As the construction sector opened the financial year on a robust note, latest data shows that the number of completed buildings and building plans have increased on a monthly basis, Simonis Storm Securities confirms.
The City of Windhoek (CoW) released its monthly building plans statistics for June 2018 and the number of building plans approved rose by 46.1% month-on-month to 260 units compared to a decrease (-1.1%) reported in the prior month, says the firm.
On a 12-month accumulative basis, approved plans declined by 41.4% in June compared to a drop of 32.2% in the prior month.
Simonis Storm Securities says the increase in building plans approved is a combination of additions (69%), housing (20%), walls (0.8%), while commercial and pools is about 0.2 %.
Buildings completed increased by 71.5% m-o-m in June 2018 and by a staggering 120.7% on a 12 month accumulated basis, but this was mainly due to completions of additions, rather than new structures.
Of the 247 additions completed 225 are in the Pioneers Park area.
“On a positive note, the CoW construction of 300 houses in Rocky Crest will spur growth in buildings completed. However, due to time lags and servicing of land, we will only see the effect in the 1Q2019,” says the firm.
The construction sector grew by 23.7% in the first quarter, the strongest performance since 2015 when the sector expanded by 30.0%.
The strong performance was caused by the low base a year earlier due to the contraction, yet value addition remained, however, below values recorded between 2014 and 2016.
Reacting to this, Economic Association of Namibia’s Klaus Schade remarked, “This could be good news for the labour market, since the construction sector is labor-intensive and hence growth is expected to result in job creation.”
Finance minister Calle Schlettwein is optimistic, too, that the increased budget for projects should start to see the sector growing more this year.
Looking at the overall economy, some analysts are beginning to think outside the box citing that although construction, mining, and hydro-electric power may have gotten the country this far, maybe renewable energy, tourism and the human capital, can be the main drivers of the economy for the next decade and another three or four sectors for the subsequent decade.
Says Claudia Boamah, an economist at Capricorn Asset Management, “If we are indeed forward thinkers, we need to know what the potential of any sector is and conduct the necessary research to establish the lifespan of that industry.”
“Every area of production eventually faces redundancy it could be due to a depletion of resources which is the case with mines or it could be caused by the emergence of technology that makes a product or means of production archaic and irrelevant which is the case with energy. The time to think about any sector is while it is still thriving, bearing in mind its lifespan and having a plan for how to phase out the dependence on it or how to transform it into a new and relevant area of production.”
She shoulders the blame of the decline in economic sectors on “past decisions of both the private and public sectors”.