Category Archives: Economic Research

Economic Research

New Vehicle Sales – December 2020

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700 New vehicles were sold in December, 1 more than the upward revised 699 in November, but a 2.0% y/y decrease from the 714 new vehicles sold in December 2019. Year-to-date 7,614 vehicles have been sold, a 26.8% contraction from December last year and the lowest annual vehicle sales figure since 2004. Of the 7,614 new vehicles sold during the year, 3,212 were passenger vehicles, 3,869 were light commercial vehicles, and 533 were medium and heavy commercial vehicles.

A total of 330 new passenger vehicles were sold during December, representing a 2.9% m/m contraction, but a 5.1% y/y increase. 3,212 passenger vehicles were sold in 2020, a 29.4% decline from 2019 and lower annual sales than the preceding 16 years. Passenger vehicle sales made up 42.2% of the total number of new vehicles sold during 2020 broadly in line with the trend over the last 6 years.

370 new commercial vehicles were sold in December, an increase of 3.1% m/m, but a 7.5% y/y contraction. During the month 315 light commercial vehicles, 13 medium commercial vehicles, and 42 heavy commercial vehicles were sold. On a year-on-year basis, light commercial sales have declined by 6.0%, medium commercial vehicles fell 38.1% and heavy and extra heavy vehicles sales contracted 4.5%. On a twelve-month cumulative basis, light commercial vehicle sales dropped 24.2% y/y, medium commercial vehicle sales fell 35.3% y/y and heavy commercial vehicle sales contracted by 25.4%.

Toyota lead the market for new passenger vehicle sales in 2020, claiming 28.6% of the market, followed by Volkswagen with a 25.5% share. They were followed by Kia and Hyundai at 6.8% and 5.8%, respectively. The only other manufacturer that managed to breach the 5% market share mark was Mercedes-Benz with 5.3% of the market, leaving the remaining 27.9% of the market to other brands.

Toyota also remained the leader in the light commercial vehicle space in 2020 with 56.0% market share, with Nissan in second place with a 12.9% market share. Ford and Isuzu claimed 12.3% and 6.7% respectively of the number of new light commercial vehicles sold for the year. Mercedes lead the medium commercial category with 32.0% of sales while Volvo Trucks was number one in the heavy and extra-heavy commercial vehicle segment with 21.6% of the market share during the year.

The Bottom Line

2020 was a dismal year for vehicle sales. The cumulative number of new vehicle sales for the year amounted to 7,614, a decline of 26.8% from the cumulative number of vehicles sold in 2019 and a 66.4% contraction from the peak of 22,664 new vehicle sales recorded in April 2015 on a cumulative 12-month basis. The year-to-date sales graph at the top of this report shows how severely the new vehicle industry was impacted by the lockdown in April. The recovery since then has been slow and overall new vehicle sales have still not returned to the already low levels of 2019. The introduction of the longer-dated 72-month vehicle loans has had a small positive impact on new passenger vehicle sales, but not enough to offset the damage done by lockdowns. With there being few signs that 2021 will see significant economic growth, we expect new vehicle sales to remain under pressure.

Building Plans – December 2020

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A total of 115 building plans were approved by the City of Windhoek in December, which is a 57.6% m/m decline from the 271 building plans approved in November. In value terms, approvals fell by 68.2% m/m to register N$75.4 million worth of approvals in December, compared to N$237.2 million in November. A total of 51 building plans worth N$32.0 million were completed during the month, representing an increase of 13.3% y/y in number, but a decline of 12.0% in value of completions. A total of 2,282 building plans were approved in 2020, 250 more than in 2019. However, in value terms approvals fell by 7.0% in 2020, declining from N$1.99 billion in 2019 to N$1.85 billion in 2020.

Additions to properties once again made up the majority of building plans approved in 2020. Of the 2,282 building plans approved in 2020, additions accounted for 1,601 of these approvals, 29 fewer than in 2019. In value terms, approvals of additions for the year declined by N$78.3 million or 10.1% y/y. The value of additions approved has been contracting for the past five years, with a decline of 10.1% recorded in 2020 following the 16.3% contraction in 2019. 84 additions were approved in December, 81 fewer than in November and 74.9% lower in value terms at N$23.9 million. During the year, 886 additions have been completed to a value of N$454.1 million, a drop of 30.5% y/y in number and 34.1% y/y in value terms.

