Building Plans – December 2017

A total of 116 building plans were approved in December and represents a 50.6% m/m decline from the 235 building plans approved in November. In value terms approvals decreased by over N$70 million, registering approvals worth N$100 million in December. The 2017 calendar year saw the City of Windhoek approve 1,923 building plans which is an improvement on the 1,761 approved in 2016. In value terms 2017 was a better year than 2016 as well, with cumulative approvals amounting to N$2.19 billion. In value terms 2017 approvals exceeded 2016 approvals by N$219 million, an 11.1% y/y increase. of the number of building plans completed in 2017 amounted to 532, with 86 of those plans completed in December. This is a 25.5% y/y increase from the 424 building plans completed in 2016. N$591 million was spent on completions in 2017 which is only a 0.7% increase from the N$587 million worth of completions done in 2016.

Additions to existing properties perennially make up most of the total building plan approvals and 2017 was no exception. Cumulatively 1,583 additions were rendered to properties in 2017, an 11.6% y/y improvement on the 1,418 additions in 2016. The 2017 calendar year also registered a 15.8% y/y increase in terms of value with regards to additions. N$1,071 billion was spent this year in comparison to N$925 million the previous year.

New residential units were the second largest contributor to the total building plans approved in 2017. 290 new residential units were approved in 2017, 26 units or a 9.8% y/y increase in new residential approvals. In value terms, N$422 million worth of new residential units were approved, a 25.1% increase on the previous year.

The number of commercial and industrial building plans approved in 2017 amounted to 50 units, worth N$697 million. Although there is a 36.7% decrease in the number of approvals compared to 79 recorded in 2016, it is offset by a N$215 million increase or 44.6% y/y rise in the value of commercial unit approvals that provides for some optimism. While 2017 registered better for commercial and industrial units than in 2017, this does in large have to be credited to one sizable project approved in May 2017 valued at over N$500 million. The inclusion of this building plan does provide a relatively skewed view of the strides made in 2017 and if it were to be stripped out, 2017 would rather show a contraction compared to 2016.

The 12-month cumulative number of building plans approved closed off 2017 positively with a 9.2% y/y increase. A total 1,923 building plans were approved in 2017 valued at N$ 2.2 billion. Though 2017 was an improvement on 2016, the number of approvals have been tapering off since its peak in 2013. Weaker consumer and business confidence was evident in the slowdown in private sector credit extension and various other high frequency indicators. As at November 2017, the rolling 12-month private sector credit issuance stood at N$3.8 billion with consumers taking up more than 90% and the remaining 10% issued to corporates to the value of N$468 million. This viewed in conjunction with the depressed level of new commercial and industrial units approved shows that business has not taken up capital projects that would aid in economic recovery, which is so direly needed. This was exacerbated by the tumultuous year that the construction sector faced with the slow payment if invoices, derailing many projects and leading to widespread retrenchments.

NCPI – December 2017

The Namibian annual inflation rate remained unchanged at 5.2% y/y for a third consecutive month. Prices increased by 0.2% m/m. Prices for food and non-alcoholic beverages, which was largely the driving force behind the moderation in annual inflation, continued to increase at slower pace in December. On a year on year basis, overall prices in five of the twelve basket categories rose at a quicker rate in December, with five categories recording slower rates of inflation and two categories remained unchanged. Prices for goods increased by 3.1% y/y while prices for services increased by 8.0% y/y. This was also unchanged from the increases recorded in November.

Housing and utilities contributed towards more than half of the annual inflation figure of 5.2% in December. This is also the largest basket item due to its weighting. This category remained relatively flat month-on-month, increasing only 0.5% and increasing 9.2% y/y. Year-on-year price increases within the subcategories showed little change from those recorded in November, with the one exception being price increases for electricity and other fuels of 8.3% y/y in December, up from 4.6% y/y in November. This follows two consecutive months of fuel pump price increases in November and in the beginning of December, which have contributed to the faster rate of increase in the prices of this subcategory. Prices for regular maintenance and repair of dwellings increased by 0.2% m/m.

Transport, with a weighting of about 14%, serves as the third largest basket item. Accounting for 0.9% of annual inflation in December and making it the second largest contributor. Prices for transport rose by 6.7% y/y, marginally quicker than the increase of 6.1% y/y recorded in November. Prices related to the purchases of vehicles increased at a slower pace in December, rising by 6.8% y/y compared to 7.5% y/y increase in November.

The alcoholic beverages and tobacco category showed slower increases of 4.6% y/y and contracted 0.7% m/m, compared to increases of 5.4% y/y and 0.3% m/m in November. Tobacco prices increased by 4.1% y/y, while alcohol increased at 4.7% y/y.

