Category Archives: Economic Research

Economic Research

Building Plans – May 2021

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The City of Windhoek approved a total of 187 building plans in May, representing a 25.2% m/m decrease from the 250 building plans approved in April. In monetary terms, the approvals were valued at N$173.0 million, a 26.1% m/m decrease. 183 buildings with a value of N$67.13 million were completed during May, a 27.9% m/m decrease in value terms. Year-to-date building approvals are 66.3% and 24.8% higher in number and value terms, respectively, than during the same period in 2020. This increase is however mostly due to stagnant construction activity during the lockdown last year. Year-to-date, the number of completed buildings increased by 23.3% y/y to 678, while the value of these completions fell marginally by 3.6% y/y from N$380.0 million in 2020 to N$366.5 million in 2021. On a twelve-month cumulative basis, 2,684 buildings with the value of N$2.01 billion were approved, an increase of 47.7% y/y in number, and 10.7% y/y in value.

In May, 105 additions to properties were approved with a value of N$55.4 million, while 125 additions worth N$28.1 million were completed during the month, as the category continues as the main contributor to the total approvals and completions. Additions to properties approved fell 36.7% m/m in number and 40.4% m/m in value terms.

New residential units were the second largest contributor to the total number of building plans approved in May, and the largest contributor in value terms. 78 new units worth N$92.6 million were approved in May, representing a 28.5% m/m decrease from the N$129.5 million worth of approvals in April. On a 12-month cumulative basis, residential units approvals recorded a 125.3% y/y increase in value. 58 new residential units worth N$39.0 million were completed during the month, representing an increase in value of 17.7% m/m, but a decrease of 21.6% y/y.

Four new commercial units, valued at N$25.0 million, were approved in May, translating to a 115.3% m/m increase in value terms. Year-to-date, there have been sixteen commercial building approvals valued at N$51.1 million, which is 33.3% lower in number terms and a 79.3% decrease in value terms compared to the same period last year. On a rolling 12-month perspective, the number of commercial and industrial approvals have slowed to 33 units worth N$135.3 million as at May, compared to the 56 approved units worth N$652.9 million over the corresponding period a year ago. No commercial and industrial units were completed in May.

The 12-month cumulative number of building plans approved increased by 47.7% y/y in May. A total of 2,684 building plans to the value of N$2.01 billion were approved over the last 12 months, representing an increase in value of 10.7% y/y. Additions to properties have made up 64.0% of the cumulative number of approvals, but only 38.4% of the total value of approvals. Completed building plans increased 17.0% y/y in value terms to N$1.52billion on a 12-month cumulative basis in May. The commercial sector has contributed a lacklustre 1% in terms of number of approvals and 6% in terms of value in 2021. This reflects the prolonged hardships experienced amongst corporates, which is unlikely to recover in the short-term, as the heightened infection levels of Covid-19 have resulted in a new economically restrictive lockdown measures.

PSCE – May 2021

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Overall

Private sector credit (PSCE) fell by N$214.2 million or 0.20% m/m in May, bringing the cumulative credit outstanding to N$105.0 billion. On a year-on-year basis, private sector credit grew by 2.66% in May, compared to the 2.74% y/y growth recorded in April. On a rolling 12-month basis, N$2.72 billion worth of credit was extended to the private sector. N$2.34 billion worth of credit has been extended to individuals on a 12-month cumulative basis, while N$498.1 million was issued to corporates. The non-resident private sector decreased their borrowings by N$112.2 million.

Credit Extension to Individuals

Credit extended to individuals increased by 3.98% y/y in May, compared to the increase of 3.91% y/y recorded in April. On a monthly basis, household credit grew by 0.1%, following the increase of 0.6% m/m recorded in the previous month. Mortgage demand by individuals was unchanged on a monthly basis but rose 5.2% y/y. Instalment credit increased by 0.4% m/m and 1.5% y/y, the second consecutive month of increase on an annual basis, following twenty consecutive months of decline. Overdraft facilities extended to individuals increased 1.1% m/m, but increased by 5.1% y/y. Other loans and advances (OLA) rose by 0.2% m/m and 1.3% y/y, displaying a slightly faster rate of increase from the 0.8% y/y growth recorded in April.

Credit Extension to Corporates

Credit extension to corporates contracted for a fourth consecutive month declining by 1.2% m/m, following the 0.8% m/m contraction recorded in April. On an annual basis, growth in credit extension to corporates slowed to 1.2% y/y in May, compared to the 2.1% y/y growth registered in April. On a monthly basis, growth in mortgage loans, other loans and advances (OLA) and overdraft facilities extended to corporates were all stagnant. On a year-on-year basis, mortgage loans contracted 2.4%, while OLA and overdrafts increased 1.4% and 14.9% respectively.

Banking Sector Liquidity

The overall liquidity position of commercial banks deteriorated substantially during May, decreasing by N$2.7 billion to reach an average of N$340.8 million. The BoN attributed the diminishing liquidity position to net transfers by investment managers as well as several cross-border transfers during the period under review. The outstanding balance of repo’s subsequently rose to N$1.1 billion at the last week of the month.

Reserves and Money Supply

As per the BoN’s latest money statistics release, broad money supply contracted by N$1.6 billion or 1.3% y/y in May, compared to the 3.1% y/y increase recorded in April. Foreign reserve balances declined by N$2.2 billion to N$39.0 billion in May. The BoN ascribed the decrease to an increase in government payments as well as foreign currency repurchases by commercial banks.

Outlook

The N$214.2 million or 0.2% m/m contraction of PSCE growth in May is the third consecutive decline on a month-on-month basis, while the rolling 12-month private sector credit issuance increased 48.7% y/y from the low base of N$1.83 billion cumulative issuance as at the end of May 2020, with individuals continuing to take up most (85.8%) of the credit extended over the past 12 months.

Despite the historically low interest rates, economic activity remains subdued, with individuals unwilling or financially incapable of taking out loans to increase consumption, and corporates who lack confidence to invest in capital projects would rather use the opportunity to de-lever their balance sheets. With Namibia experiencing a third wave of Covid-19 infections, and with it, stricter lockdown measures which hampers economic activity, credit extension is unlikely to improve in the short-term.