Category Archives: Economic Research

Economic Research

New Vehicle Sales – May 2021

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May observed 792 new vehicle sales, an increase of 4.9% m/m from the 755 vehicles sold in April. As at 31 May, 4,052 new vehicles were sold for the year, of which 1,849 were passenger vehicles, 1,887 light commercial vehicles, and 316 medium and heavy commercial vehicles. By comparison, the first five months of 2020 saw 2,750 new vehicles sold. On a twelve-month cumulative basis, a total of 8,914 new vehicles were sold as at May 2021, representing a 1.1% expansion from the 8,820 sold over the comparable period a year ago, though 22.9% lower than at May 2019.

A total of 360 new passenger vehicles were sold during May, a slight uptick of 0.6% from the 358 passenger vehicles sold in April. Year-to-date, passenger vehicle sales rose to 1,849, 56.0% higher than during the same period in 2020, but 11.7% lower than at May 2019. On a rolling 12-month basis, passenger vehicle sales rose to 3,874, 6.0% higher than in May 2020, and 23.2% lower than in May 2019.

A total of 432 new commercial vehicles were sold in May, representing an increase of 8.8% m/m. 371 Light commercial vehicles, 15 medium commercial vehicles, and 46 heavy and extra heavy commercial vehicles were sold during the month. Light commercial vehicle sales rose 15.2% m/m, medium commercial vehicle sales posted a second consecutive month of declines, dropping 25.0% m/m, and heavy commercial vehicle sales decreased by 16.4% m/m. On a twelve-month cumulative basis, light commercial vehicle sales have declined by 2.1% y/y, medium commercial vehicles fell by 30.2% y/y, and heavy commercial vehicles entered positive territories for the first time since April, last year, increasing by 10.8% y/y.

Although Volkswagen continues to lead in the new passenger vehicle sales segment, its market share declined from 34.7% last month to 31.2% of sales year-to-date, followed by Toyota whose market share rose to 25.3% from 24.9% a month ago. Kia and Suzuki continued to trail, with 8.7% and 6.2% of the market, respectively, leaving the remaining 18.1% of the market to other brands.

On a year-to-date basis, Toyota continued as the leader in the light commercial vehicle space with a 54.0% market share, Nissan maintained second place with a 13.5% market share. Ford and Isuzu claimed 13.1% and 5.8%, respectively, of the number of light commercial vehicles sold thus far in 2021. Mercedes surpassed Hino as the leader in the medium commercial vehicle segment with 33.3% of sales year-to-date. Scania remained number one in the heavy and extra-heavy commercial vehicle segment with 23.8% of the market share year-to-date.

The Bottom Line

The number of total new vehicle sales has ticked up every month this year on a year-on-year basis, all but confirming an ongoing recovery in vehicle sales. This is further evidenced by average monthly vehicle sales for 2021 standing at 810, compared to the 634 in 2020. Furthermore, the cumulative 12-month new passenger vehicle sales have been on the rise on a month-on-month basis for 6 consecutive months, indicating improvements in consumer confidence. Despite the glimmers of recovery, total vehicle sales still lag the pre-Covid-19 era, when an average of 868 sales were made per month in 2019. Interestingly, monthly passenger vehicle sales for 2021 have averaged 370, slightly below the average of 380 recorded in 2019. This indicates that it is the commercial sector that has been impacted the hardest by the pandemic and continues to struggle. This year’s monthly average commercial vehicle sales are 9.6% lower than an already low base of 488 in 2019, which indicates muted activity in Namibia’s commercial sector, as few new businesses enter the scene, while existing businesses rely on their existing vehicles instead of expanding their fleet.

PSCE – April 2021

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Overall

Private sector credit (PSCE) fell by N$41.3 million or 0.04% m/m in April, bringing the cumulative credit outstanding to N$105.2 billion. On a year-on-year basis, private sector credit grew by 2.74% in April, compared to the 1.55% y/y growth recorded in March. On a rolling 12-month basis, N$2.81 billion worth of credit was extended to the private sector. N$2.30 billion worth of credit has been extended to individuals on a 12-month cumulative basis, while N$880.0 million was issued to corporates. The non-resident private sector decreased their borrowings by N$369.0 million.

Credit Extension to Individuals

Credit extended to individuals increased by 3.91% y/y in April, compared to the increase of 2.57% y/y recorded in March. On a monthly basis, household credit grew by 0.6%, following the increase of 0.4% m/m recorded in March. Mortgage demand by individuals remained relatively strong, increasing by 0.6% m/m and 5.2% y/y. Instalment credit increased by 0.7% m/m, and by 0.5% y/y, making April the first month since July 2019 to record an uptick on a year-on-year basis. Overdraft facilities extended to individuals have increased by 1.8% m/m and 4.2% y/y. Other loans and advances (OLA) rose by 0.8% y/y and 0.2% m/m, displaying a decline in demand amongst individuals over the last 16 months, from the 65.6% y/y increase in January 2020.

