By Hilary Mare
DESPITE the expected ease on the repo rate through the course of 2018, Simonis and Storm Securities (SSS) has highlighted that the growth of approved building plans for the year will remain subdued.
Trainee analyst Rosemary Strauss noted that growth will be relatively affected by debt, which remains high.
“We do not expect to see significant growth in building plans, because household indebtedness continues to be at all-time high levels, while PSCE (private sector credit extension) is at multiyear lows,” Strauss said.
The number of building plans approved within the Windhoek municipal area by December 2017 showed a 12-month growth of 1 percent to 1 999 units, compared to a contraction of 29.1 percent in the prior year. However, on a monthly basis, building plans approved recorded a decline by 49 percent, compared to an increase of 43.4 percent in the prior month. In addition, the number of buildings completed increased by 15.1 percent to 510 units, compared to a contraction of 18.2 percent in the prior year. On a monthly basis, buildings completed increased to 37 percent, following a decrease by 20.7 percent recorded in the prior month.
The overall decrease in the number of building plans approved on a month-on-month basis was more pronounced in the additions and house categories, while more houses were completed and less industrial structures were finished between November 2017 and December 2017. In monetary terms, the value of buildings completed increased by 1 percent for the year to date (YTD), to N$101.9 million in December 2017, compared to a contraction of 18.9 percent for the YTD in the prior year. “We might see slowdown in PSCE, as the banks tightened their credit standards, thus we will expect a further slack in the building plans, as this weakens consumer and business demand for credit,” added Strauss. In the beginning of last year, the Construction Industries Federation (CIF) of Namibia said that 63 percent of businesses had either closed down, are dormant or had scaled-down operations drastically.
“Between 1 September 2016 and 31 March 2017, a minimum of 30 percent of the workforce was retrenched,” the federation said in a statement. In a statement in the middle of last year, the CIF also demanded an increase in government’s capital budget focusing on productive infrastructure and that preference be given to contractors that adhere to Namibian laws. Bärbel Kirchner, consulting general manager of the CIF, said that they know that government needs to introduce measures in the long-term interest of the country, and commended Finance Minister Calle Schlettwein for the “bold approach to secure much greater control over public expenditure”.
Even so, she called for immediate measures to ensure the survival of the industry, while stressing that “irrespective of budget allocations, the current uncertainty is untenable”
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