93.6% . On a 12-month cumulative basis the number of residential units approved increased by 146.6% y/y and by 86.3% y/y in value terms. 30 new residential units worth N$21.1 million were completed in July.

Only one commercial unit, valued at N$280,000 was approved in July. This brings the total number of commercial buildings approved in 2021 to 20, at a value of N$67.4 million. While 30 commercial buildings, valued at a N$137.6 million, have been approved in the last 12 months, no commercial units were completed for the fourth month running. Year-to-date, commercial and industrial completions account for only 1.3% of the total value of completions, well below the pre-pandemic 2019 average contribution.   

On a 12-month cumulative basis, the number of building plans approved increased by 24.5% y/y. This increase is however from a low base. 2,499 building plans to the value of N$1.97 billion were approved in the last 12 months, representing a 0.7% y/y increase in value. Additions to properties made up 63.9% of the cumulative number of approvals, but only 36.3% of the total value of approvals. Commercial and industrial building plan approvals are on course to be even lower in 2021 than in 2020 with only 20 approvals worth N$67.4 million thus far, compared to 31 approvals worth N$261.0 million at the same point last year. As building plan approvals is a forward-looking measure of expected construction activity this does not bode well for economic activity in the capital in general. The construction industry thus remains fragile.