New Vehicle Sales – July 2018

New vehicle sales of 1,194 units were recorded in July, with sales falling by 7.0% from the 1,284 new vehicles sold in July 2017. On a month-on-month basis new vehicle sales increased by 5.3% as 60 more vehicles were sold in July than in June. Year-to-date, 7,132 new vehicles have been sold, an 11.4% decrease from the number of sales recorded in the corresponding period of 2017.  Of the 7,132 vehicles sold this year, 3,275 were passenger vehicles, 3,527 were light commercial vehicles, and 330 were medium and heavy commercial vehicles. On a twelve-month cumulative basis, a total of 12,281 new vehicles were sold as at July 2018, a decrease of 13.2% from the 14,147 sold over the comparable period a year ago. Thus on a twelve month cumulative basis new vehicle sales are still declining as the Namibian economy continues to languish.

A total of 607 new passenger vehicles were sold during July, representing an increase of 30.5% m/m and 22.4% y/y. Year-to-date passenger vehicle sales amounted to 3,275, down 7.1% compared to the number sold by July last year. The rolling 12-month vehicles sales figures continue to reflect weakness in the number of passenger vehicles sold, declining 10.3% y/y as at July 2018.

587 Commercial vehicles were sold in July, representing a 12.3% m/m and 25.5% y/y contraction. 525 light commercial vehicles, 31 medium commercial vehicles, and 31 heavy commercial vehicles were sold during the month. On a year-on-year basis, light commercial sales have declined by a hefty 29.2%, medium commercial sales increased 72.2% and heavy and extra heavy sales rose by 10.7%. On a twelve-month cumulative basis, commercial vehicle sales remain depressed with light commercial vehicle sales decreasing by 15.8% y/y, medium commercial vehicle sales remaining flat and heavy commercial vehicle sales dropping by 14.6% y/y. We prefer to look at the twelve-month cumulative figures as they give an indication of the trend in vehicle sales. For the most part this measure of new vehicle sales remains firmly in contractionary territory, with only medium commercial vehicle sales showing some evidence of having reached a turnaround point.

Year-to-date, Toyota and Volkswagen continue to hold their market share in the passenger vehicle market based on the number of new vehicles sold, claiming 37.8% and 27.1% of the market respectively. They were followed by Hyundai at 5.1% and Kia at 4.6%, while the rest of the passenger vehicle market was shared by several competitors.

Toyota also remained the leader in the light commercial vehicle space with a robust 59.8% market share with Nissan in second place with a 14.6% share. Ford and Isuzu claimed 9.2% and 5.4%, respectively, of the number of light commercial vehicles sold so far in 2018. Hino leads the medium commercial vehicle category with 43.5% of sales while Scania remains number one in the heavy and extra-heavy commercial vehicle segment with 32.2% of the market share year to date.

The Bottom Line

The cumulative number of new vehicle sales continued to contract on a 12-month basis, amounting to 12,281 at the end of July. Year-on-year, the 12-month cumulative number of new vehicles sold has contracted by 13.2% from the 14,147 cumulative sales recorded in July 2017. While passenger vehicle sales have picked up on both a monthly and annual basis in July, commercial vehicle sales remain depressed, and overall sales remain well below the figures seen in 2015 and 2016. Low government spending on capital assets, slow economic growth and disposable income growth as well as amendments to the credit agreement act have been identified as the main impediments on new vehicle sales. These factors coupled with a weakening currency and increasing fuel prices make it unlikely that significant recovery in vehicle sales can be expected for the rest of the year.

PSCE – June 2018


Private sector credit extension (PSCE) increased by N$345.0 million or 0.37% m/m in June, bringing the cumulative credit outstanding to N$93.1 billion. On a year-on-year basis, private sector credit extension increased by 6.4% in June, compared to growth of 5.5% in May. On a rolling 12-month basis N$5.6 billion worth of credit was extended to the private sector, with individuals taking up N$3.3 billion while N$1.5 billion was extended to corporates. Claims on non-resident private sector credit contracted by 0.9% m/m and increased by 186.6% y/y.

Credit extension to individuals

Credit extended to individuals increased by 6.4% y/y in June, marginally faster than the 6.1% y/y growth recorded in May. Month-on-month, credit extension to individuals increased by 0.8% in June following a 0.3% contraction registered in May. Installment credit extension remained depressed, contracting by 4.8% y/y and 1.4%% m/m. Demand for overdraft facilities continued to decrease on an annual basis, with overdraft facilities increasing by a slight 0.6% y/y in June compared to 1.7% y/y in May. Overdraft facilities recorded a contraction in credit outstanding of 1.1% m/m in June.

