Category Archives: Economic Research

Economic Research

New Vehicle Sales – January 2020

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A total of 671 new vehicles were sold in January, which represents 6.0% m/m decrease from the 714 vehicles sold in December, and a drop of 1.0% from the 678 new vehicles sold in January 2019. On a twelve-month cumulative basis, a total of 10,394 new vehicles were sold as at January 2020, representing a contraction of 11.4% from the 11,733 sold over the same period a year ago. 2020 is thus off to sluggish start as illustrated by the lowest monthly new vehicles sales number since May 2009.

291 new passenger vehicles were sold during January, a contraction of 7.3% m/m from the 314 passenger vehicles sold in December, and a decline of 14.9% y/y from the 342 new passenger vehicles sold in January 2019. On a rolling 12-month basis, new passenger vehicle sales fell 1.1% m/m and 10.6% y/y at the end of January, and were down 54.2% from the peak in April 2015.

Commercial vehicle sales declined to 380 units in January, representing a contraction of 5.0% m/m, but an increase of 13.1% y/y. During the month 335 light commercial vehicles, 14 medium commercial vehicles, and 31 heavy commercial vehicles were sold. On a year-on-year basis, light commercial sales have increased by 11.3%, medium commercial vehicles were flat, and heavy and extra heavy vehicle sales rose 47.6% y/y. On a twelve-month cumulative basis, light commercial vehicle sales have declined by 14.9% y/y, medium commercial vehicles rose by 9.0% y/y, and heavy commercial vehicles sales rose 17.6% y/y.

Volkswagen started the year off with a 32.6% market share of new passenger vehicles sold, followed by Toyota with a 21.3% market share. They were followed by Kia and Hyundai with 8.9% and 7.9% of the market respectively, while the rest of the passenger vehicle market was shared by several other competitors.

Toyota meanwhile started the year off with a solid grip on the light commercial vehicle market with a 57.6% market share, with Nissan in second place with a 15.5% market share. Ford and Volkswagen claimed 9.6% and 5.1% of the number of new light commercial vehicles sold during the month, respectively. Mercedes lead the medium commercial vehicle category with 42.9% of sales, while Volvo was number one in the heavy and extra-heavy commercial vehicle segment with 25.8% of the market share during the month.

The Bottom Line

Cumulative new vehicle sales fell to the lowest level in ten years on a rolling 12-month basis. This is a consequence of the incessant recessionary environment we find ourselves in, which is characterised by depressed business and consumer confidence, as well as lower government spending. The low sales figures show that both consumers and businesses continue to face economic hardship, with many preferring to hold on to their existing vehicles for longer, or opting to buy second-hand vehicles instead. The prospects for new vehicle sales in 2020 are likely to remain dim as economic conditions are expected to remain difficult for the rest of the year.

Building Plans – December 2019

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A total of 91 building plans were approved by the City of Windhoek in December, which is a 51.1% m/m decline from the 186 plans approved in November. In value terms, however, approvals increased by 34.6% m/m to register N$166.4 million worth of approvals in December compared to N$123.6 million in November. A total of 45 buildings with a total value of N$36.4 million were completed during December, representing declines of 82.5% m/m and 84.5% m/m in the number and value of completions, respectively. A total of 2,032 building plans were approved in 2019, 86 fewer than in 2018. However, in value terms approvals increased by 8.3% in 2019, rising to N$1.99 billion from N$1.84 billion in 2018.

Additions to properties once again made up the majority of building plans approved in 2019. Of the 2,032 building plans approved in 2018, additions accounted for 1,630 of those approvals, 35 more than in 2018. In value terms however, approvals of additions for the year declined by N$151.2 million or 16.3% y/y. The value of additions approved has been contracting for the past four years, with the 2019 decline of 16.3% following the 13.5% contraction recorded in 2018. 65 additions were approved in December, 100 fewer than in November and 62.1% lower in value terms at N$32.8 million. During the year, 1,275 additions have been completed to a value of N$689.5 million, a drop of 43.9% y/y in number and 8.1% y/y in value.

New residential units were the second largest contributor to the total number of building plans approved with 355 approvals registered in 2019, 125 less than in 2018. In value terms new residential units approved increased from N$532.2 million in 2018 to N$640.8 million in 2019. On a month-on-month basis, the number of new residential approvals increased by 43.8% to 23 in December, while the value of approvals increased by 338.4% to N$123.0 million. This increase in value is mostly due to a single large residential approval of N$77.0 million in Khomasdal. 29 Residential units valued at N$29.5 million were completed in December, bringing 2019’s total number to 308, up 280.2% y/y, and value to N$409.5 million, up 290.8% y/y.

