Category Archives: Economic Research

Economic Research

New Vehicle Sales – March 2020

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A total of 759 new vehicles were sold in March, representing a 5.0% m/m decrease from the 799 vehicles sold in February, and a 18.9% y/y decrease from the 936 new vehicles sold in March 2019. Year-to-date, 2,229 vehicles have been sold of which 956 were passenger vehicles, 1,110 light commercial vehicles, and 163 medium and heavy commercial vehicles. This is a 5.8% decline in the total number of new vehicles sold during the first quarter of 2020 when compared to 2019. On a twelve-month cumulative basis, vehicle sales continued to wane with a total of 10,265 new vehicles sold as at March 2020, down 9.0% from the 11,285 sold over the comparable period a year ago, and the lowest since April 2010.

318 New passenger vehicles were sold during March, declining by 8.4% m/m. On a year-on-year basis new passenger vehicle sales were 24.6% lower than the 422 units sold in March 2019. Year-to-date passenger vehicle sales rose to 956, reflecting lower annual sales than the preceding 15 years, and a 14.5% decline from the first quarter of 2019.

A total of 441 new commercial vehicles were sold in March, representing a contraction of 2.4% m/m and 14.2% y/y. Of the 441 commercial vehicles sold in March 389 were classified as light, 23 as medium and 29 as heavy. On an annual basis, light commercial sales fell by 19.5% y/y, medium commercial sales climbed 53.3% y/y and heavy commercial vehicle sales increased by 81.3% y/y. The increases in medium and heavy commercial sales are however from a low base. On a twelve-month cumulative basis light commercial vehicle sales have declined 13.0% y/y, medium commercial vehicles rose by 17.1% y/y, and heavy commercial vehicles rose 25.6% y/y. These high growth figures are again from a very low base.

Toyota continued to lead the market for new passenger vehicle sales in March, claiming 30.9% of the market, followed closely by Volkswagen with a 29.0% share. They were followed by Kia and Hyundai at 7.2% and 5.8% of the market respectively, while the rest of the passenger vehicle market was shared by several other competitors.

Toyota also remained the leader in the light commercial vehicle space with a 57.6% market share, with Nissan in second place with a 16.3% market share. Ford and Isuzu claimed 8.7% and 5.6%, respectively, of the number of light commercial vehicles sold thus far in 2020. Mercedes leads the medium commercial vehicle segment with 31.0% of sales year-to-date. Mercedes was also number one in the heavy and extra-heavy commercial vehicle segment with 21.9% of the market share year-to-date.

The Bottom Line

March new vehicle sales generally have a seasonal effect of being slightly higher due to it being the end of the tax year. This was however not the case in 2020 with new vehicle sales were depressed in March, declining by 9.0% y/y on a twelve-month cumulative basis, to to 10,265 vehicles. It should be noted that the data precedes the 21-day lockdown of the two most economically significant regions and as a result, vehicle sales are expected to be significantly lower in April. Used vehicle sales will similarly be affected by this. Both consumers and businesses are expected to be under considerable financial stress in the short- to medium term as a result of the lockdown, and we thus expect vehicle sales to remain at lower levels in the months to come.

PSCE – February 2020

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Overall

Private sector credit (PSCE) decreased by N$264.0 million or 0.25% m/m in February, bringing the cumulative credit outstanding to N$103.8 billion. On a year-on-year basis, private sector credit extension increased by 5.87% in February, compared to 6.96% y/y in January. On a rolling 12-month basis, N$5.76 billion worth of credit was extended to the private sector. Of this cumulative issuance, individuals took up credit worth N$3.73 billion, while N$2.23 billion was issued to corporates. The non-resident private sector decreased their borrowings by N$204.0 million.

Credit Extension to Individuals

Credit extended to individuals increased by 6.7% y/y in February, growing at a slightly slower pace than the 7.0% y/y increase recorded in January. On a monthly basis, household credit grew by 0.5% following the decrease of 4.4% m/m recorded in January. Household demand for overdraft facilities was relatively strong in February, increasing by 2.7% m/m and 11.4% y/y, compared to the 18.1% m/m decline and 9.2% y/y increase seen in January. The value of mortgage loans extended to individuals fell by 0.1% m/m, but rose 5.7% y/y. Installment credit remained depressed, increasing by 0.9% m/m, but contracting by 5.1% y/y. 

Credit Extension to Corporates

Credit extension to corporates contracted by 1.2% m/m after increasing by 7.3% m/m in January. On an annual basis, however, credit extension to corporates increased by 5.4% y/y in February, compared to the 7.5% y/y growth registered in January. The Bank of Namibia (BoN) attributed the monthly contraction to repayments made by corporates, especially those operating in the services, construction and fishing sectors. Overdraft facilities extended to corporates declined by 0.5% m/m and 3.9% y/y. Mortgage loans to corporates decreased by 1.9% m/m, but rose 1.4% y/y. Installment credit extended to corporates, which has been contracting since February 2017 on an annual basis, remained depressed, contracting by 5.1% m/m and 7.2% y/y in February. Leasing transactions to corporates fell by 4.9% m/m and 7.2% y/y.

Banking Sector Liquidity 

The overall liquidity position of commercial banks improved somewhat during February, increasing by N$278.2 million to reach an average of N$325.9 million. Commercial banks continued to utilize the BoN’s repo facility, as the overall liquidity position remained low. The balance of repo’s outstanding decreased from N$2.04 billion at the start of February to N$974.1 million at the end of the month.

Reserves and Money Supply

As per the BoN’s latest money statistics release, broad money supply fell by N$816.1 million in February. Foreign reserve balances increased by N$1.21 billion to N$32.7 billion in February. According to the BoN, the increase mainly as a result of exchange rate fluctuations coupled with lower government payments during the month.

Outlook

Overall PSCE growth moderated for the first time in four months on a year-on-year basis, increasing by 5.87%. Rolling 12-month private sector credit issuance is down 10.0% from the N$6.39 billion issuance observed at the end of February 2019, with individuals taking up most (64.7%) of the credit extended over the past 12 months.

The above data precedes the economic impact of the coronavirus pandemic which we expect to have a detrimental impact on PSCE going forward. While the BoN’s MPC’s unexpected ‘early’ repo rate cut in March is likely to provide relief to heavily indebted consumers, we don’t anticipate that the more accommodative monetary policy will be effective in stimulating economic activity to the extent that it eliminates the impact of the external shock to the economy.

Given the 21-day lockdown of the two most economically significant regions announced by the Namibian government, we expect both consumers and businesses to increase their uptake of short-term debt going forward as a means of making ends meet, as most economic activity (and subsequently income) grinds to a halt while expenditure will still need to be covered.