Category Archives: Economic Research

Economic Research

NCPI November 2021

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Namibia’s annual inflation rate rose to 4.1% y/y in November, with prices in the overall NCPI basket increasing by 0.6% m/m. Year-on-year, overall prices in eight of the twelve categories rose at a quicker rate in November than in October, two categories experienced slower rates of inflation and two categories posted steady inflation. Prices for services rose by 2.4% y/y and prices for goods rose by 5.4% y/y.

Transport was the largest contributor to annual inflation in November, with prices in this category increasing by 1.5% m/m and 11.9% y/y. This basket item contributed 1.6 percentage points to the annual inflation rate in November. Prices in all three sub-categories recorded price increases, with the sharpest increase coming in “operation of personal transport equipment”. This is due mostly to a 27.4% y/y increase in the price of petrol and diesel. This is the largest year-on-year price increase in fuel seen so far this year. As was the case last month, this increase is explained by both base effects and an ongoing shortage in global oil supply.

Predictably, food & non-alcoholic beverages was the second biggest contributor to the annual inflation rate in October, contributing 1.0 percentage points.  Prices in this basket item increased by 0.3% m/m and 5.2% y/y. On a yearly basis all sub-categories, except for vegetables & tubers, registered price increases. Namibia’s continued reliance on South Africa for food imports means than whenever transport costs rise it is all but inevitable that the price of food will rise accordingly.

Inflation rates in the remainder of the categories were relatively subdued. Alcohol & Tobacco was the third largest contributor to November’s annual inflation rate, with prices increasing by 2.0% m/m and 2.8% y/y. The prices of alcoholic beverages, the more heavily weighted of the two sub-categories in this basket, increased by 2.3% y/y while the price of tobacco products, the other sub-category, increased by 5.2% y/y in November.

The 4.1% y/y annual inflation rate for November came in above IJG’s average inflation forecast for the month. IJG’s last estimate was that inflation would rise to 3.8% y/y in November. A hawkish shift in the Fed’s tone has led to debate as to whether the US central bank will taper asset purchases at a faster rate than it had previously indicated. This, as well as a 25bps SARB rate hike in late November, lends credence to the argument that inflation risks both globally, and in southern Africa, remain to the upside. In our previous report our inflation model forecast average annual inflation for 2022 at 3.9% y/y. A spike in Namibia’s CPI and a deterioration in the rand has pushed that estimate up to 4.2% y/y. The estimated upper bound for average annual inflation in Namibia for 2022 is now 5.2% y/y.

Building Plans – November 2021

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In November the City of Windhoek approved 263 building plans, a 3.0% m/m decrease from the 271 approved in October. The total value of approvals decreased by 2.1% m/m to N$216.9 million. On a 12-month cumulative basis, the number of approvals has risen by 9.3% y/y to 2,468 but the value of these approvals has declined by 1.1% y/y to N$1.92 billion. Year-to-date there have been 2,353 approvals valued at N$1.85 billion. 139 construction projects were completed in November at a value of N$99.9 million. In terms of value, this equates to a 147.1% y/y increase and a 71.0% m/m increase. However, on a 12-month cumulative basis the value of completed projects is down 46.3% y/y.  

185 additions to properties were approved at a value of N$107.9 million in November, making November the best month, in terms of value, for addition approvals in 2021. This represents a 12.1% y/y increase in number and 13.5% y/y increase in value. Month-on-month this translates to a 7.5% decrease in number but a 37.9% increase in value. 47 additions to properties were completed in November at a value of N$11.1 million. The latter months of 2020 saw a particularly slow rate of construction completions, therefore the year-on-year change in the value of additions completed has doubled (approximately 101.1% y/y increase in value). On a year-to-date basis, the number of additions to properties completed stands at 855, at a value of N$233.8 million. While the number of additions completed by this time last year is similar (866 by November 2020) the value of those additions stood significantly higher, at N$444.8 million.   

75 residential units were approved in November at a value of N$105.5 million, translating to an 8.7% m/m increase in number and a 29.6% m/m increase in value. Year-to-date 808 units have been approved at a value of N$968.8 million. These numbers compare favourably to last November’s year-to-date figures when only 610 residential units were approved at a value of N$798.2 million. Accordingly, on a 12-month cumulative basis, the value of residential approvals increased by 9.3% y/y and the number of approvals by 7.9% y/y. 90 residential units were completed in November at a value of N$70.8 million, making November the best month for the number of residential unit completions in 2021. On a 12-month cumulative basis the number of residential properties completed now stands at 596, with a collective value of N$540.6 million. Following the trend seen in completions of additions to properties, the 12-month cumulative value figure for residential units completed has fallen by 46.3% y/y.