New residential units were the second largest contributor to the total number of building plans approved with 640 approvals registered in 2020, 285 more than in 2019. In value terms, new residential units approved increased from N$640.8 million in 2019 to N$823.5 million in 2020. On a month-on-month basis, the number of new residential approvals decreased by 71.2% to 30 in December, while the value of approvals declined by 80.9% to N$25.3 million. 30 Residential units valued at N$16.8 million were completed in December, bringing 2020’s total number to 720, up 133.8% y/y, and value to N$1.04 billion, up 155.0% y/y.

A total of 41 commercial and industrial units were approved in 2020 compared to the 47 approved in 2019. In value terms, commercial and industrial approvals fell by N$244.5 million or 42.5% for the year in 2020 from the N$575.6 million reported in 2019. In December, only 1 new commercial unit valued at N$26.2 million was approved, 1 fewer than in November, but a 162.2% m/m increase in terms of value. 1 Commercial and industrial building was completed in December, bringing the year’s total to 12, a 58.6% decline from 2019. In value terms, N$39.7 million worth of commercial and industrial units were completed in 2020, representing a contraction of 78.6% y/y.

The number of building plans approved in 2020 rose by 12.3% compared to 2019, but the cumulative number of plans remains down 32.9% from its peak in 2013. The cumulative value of approvals fell 7.0% y/y to N$1.85 billion in 2020 and is down 29.0% from the peak in 2013 in nominal terms. Building plans approved is a leading indicator of economic activity in the country and the above data implies that the Namibian economy is still showing signs of hardship. The significantly lower commercial building plan approvals in 2020 is another sign of this and indicate that most businesses are not planning on expanding their existing operations.

NCPI – December 2020

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The Namibian annual inflation rate increased marginally to 2.4% y/y in December, following the 2.2% y/y increase in prices recorded in November. Prices in the overall NCPI basket remained steady on a month-on-month basis, an indication of the subdued inflationary pressure currently being experienced. The annual average inflation rate for 2020 was 2.2%, compared to 3.7% in 2019 and 4.3% in 2018. On a year-on-year basis, overall prices in five of the twelve basket categories rose at a quicker rate in December than in November, with four categories recording slower rates of inflation and three categories recorded consistent with the prior month. Prices for goods increased by 3.5% y/y while prices for services increased by 0.9% y/y.

As it has been the case for the majority of the year, the food & non-alcoholic beverages category was the largest contributor to annual inflation in December, accounting for 1.3 percentage points of the total 2.4% annual inflation rate. Price inflation for this category came in at 0.1% m/m and 7.6% y/y, the highest annual figure since February 2017. Prices in all thirteen sub-categories recorded increases on an annual basis with the largest being observed in the prices of fruits which increased by 17.7% y/y and oils and fats which increased by 12.2% y/y.

The alcoholic beverages and tobacco basket item, the third-largest basket item by weighting, was the second-largest contributor to the annual inflation rate in December. The category displayed a price decrease of 0.4% m/m, but an increase of 4.3% y/y. Prices for alcoholic beverages decreased at a rate of 0.5% m/m, but rose 3.2% y/y, while tobacco prices fell by 0.2% m/m, but increased 9.3% y/y.

The education basket recorded inflation of 7.0% y/y, with the cost of pre-primary education growing at a rate of 5.6% y/y, while the primary and secondary education recorded price increases of 9.3% y/y. Tertiary education prices rose by 5.3% y/y. All three subcategories printed no price increases on a month-on-month basis.

The Namibian annual inflation rate trended lower than that of neighbouring South Africa’s during the entire year. Inflationary pressure in Namibia has been particularly low since the outbreak of Covid-19 due to a lack of demand for both goods and services. The almost persistent inclusion of the education basket item, which has the 8th highest weighting, in the top contributors to inflation in 2020 is an indication of how subdued the inflationary pressure is. IJG’s inflation model forecasts an average inflation rate of 3.2% y/y in 2021 and 4.5% in 2022, thus indicating a steady increase in the inflation rate over the next two years. The largest upside risk to this forecast is higher food costs and fuel prices.