Namibian annual inflation averaged 6.2% for the year 2017, having moderated throughout the course of the year due largely to the slowdown in food inflation. South African inflation has remained well contained within the SARB’s target band and is most likely set to report December data still within that range. Although buoyed by a strengthening currency, short term risks to the upside for inflation are ever present. There has been a rally in the price of oil since mid-December and does present a case for an increase in the prices of imported goods. Further risks to an uptick in inflation exist in the imminent decision from Moody’s review on SA’s sovereign credit rating. This decision will be preceded by a February budget that, amongst others, could include details on how the newly approved free higher education will be funded. A disappointing budget preceded or followed by a possible downgrade will lead to a fallout from major global bond indices, resulting in a weaker currency and definite inflationary pressures.

PSCE – November 2017


Private sector credit extension (PSCE) increased by N$584.5 million or 0.7% m/m in November, bringing the cumulative credit outstanding to N$89.4 billion. On a y/y basis, private sector credit extension increased by 4.5% in November, slowing from the 5.1% growth recorded in October. From a rolling 12-month basis, total credit extended to the private sector has been trending downward with N$3.82 billion worth of credit extended over the last 12 months. Compared to last year, the rolling 12-month issuance is down 48% from the N$7.39 billion issuance observed at the end of November 2016. Of this cumulative issuance, individuals took up credit worth N$3.4 billion while N$468.1 million was issued to corporates. Claims on non-resident private sector credit decreased by N$92.1 million y/y.

Credit extension to households

 Credit extended to individuals increased by 6.9% y/y in November, lower than the 7.3% y/y recorded in October. On a m/m basis, household credit extension rose by 0.7% in November and is slightly higher than the increase of 0.6% registered in October. Household credit extension growth has been waning for much of 2017, with annual growth dropping below 7% now for the first time since December 2010. Installment credit contracted by 2.2% y/y. This contraction is in tandem with diminishing new vehicle sales reported for November, since installment credit is largely used to finance vehicle purchases. The value of mortgage loans extended to individuals increased by 0.8% m/m and 7.8% y/y. Demand for overdraft facilities has been slowing since July this year and increased by 8.5% y/y in November compared to 10.9% y/y in October. Other loans and advances recorded growth of 1.3% m/m and 6.5% y/y.

Credit extension to corporates

Credit extension to corporates increased marginally by 0.2% m/m in November, following a contraction in credit extended of 0.5% in October. Year on year credit extension to corporates grew 1.3% in November, slower than the 2.4% in October. Installment credit extended to corporates, which has been contracting since February 2017 on an annual basis, continued to wither, contracting by 7.2% y/y in November. Mortgage loans extended to corporates contracted by 0.1% m/m while increasing by 8.6% y/y. Overdraft facilities extended to corporates increased slightly by 0.9% m/m and 2.5% y/y.

Banking Sector Liquidity

The average monthly liquidity position of commercial banks improved by N$330 million from N$2.85 billion in October to N$3.18 billion in November. The increase in the liquidity position is attributed to increased mineral sales proceeds and maturing Bank of Namibia (BoN) bills during November.

Reserves and money supply

Foreign reserves decreased by N$3.1 billion to N$28.5 billion at the end of November from N$31.6 billion in October. According to the Bank of Namibia the decline in reserves stemmed from the foreign currency fluctuations and net commercial banks purchases of foreign currency in November.


 Private sector credit extension for 2017, with the omission of December data, will be characterized by growth that has receded since the start of the year and provided no signs to the contrary. Weakened consumer and business confidence in the wake of a weak economy points has resulted in a low demand for credit, which has been further exacerbated by tighter credit regulations. Improved commercial bank liquidity indicates that the supply side for credit has boasted healthy loanable balances although banks have been more selective in credit issuance too. Of the total credit extended to the private sector over the last 12 months, individuals helped themselves to around 90% of the pie. Corporates had a trying year, especially those that endured slow payment from government for work done.

Inflation slowed throughout the year, providing optimism for easing monetary policy which was rewarded with only one rate cut of 25 basis points. Disappointing mid-year budget reviews in SA and Namibia which highlighted expenditure over-runs, divergence from fiscal consolidation measures and revenue shortfalls prompted downgrades from ratings agencies. The year closed with both the SARB and BoN keeping rates unchanged going into 2018. The political landscape in South Africa did provide markets with relative calm in the election of Cyril Ramaphosa as ANC president. Since this shift in power within the ruling party the rand has strengthened relative to the US dollar, though the immediate test lies in Moody’s imminent review decision on South Africa’s credit rating in February. The risk herein, should SA be downgraded, is that we could see a rate hiking cycle take effect.