Credit extension to corporates

Credit extension to corporates contracted by a slight 0.2% m/m after increasing by 0.9% m/m in May. On an annual basis, however, credit extension to corporates increased by 4.2% y/y in June, 1.4 percentage points higher than the 2.8% y/y growth registered in May. Installment credit extended to corporates, which has been contracting since February 2017 on an annual basis, remained depressed, contracting by 6.7% y/y in June. Leasing transactions to corporations contracted by 3.6% y/y in June following the 5.0% y/y decline in May. Overdraft facilities extended to corporates decreased by 1.4% m/m, but increased by 0.6% y/y.

Banking Sector Liquidity

The overall liquidity position of commercial banks increased by N$937 million to an average of N$4.9 billion during June. Bank of Namibia credits this improvement in liquidity to proceeds from diamond sales coupled with companies hoarding liquidity in preparations for customary corporate tax payments. The increased liquidity position meant that repo facilities amounting to N$176 million were utilised only briefly at the end of June.

Reserves and money supply

Foreign reserve balances increased by N$1.5 billion to N$29.6 billion in June. This increase was due to payments received from Banco Nacional de Angola, interest received on investments, Rand seigniorage and exchange rate fluctuations, according to the Bank of Namibia.


Growth in private sector credit extension has been ticking up for most of the first half of the year, but still remains far from the double-digit growth rates last seen in 2016. According to BoN’s data, the overall liquidity position of Namibian commercial banks averaged the highest levels since August 2014. Despite this, banks are selective regarding extending more credit into an economy currently in a recession. Thus, credit supply is dampened by selective issuance justified by stretched balance sheets and high debt to income levels. Demand for credit has been affected by stricter borrowing requirements set by BoN during the last two years. Furthermore, overall market expectations currently are for interest rates to remain stable for the rest of the year. Due to the abovementioned reasons, our expectation is for private sector credit extension to remain under pressure for the rest of the year.

Building Plans – June 2018

A total of 234 building plans were approved by the City of Windhoek in June, which is 73 more than the 161 approvals in May. The value of building plans approved in June was N$138.4 million, an increase of 8.4% from the N$127.7 million worth of approvals in May. A total of 250 buildings with a value of N$95.8 million were completed during the month. On a year-to-date basis, 975 plans have been approved, 45 more than the 930 plans approved over the same period last year. The year-to-date value of approved building plans currently stands at N$792.3 million, which is 45.6% lower than during the first half of 2017. On a twelve-month cumulative basis, 1,968 building plans were approved worth approximately N$1.5 billion, 38.2% lower in value terms than the same measure as at the end of June 2017.

The majority of the number of building plan approvals were made up of additions to properties. Additions to properties made up 179 plans of the total 234 plans approved in June. Year-to-date, 770 additions to properties have been approved, increasing by 2% y/y but decreasing by 14.5% y/y in value terms to N$524.4 million.

New residential units were the second largest contributor to the number of building plans approved with 53 approvals registered in June, 16 more than in May. 186 new residential units were approved year-to-date, which is 28 more than the corresponding period in 2017. In dollar terms, N$225.1 million worth of residential plans have been approved year-to-date, a contraction of 20.4% when compared to the first half of last year.

2 Commercial and industrial building plans were approved in June, worth N$7.0 million. This is one fewer than in the prior month, but an increase of 128.8% m/m and a decrease of 30.0% y/y in value terms. The number of new commercial units approved thus far in 2018 amounted to 19, valued at N$42.9 million. This compares to 17 units valued at N$561.3 million approved over the same period in 2017. On a 12 month-cumulative basis, the number of commercial and industrial approvals has decreased by 13.3% y/y in June to 52 units, worth approximately N$178.9 million, a decrease of 76.1% in value terms over the prior 12-month period.

During the last 12 months 1,968 building plans have been approved, increasing by 6.5% compared to June 2017. These approvals amounted to N$1.5 billion, which is a decrease in value of 38.2% y/y. Much of this is due to a single project worth N$501 million (Wernhill expansion) included in the base period and not in the current 12-month period. The number of building plans approved, on a cumulative 12-month basis, has been steadily increasing since December 2017.

Our expectation is for the BoN to follow the SARB’s MPC decision to keep interest rates unchanged at next month’s MPC meeting. Consumers and businesses are thus unlikely to be provided with slight cost of debt relief in the near-term, meaning that it will not become more attractive for businesses to acquire the debt finance needed to expand and invest in capital projects. That said, interest rates are unlikely to be the major barrier to capital projects as they remain relatively accommodative. A larger obstacle to securing credit is that banks are weary of the construction industry at present as the balance sheets of many players in the industry are stretched. Another factor affecting the construction industry in Windhoek is the scarcity of land on which to build. We do not expect a significant improvement in the approvals and completions numbers in the short term due to the factors mentioned.