Category Archives: Economic Research

Economic Research

NCPI – June 2021

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The annual Namibian inflation rate accelerated to 4.1% in June, following the 3.8% y/y uptick in prices in May. The prices in the overall NCPI basket increased by 0.5% m/m. On a year-on-year basis, overall prices in three of the twelve basket categories rose at a quicker rate in June than in May, while five categories experienced slower rates of inflation and four categories posted steady inflation. Prices for goods increased 5.5% y/y while prices for services accelerated to 2.1% y/y in June, compared to the 1.3% y/y increase recorded in May.

The food and transport categories were the largest contributors to annual inflation, making up 1.3 percentage points each of the annual inflation rate and together were the main drivers of inflation in June. Transport prices rose 2.5% m/m and 9.6% y/y. The Road User Levy increased by seven cents per litre in June, contributing to higher fuel prices, which have already been on the rise from the low base a year ago. The Rand also weakened against the US Dollar during June, which further elevated fuel prices.

Food prices rose 0.3% m/m and 7.3% y/y, with prices in all thirteen sub-categories increasing on an annual basis. Namibia is relatively dependant on South Africa for food imports, which would have experienced a spillover effect from the increased transport costs, as well as near all-time high fuel costs in South Africa. The largest increases were witnessed in the oils and fats sub-category, which recorded a 16.7% y/y increase, followed by meat, which posted a 16.0% y/y increase in prices and vegetables, which rose 6.8% y/y. 

Alcoholic beverages and tobacco prices contributed 0.3 points to the annual inflation rate, increasing by 0.4% m/m and 2.5% y/y in June. The miscellaneous category also contributed 0.3 points to the annual inflation rate, although decreasing by 0.2% m/m, the category rose posted a price increase of 6.4% y/y.

The 4.1% y/y increase in annual inflation is at the upper-end of IJG’s inflation forecast for the year, as we expect inflation to average 3.8% y/y in both 2021 and 2022. Rising inflation rates have also been witnessed recently in South Africa and, as such, the South African Reserve Bank imposing rate hikes this year is not an impossibility, however, monetary policy is expected to remain accommodative. The Bank of Namibia is expected to follow suit to whichever strategy the SARB pursues. Overall, we expect the annual inflation rate to remain near the mid-point of the SARB’s inflation range for the rest of the year.

New Vehicle Sales – June 2021

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843 new vehicles were sold in June, an increase of 6.4% m/m from the 790 vehicles sold in May. The first half of 2021 has observed a total of 4,893 total vehicle sales, of which 2,277 were passenger vehicles, 2,218 light commercial vehicles, and 398 medium and heavy commercial vehicles. By comparison, the first half of 2020 saw 3,516 new vehicles sold. On a twelve-month cumulative basis, a total of 8,991 new vehicles were sold as at June 2021, representing a 4.4% expansion from the 8,609 sold over the comparable period a year ago.

A total of 430 new passenger vehicles were sold during June, a 20.1% increase from the 358 passenger vehicles sold in May. Year-to-date, 2,277 passenger vehicles have been sold, which translates to a 48.9% increase from the same period in 2020. On a rolling 12-month basis, passenger vehicle sales rose to 3,958, 9.3% higher than in June 2020.

A total of 413 new commercial vehicles were sold in June, representing a decline of 4.4% m/m. 3,311 Light commercial vehicles, 19 medium commercial vehicles, and 63 heavy and extra heavy commercial vehicles were sold during the month. Light commercial vehicle sales dropped 10.8% m/m, medium commercial vehicle sales rose 26.7% m/m, and heavy commercial vehicle sales increased by 37.0% m/m. On a twelve-month cumulative basis, light commercial vehicle sales have declined by 0.3% y/y, medium commercial vehicles fell by 21.8% y/y, and heavy commercial vehicles increased by 27.1% y/y, although the increase is from a very low base.

Toyota surpassed Volkswagen in terms of year-to-date market share of new passenger vehicles sold, recording a 29.0% market share. Volkswagen dropped to second place with a 28.3% market share, compared to the 31.2% share in May. Kia and Hyundai followed, with 8.6% and 5.8% of the market, respectively, leaving the remaining 28.3% of the market to other brands.

On a year-to-date basis, Toyota maintained its dominance in the light commercial vehicle space with a 53.8% market share, Ford climbed to second place with 13.5% of the market, followed by Nissan, with a market share of 13.4%. Mercedes leads the medium commercial vehicle segment with 32.0% of sales year-to-date. Scania remained number one in the heavy and extra-heavy commercial vehicle segment with 25.5% of the market share year-to-date.

The Bottom Line

June was a respectable month for new vehicle sales, despite a raging third wave of Covid-19 infections in the country, coupled with the introduction of new lockdown restrictions. An average of 379 new passenger vehicles were sold per month in the first half of 2021, which is well above the average of 254 in the comparable period of 2020, but still trails slightly below the average of 411 in the first 6 months of 2019. On the commercial front, total commercial vehicle sales in the first half of the year are 31.7% higher than the comparable period in 2020, with light and medium commercial vehicle sales increasing by 25.6% and 22.0% year-on-year, respectively, while heavy commercial vehicle sales recorded the largest increase of 114.4% y/y. Despite these increases, the commercial sector lags well behind the comparable period’s 10-year pre-Covid-19 average (2010-2019) when total new commercial vehicle sales were 50.1% higher than they are now. Overall, this reflects a long path to recovery in the commercial sector.  

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.