Category Archives: Economic Research

Economic Research

Building Plans – November 2020

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The City of Windhoek approved a total of 271 building plans worth N$237.2 million in November, 35 fewer than in October. In value terms, approvals fell by N$90.5 million to N$237.2 million in November from N$327.7 million worth of approvals in October. A total of 61 building plans worth N$40.4 million were completed during the month, a decline of 76.3% y/y in number and 82.8% y/y in value of completions. Year-to-date, N$1.78 billion worth of building plans have been approved, 2.7% lower than the corresponding period in 2019. On a twelve-month cumulative basis, 2,258 building plans have been approved worth approximately N$1.94 billion, 2.8% higher in value terms than approvals at the end of November 2019.

The largest portion of building plan approvals in November was made up of additions to properties. 165 additions to properties were approved with a value of N$95.1 million, 11.3% lower in number, but 42.4% more in value terms than in October. Year-to-date 1,517 additions to properties have been approved with a total value of N$673.5 million, a 3.1% y/y decline in number and 9.3% y/y decrease in value. 10 additions worth N$5.5 million were completed during the month. Year-to-date 866 additions have been completed with a combined value of N$444.8 million, down 31.2% y/y in number and 34.8% y/y in value terms.

New residential units accounted for 104 of the total 271 approvals registered in November, an 9.6% m/m decrease compared to the 115 residential units approved in October. In value terms, N$132.0 million worth of residential units were approved during the month, 45.6% less than the N$242.9 million worth of residential approvals in October. Year-to-date 610 residential units have been approved worth N$798.2 million, 278 units more than in the corresponding period in 2019 and up N$280.4 million in value terms. 51 Residential units valued at N$34.9 million were completed in November, bringing the year-to-date number to 690, up 147.3% y/y. In monetary terms, this is an increase of 170.4% y/y.

Only 2 new commercial units, valued at N$10.0 million, were approved in November, bringing the year-to-date number of approvals to 40, worth a total of N$305.0 million. On a rolling 12-month perspective, the number of commercial and industrial approvals have slowed to 43 units worth N$315.6 million as at November, compared to the 47 approved units worth N$566.1 million over the corresponding period a year ago. No commercial and industrial units were completed in November.

On a rolling 12-month basis, the number of building plan approvals have been ticking up steadily since June, although the growth has been from a relatively low base. In monetary terms, these approvals are up only 2.8% y/y. Additions to properties have made up 70.0% of the year-to-date total number of approvals, but only 37.9% of the total value of approvals, indicating that the planned construction activity will mostly consist of smaller building projects. The cumulative value of plans approved is still trending downward from a longer-term perspective, as the graph above indicates.

NCPI – November 2020

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The Namibian annual inflation rate moderated slightly to 2.2% y/y in November, following the 2.3% y/y increase in prices recorded in October. Prices in the overall NCPI basket increased by 0.1% m/m, as inflationary pressure remains subdued. Overall, prices in five of the twelve basket categories rose at a faster annual rate than in October, while four categories recorded slower rates of inflation and two categories posted steady inflation. Prices for goods increased by 3.3% y/y while prices for services increased by 0.8% y/y.

As it has been the case since April this year, food & non-alcoholic beverages were the largest contributors to annual inflation in November, accounting for 1.2 percentage points of the total 2.2% annual inflation rate. Prices in this category rose 0.3% m/m and 6.9% y/y. Prices in all thirteen sub-categories recorded increases on a year-on-year basis with the largest increases being observed in the prices of fruits which increased by 16.1% y/y and vegetables which increased by 11.5% y/y. Price increases in oils and fats, and meat products quickened to 11.4% y/y and 10.8% y/y respectively.

Alcoholic beverages and tobacco, the third-largest basket item by weighting, was the second-largest contributor to the annual inflation rate in November, contributing 0.6 percentage points to the total 2.2% annual inflation rate.  The basket item recorded a price increase of 0.2% m/m and 4.6% y/y during the month. Prices for alcoholic beverages increased at a rate of 0.1% m/m and 3.6% y/y, while tobacco prices rose by 0.5% m/m and 9.2% y/y.