Credit Extension to Corporates

Credit extension to corporates contracted for a third consecutive month, on a month-on-month basis, declining by 0.8% m/m, following the 1.1% m/m contraction recorded in March. On an annual basis, however, credit extension to corporates recorded low growth of 2.1% y/y in April, compared to the 1.2% y/y growth registered in March. Mortgage loans to corporates expanded by 0.4% m/m, other loans and advances (OLA) contracted 2.2% and overdrafts rose 0.9% m/m. On a year-on-year basis, mortgage loans contracted 2.0%, while OLA and overdrafts increased 1.3% and 13.5% respectively.

Banking Sector Liquidity

The overall liquidity position of commercial banks improved during April, increasing by N$376.0 million to reach an average of N$3.0 billion. According to the BoN, the improvement in the liquidity position was largely due to higher inflows of funds by pension funds in adherence to domestic asset requirements as well as proceeds from minerals sales during the period under review. The outstanding balance of repo’s stood at zero for thirteen out of the twenty business days in April and rose to N$591.3 million in the last week of the month.

Reserves and Money Supply

As per the BoN’s latest money statistics release, broad money supply rose by N$3.8 billion or 3.1% y/y in April, compared to the 9.4% y/y increase recorded in March. Foreign reserve balances rose by N$6.5 billion to N$41.2 billion in April. The BoN ascribed the rise in official reserve stock to inflows in the form of the IMF Rapid Financing Instrument (RFI), SACU receipts, as well as foreign currency purchases by the BoN during the period under review.

Outlook

Overall, PSCE growth remains subdued, decreasing by N$41.4 million or 0.04% m/m in April, resulting in a second consecutive month of negative growth. The rolling 12-month private sector credit issuance is down 15.5% from the N$3.32 billion cumulative issuances as at the end of April 2020, with individuals taking up most (81.8%) of the credit extended over the past 12 months.

We expect the Bank of Namibia to leave interest rates unchanged at their historically low levels at its April MPC meeting, which will continue to accommodate indebted consumers and corporates. However, the lack of confidence in the economy is evidenced by corporates exploiting the low rates to de-lever their balance sheets rather than using the opportunity to expand their financial positions. As a result, the contracted interest rates alone are unlikely to drive PSCE growth. The lacklustre PSCE statistics reflect the nation’s poor recent economic performance of late, as it reflects both lower consumption spending as well as lower investments by corporates, two vital components of GDP. With few drivers for economic growth, a recovery in credit extension is unlikely in the short term.

Building Plans – April 2021

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The City of Windhoek approved a total of 250 building plans in April, representing a 9.6% m/m increase from the 228 building plans approved in March. In monetary terms, the approvals were valued at N$234.1 million, a 48.1% m/m increase. 199 buildings with a value of N$93.12 million were completed during April, a 1.2% m/m decrease in value terms. Year-to-date building approvals are 65.9% and 15.0% 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 44.7% y/y to 495, while the value of these completions rose marginally by 8.3% y/y from N$276.3 million in 2020 to N$299.4 million in 2021. On a twelve-month cumulative basis, 2,608 buildings with the value of N$1.94 billion were approved, an increase of 39.8% y/y in number, and 7.2% y/y in value.

In terms of the number of approvals, additions to properties once again made up the majority of approvals. In April, 166 additions to properties were approved with a value of N$93.0 million while 168 additions worth N$60.0 million were completed during the month. The number of approvals has been ticking up steadily since January. These approvals are however of lower relative value.

New residential units were the second largest contributor to the total number of building plans approved in April, and the largest contributor in value terms. 80 new units worth N$129.5 million were rubber-stamped in April, representing a 49.1% m/m increase from the N$86.9 million worth of approvals in March. On a 12-month cumulative basis, residential units recorded a 108.3% y/y increase in value. 31 new residential units worth N$33.1 million were completed during the month, representing a decrease in value of 36.2% m/m.

Four new commercial units, valued at N$11.6 million, were approved in April, translating to a 65.8% m/m increase. Year-to-date, there have been twelve commercial building approvals valued at N$26.1 million, which is 50.0% lower in number terms and an 89.4% 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 29 units worth N$110.3 million as at April, compared to the 57 approved units worth N$654.2 million over the corresponding period a year ago. No commercial and industrial units were completed in April.

The 12-month cumulative number of building plans approved increased by 39.8% y/y in April. A total of 2,608 building plans to the value of N$1.94 billion were approved over the last 12 months, representing an increase in value of 7.2% y/y. Additions to properties have made up 65.0% of the cumulative number of approvals, but only 40.2% of the total value of approvals. Completed building plans increased 16.3% y/y in value terms to N$1.56 billion on a 12-month cumulative basis in April. Although residential building plan approvals have gained momentum, the commercial sector remains woeful, contributing a mere 2.0% of the N$299.4 million total building completions so far in 2021. Furthermore, with only 4.1% of building approvals attributable to the commercial sector, this trend seems unlikely to change in the near term. Residential approvals continue to contribute the most in value terms, with 56.3% of approvals and 64.0% of completions, overall indicating a lively housing market.