Category Archives: Economic Research

Economic Research

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.

NCPI July 2021

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The annual Namibian Inflation rate slowed marginally to 4.0% in July, following the 4.1% y/y increase in June. The prices in the overall NCPI basket increased by 0.2% m/m. On a year-on-year basis, the overall prices of seven of the twelve basket categories rose at a quicker rate in July than in June, while three categories experienced slower rates of inflation and two categories posted steady inflation. Prices for goods increased 5.4% y/y while prices for services increased by 2.2% y/y in July.

The transport and food categories were the largest contributors to annual inflation, making up 1.4 and 1.1 percentage points respectively. These were the main drivers of inflation in July. Food prices fell 0.4% m/m but rose 6.1% y/y, with all sub-categories except one increasing on an annual basis. Despite a bumper harvest for some vegetable products, Namibia’s reliance on South Africa for food imports is reflected in the increased prices of meat, oil and fats, and fruit. Increased transport prices have resulted from the recent upward trend in global oil prices and the depreciation of the Namibian dollar against the US dollar, making imports more expensive. 

Alcoholic beverages and tobacco prices contributed 0.3 points to annual inflation, as they did in June, increasing by 0.8% m/m and 2.5% y/y in July. The miscellaneous category also contributed 0.3 percentage points to inflation alongside transport and housing, water and electricity. Driven by higher fuel prices, transport costs have increased by 1.0% m/m and 10.6% y/y in July.

The 4.0% y/y increase in annual inflation is towards the upper end of IJG’s inflation forecast for the year. The main driver of inflation in the last couple of months has been food inflation which has been averaging 6.2% y/y since the beginning of the year. While risks remain to the upside, we see these as muted in the short-term in what is currently a very accommodative global monetary environment. Higher oil prices remain the largest risk in the short-term, while domestic and South African fiscal deterioration pose medium-term risks as debt levels increase unchecked, eating into the already limited productive portion of expenditure. IJG’s inflation model currently forecasts an average inflation rate of 3.7% y/y in 2021 and in 2022. Given that economic growth is expected to be low, and that inflation will likely remain muted, we expect monetary policy to remain accommodative over the short- to medium-term. 

New Vehicle Sales – July 2021

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800 new vehicles were sold in July, a 5.1% m/m decrease from the 843 sold in June. This brings the total number of vehicle sales in 2021 to 5,693. Despite this monthly drop, over the past 12 months total vehicle sales have grown by 8.9% y/y to 9,119 with passenger and light commercial vehicles continuing to make up the bulk of the sales. On a year-on-year basis, new vehicle sales rose 19.4% in July.

389 new passenger vehicles were sold in July, a 9.5% m/m decrease from the 430 sold in June. Year-on-year passenger vehicle sales increased by 68.4%. Year-to-date passenger vehicle sales have increased by 51.5% y/y, as 1,760 vehicles were sold by this time last July compared to the 2,666 figure this year. Beating 2020’s figures should, and is so far proving, to be an easy task. However, new passenger vehicle sales continue to trail the (already low) pre-pandemic levels of 2019. On a 12-month cumulative basis, the number of passenger vehicles sold increased by 18.6% y/y in July.

A total of 411 new commercial vehicles were sold in July, virtually the same number as in June. New commercial vehicle sales have decreased by 6.4% y/y. 376 light, 13 medium and 22 heavy commercial vehicles were sold in this period. While the sale of light commercial vehicles increased by 13.6% from June, the sales of medium and heavy commercial vehicles both declined on a month-on-month basis. On a 12-month cumulative basis, light commercial vehicle sales have increased by 0.4% y/y, medium commercial vehicles fell by 14.9% y/y, and heavy commercial vehicles increased by 28.7% y/y, although the increase is from a very low base.

The ongoing two-way battle between for supremacy in the Namibian commercial and passenger vehicle market between Toyota and Volkswagen rolls on. Volkswagen regained top spot in the year-to-date sale of passenger vehicles with 30% of the market share. Toyota’s market share of passenger vehicles over the same period is 28%. Kia and Hyundai make up 8.5% and 5.7% of the market respectively.  

On a year-to-date basis, Toyota remains the preeminent seller of light commercial vehicles with a 55% share of the market. This is more than four times the share of their nearest competitor, Ford at 13%. Hino and Mercedes each make up 32% of the total medium commercial vehicles sales on a year-to-date basis. The heavy and extra heavy commercial vehicle market is the most competitive of the vehicle markets, with no one seller amassing more than a quarter of total market share.

The Bottom Line  

July’s new vehicle sales figures bear no marked difference to June’s. 2021 remains on track to be the second worst year for vehicle sales in the past decade. By this time in 2019, itself a below par year for vehicle sales over the last 10 years, 6,227 new vehicles were sold, in 2021 that number is only 5,693. Naturally this is an improvement on 2020’s sales figures (4,186 total) but as noted earlier, that is not difficult to accomplish. More tellingly, sales figures for new passenger and commercial vehicles are below pre-pandemic averages, showing that both individual and business spending remains depressed. As vehicle sales and most other high-frequency data is indicating, the economic recovery has a long way yet to go.