In November three commercial units with a combined value of N$3.5 million were approved. Year-to-date 34 commercial units worth N$160.3 million have been approved. In terms of value, that’s 47.4% lower than at the same time last year. Two commercial units were completed in November at a value of N$18.1 million. After six consecutive months with zero completions Windhoek has now seen back-to-back months with commercial completions, the first time that has happened in 2021. Encouragingly, this means that the year-to-date value of commercial construction projects completed is higher now than it was at the same time in 2020.

On a 12-month cumulative basis, the number of building plans completed fell by 8.3% y/y and by 46.3% y/y in terms of value. Given the severity of the general economic contraction in the past 18 months this is not surprising. The year-on-year change of the 12-month cumulative value of plans completed is therefore likely to remain negative for several more months.

As the year draws to a close, we now have a sufficiently detailed picture of how well the construction industry faired in 2021. In a phrase, 2021 was not all that bad. The year-to-date figure for total building plan approvals stands at N$1.85 billion, that’s a 3.9% y/y increase from the N$1.78 billion approved by last November. The success and rate with which these approvals are converted into completions will go a long way to determining the fortunes of the construction sector in 2022.  While the year-to-date value of total building completions remains well off 2020 levels, in the context of the last five years the figure (N$796.5 million y-t-d completions by November 2021) doesn’t look out of place (5-year November average; N$913.8 million).   

New Vehicle Sales – November 2021

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752 new vehicles were sold in November, a 5.3% m/m increase from the 714 sold in October and a 7.4% y/y increase from the 700 sold last November. In November, more passenger vehicles, light commercial vehicles and heavy commercial vehicles were sold than in October. Fewer medium commercial vehicles were sold. On a 12-month cumulative basis, vehicle sales have grown by 23.3% y/y to 9,391. Year-to-date, new vehicle sales have increased by 25.8% to 8,687. However, this is 10.5% lower than the year-to-date figure for November 2019, when 9,706 vehicles were sold. As such, 2021 remains on track to be the second worst year for new vehicle sales in the past decade.

376 new passenger vehicles were sold in November, 20 more than in October, translating to a 5.6% m/m increase and a 10.3% y/y increase. On a 12-month cumulative basis, new passenger vehicle sales have increased by 39.7% y/y to 4,449. Year-to-date, 4,115 new passenger vehicles have been sold. This represents a 43.1% increase from the year-to-date figure for November 2020, when only 2,876 new passenger vehicles were sold. Encouragingly, on a year-to-date basis, new car sales for November almost reached 2019 levels, with the 4,115 sold so far this year only 140 fewer than the 4,255 sold by November 2019. Compared to commercial vehicle sales (4,572 year-to-date sales in 2021 vs 5,451 year-to-date sales in 2019), passenger vehicle sales have enjoyed a stronger recovery in 2021.

376 commercial vehicles were sold in November, a 5.0% m/m increase and 4.7% y/y increase. 316 light commercial vehicles were sold, translating to a 7.1% m/m increase but a 1.6% y/y decrease. 18 medium commercial vehicles were sold, four fewer than the 22 sold in October. So far this year the average number of medium commercial vehicle sales per month is 17. 42 heavy commercial vehicles were sold in November, a near identical number to the 41 sold in October.

Toyota and Volkswagen retain the largest year-to-date market shares in the passenger vehicle market. Toyota’s year-to-date market share is unchanged from October’s figure of 29%, while Volkswagen’s dropped 1% m/m to 27%. Kia, Suzuki and Hyundai have market shares of 9%, 6% and 6% respectively.

On a year-to-date basis, Toyota continues to dominate the light commercial vehicles market. Toyota’s market share currently stands at 52% in 2021. Ample competition in the medium commercial vehicle sector means that Hino and Mercedes both capture a significant share of the market, with year-to-date market shares of 31% and 29% respectively. In the heavy and extra-heavy commercial vehicle market Scania, Volvo and Man continue to enjoy strong market shares, with 29%, 19% and 15% respectively.

The Bottom Line  

In the context of 2021, November was an average month for vehicle sales in Namibia. Therefore, 2021 remains on track to be the second worst year for vehicle sales in the past decade.  As alluded to earlier in this report, the marginal recovery from the nadir that was 2020 has been driven predominantly by a recovery in passenger vehicle sales, with commercial vehicle sales still lagging well behind 2019 levels. With persistent global headwinds such as supply chain bottlenecks and semiconductor shortages conspiring to drag down vehicle sales globally, and in Namibia, there is no guarantee that 2022 will be a markedly better year for new vehicle sales.