A total of 47 commercial and industrial units were approved in 2019 compared to the 43 approved in 2018. In value terms, commercial and industrial approvals rose by N$195.3 million or 51.4% for the year in 2019 from the N$380.3 million reported in 2018. On a month-on-month basis, a total of three commercial and industrial projects worth N$10.65 million were approved in December, representing a 40.0% m/m reduction in terms of number, but an increase of 16.4% m/m in terms of value. No commercial and industrial buildings were completed in December, leaving 2019’s number of completed buildings in this category unchanged at 29, an 81.3% y/y increase. In value terms, N$185.5 million worth of commercial and industrial units were completed in 2018, representing an increase of 249.9% y/y.

The number of building plans approved in 2019 declined by 4.1% compared to 2018 and the cumulative number of plans is down 40.3% from its peak in 2013. Although there has been an 8.3% y/y increase in the cumulative value of approvals to N$1.99 billion in 2019, the cumulative value of approvals is still down 23.6% 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 value of plans completed has however recovered more significantly during 2019 as can be seen in the below figure.

PSCE – December 2019

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Overall

Private sector credit (PSCE) increased by N$1.24 billion or 1.2% m/m in December, bringing the cumulative credit outstanding at the end of 2019 to N$103.7 billion. On a year-on-year basis, private sector credit increased by 6.9% in December, increasing at a quicker rate than the 5.9% recorded in November. From a rolling 12-month basis, N$6.7 billion worth of credit was extended to the private sector, compared to the previous year, the rolling 12-month issuance is down 1.4% from the N$6.8 billion issuance observed by the end of December 2018. Of this cumulative issuance, individuals took up the lion’s share of credit, amassing N$4.1 billion worth of debt while N$2.8 billion was extended to businesses. The non-resident private sector decreased their borrowings by N$170 million.

Credit Extension to Individuals

Credit extended to individuals increased by 7.2% y/y in December, compared to 6.6% y/y recorded in November. On a monthly basis, household credit increased by 1.2%, double the pace of the 0.6% growth registered in November. Most of this growth stemmed from an increase in ‘Other loans and advances’ of 5.8% m/m and 32.0% y/y in December. This relatively quick pace can likely be explained by consumers making use of credit cards and payday loans to purchase gifts and pay for travel expenses over the holiday period. Installment credit continued to contract, by 0.1% m/m and 6.0% y/y. Mortgage loans extended to individuals grew by 0.7% m/m and 5.9% y/y, compared to 0.2% m/m and 5.7% y/y in November.

Credit Extension to Corporates

Credit extension to corporates grew by 1.1% m/m and 7.1% y/y in December, following a slow increase of 0.4% m/m and 5.7% in November. On a rolling 12-month basis N$2.76 billion was extended to corporates in 2019, an increase of 17.3% y/y from the N$2.35 billion that was extended to corporates in 2018.  Installment credit extended to corporates, which has been contracting on an annual basis since February 2017 remained depressed, contracting by 0.9% m/m and 4.1% y/y in December. Leasing transactions to corporations grew by 1.1 m/m, but declined by 31.7% y/y. Overdraft facilities extended to corporates increased by 3.0% m/m and 1.9% y/y.

Banking Sector Liquidity

The overall liquidity position of commercial banks deteriorated significantly during December, declining by N$858.3 million to reach an average of N$982.7 million. Bank of Namibia attributed the decline in liquidity to corporate tax payments during December as well as a high uptake of treasury bills and other liquid assets by commercial banks. The relatively low liquidity position has prompted commercial banks to utilize the BoN’s repo facility, with the balance of repo’s outstanding increasing from N$284.7 million at the start of December to N$1.75 billion at the end of the month.

Reserves and Money Supply

As per the BoN’s latest money statistics release, broad money supply rose by N$11.0 billion or 10.5% y/y in December, following a 10.6% y/y increase in November. Foreign reserve balances fell by 3.0% m/m to N$28.8 billion in December. The BoN again stated that the decline was due to the net purchases of South African Rands by commercial banks for import payments coupled with increasing government foreign payments during the month under review.

Outlook

Private sector credit growth figures for 2019 remained largely in the same 6-7% y/y range as in 2018. The rolling 12-month issuance of N$6.7 billion is however down 1.4% from the N$6.8 billion issuance recorded at the end of 2018.

The SARB’s MPC surprised markets with a unanimous decision to cut the repo rate by 25-basis points to 6.25% at its meeting in January. We expect the BoN’s MPC to follow the SARB’s decision at its next meeting later in February, as Namibian inflation figures are trending at very low levels and economic growth is stagnating. Policy changes (and policy certainty) to attract foreign investment will at this moment likely be more effective to revive economic activity than more accommodative monetary policy, although a 25-basis point rate cut should provide some relief to heavily indebted consumers.