The education basket, the basket item with the eighth largest weighting (at only 3.6% of the CPI basket), was the third-largest contributor to the annual inflation rate. Primary and secondary education recorded price increases of 9.3% y/y, while tertiary education prices rose by 5.3% y/y. None of the three subcategories printed price increases on a month-on-month basis.

As expected, inflationary pressure in Namibia remains extremely subdued and the Namibian inflation rate continues to trend lower than neighbouring South Africa’s October figure (latest available release) of 3.3%. IJG’s inflation model forecasts an average inflation rate of 2.2% y/y in 2020 and 3.2% y/y in 2021. Global oil prices remain one of the larger risks to our inflation forecast. However, the announcement by the Ministry of Mines and Energy at the beginning of December to cut the petrol and diesel prices by 30 cents and 20 cents per litre respectively, means that the lower transport inflation will likely lead to an even lower inflation print for December. It is also unlikely that we will see lower rental prices in the next 12 months as many consumers remain under financial pressure. With these being the larger categories of the inflation basket, we do not foresee any sudden increases in Namibian inflation in the short-term.

New Vehicle Sales – November 2020

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698 new vehicles were sold in November, representing a 24.9% m/m increase from the 559 vehicles sold in October, but a 20.2% y/y decline from the 875 new vehicles sold in November 2019. Year-to-date 6,913 vehicles have been sold of which 2,881 were passenger vehicles, 3,554 were light commercial vehicles, and 478 were medium and heavy commercial vehicles. On a twelve-month cumulative basis, a total of 7,627 new vehicles were sold as at 30 November, representing a contraction of 26.8% from the 10,417 sold over the comparable period a year ago.

A total of 339 new passenger vehicles were sold during November, an increase of 14.5% m/m, but a decrease of 2.3% y/y. Year-to-date passenger vehicle sales rose to 2,881, down 32.0% compared to the number of new passenger vehicles sold by November last year. On a rolling 12-month basis, passenger vehicle sales are down 29.7% y/y at 3,195 units, the lowest level since April 2004, highlighting the severity of the slowdown in sales.

Commercial vehicles sales reflect a similar picture. 359 New commercial vehicles were sold in November, representing a 36.5% m/m increase, but a year-on-year contraction of 32.0%. 321 light commercial vehicles, 9 medium commercial vehicles, and 29 heavy and extra heavy commercial vehicles were sold during the month. On a twelve-month cumulative basis, light commercial vehicle sales dropped 24.5% y/y, medium commercial vehicle sales fell 29.7% y/y, and heavy commercial vehicle sales contracted by 22.3% y/y, with all measures remaining on a downward trajectory on an annual basis.

Toyota remains the leader in terms of year-to-date market share of new passenger vehicles sold with 28.9% of the market, followed closely by Volkswagen with 25.6%. The two top brands maintained their large gap over the rest of the market with Kia and Hyundai following with 6.7% and 5.8% of the market respectively. The only other manufacturer that managed to breach the 5% market share mark was Mercedes-Benz with 5.2% of the market leaving the remaining 27.7% of the market to other brands.

Toyota also remains the leader in the light commercial vehicle space with a dominant 55.9% market share. Nissan and Ford were the only other manufacturers to breach the 10% market share level with 12.7% and 12.2% of the market respectively. Mercedes leads the medium commercial vehicle segment with 32.1% of the market. Scania remained number one in the competitive heavy and extra-heavy commercial vehicle segment with 22.6% of the market share year-to-date, followed closely by Volvo Trucks and Mercedes with 21.3% and 17.9% of the market respectively.

The Bottom Line

Black Friday specials and the recent introduction of 72-month vehicle loans could likely have been the cause for the month-on-month uptick in new vehicle sales in November, however the general trend in new vehicle sales remains negative as every sector recorded lower sales than during the same month last year. The fact that the 12-month cumulative figure is hovering around levels last seen in 2005 is a consequence of the recessionary environment we find ourselves in. Eroded consumer and business confidence, coupled with government’s commitment to fiscal consolidation as well as a halt in foreign direct investment brought on by poor policy guidance means that domestic economic growth (and by extension new vehicle sales) are expected to remain muted for the foreseeable future.