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Namibian Economics to the Point – March 2017

Avatar of inke inke - 31. March 2017 - Economics

With good rainfalls in most parts of Namibia raising hopes for good harvests and a general economic upswing, the new national budget, tabled this month, also tended to the positive by avoiding tax increases - a relief for taxpayers and the economy. Government announced plans to expropriate farms for fair compensation. Petrol prices went up by 32 cents a litre and Diesel increased by 25 cents. 

Land expropriation

On Independence Day, 21 March, President Hage Geingob announced a major policy shift with regard to the land reform. Expropriation of land is on the cards – albeit with fair compensation. “We are committed to addressing the land issue and this is why I have alluded to the fact that we need to revisit the willing buyer - willing seller concept. We have exhausted the concept, because after 27 years, the process is slow in satisfying the wishes of the majority of Namibians,” Geingob said. He added: “This means we need to refer back to our constitution, which allows for the expropriation of land with fair compensation and [we] also look at foreign ownership of land, especially absentee land owners.” 

Ancestral land claims

In terms of ancestral land, Geingob added that the government would ‘welcome proposals from all concerned Namibians’ on this issue to reach a national consensus before proceeding with new measures to address the land problem. He noted that the San community always seems to be left out of the discussion on [ancestral] land. “They, more than any other group of Namibians, have more of a right to claim a large proportion of this country’s land,” the President said.

Sharing the economic cake 

The New Equitable Economic Empowerment Framework (NEEEF) has resurfaced. The topic disappeared from centre stage after the last public hearing in August 2016. 

A quick reminder: In February 2016 government announced plans to force all private sector companies to sell 25 percent ownership to previously disadvantaged Namibians. This was to be financed through loans from financial institutions. 

“NEEEF is also a program that we intend to implement. It will have to come with conditions in regard to terms of Government tenders,” Geingob said. “Some people are opposed to NEEEF without providing alternative proposals but it is time that all of us in Namibia adopt the culture of sharing and assisting each other to attain human dignity.” 

Many pages of recommendations were in fact sent to the authorities by the private sector. Interviewed recently by a local newspaper, Geingob hinted that the 25-percent clause might be dropped. 

SME bank run by central bank

On 1 March control of the SME Bank was taken over by the Bank of Namibia (BoN), our central bank. The Bank of Namibia stated that bank capital of more than N$190 million had been used for ‘investments’ in South Africa. The SME Bank Chief Executive and the entire board were suspended after they allegedly could not give satisfactory answers about these investments. The BoN has appointed an interim chief executive and an interim board. Business continues as usual and investigations are underway.

New national budget

Finance Minister Calle Schlettwein tabled a N$62.5 billion national budget in Parliament. Due to Namibia’s economic situation, expenditure only increased by 1.7 percent or N$1 billion more than the revised budget of N$61.5 billion of last year. Personal income tax and company tax remains unchanged. Minister Schlettwein said in his budget speech that he expects Namibia’s economy to grow 2.5 percent this year, compared to an all-time low of 1.3 percent growth in 2016.

Construction sector still suffering

On Budget Day the Construction Industries Federation (CIF) sent a letter to each Member of Parliament asking them to support the local building industry. The CIF noted that if the budget for infrastructure would mainly go to local companies it would benefit the economy and preserve jobs. During a debate on the presence of Asian construction companies in Namibia the Transport & Public Works Minister admitted that about 1 600 jobs were lost in the construction sector due to the government’s austerity measures, which kicked in last September. Minister Alfeus Naruseb acknowledged that over 80 percent of all government infrastructure tenders went to local companies. Many of them, however, passed on the tender to foreign [construction] companies at a ‘fee’. This is illegal, Naruseb stated. The industry is waiting for a response from the government.

Namibia at the Berlin Tourism Fair

The annual international tourism bourse (ITB) held in Berlin, Germany, in early March was once again a huge success for Namibia. The Namibia Tourism Board and tourism companies from the private sector showcased our country through information sessions, brochures and pictures displaying our wildlife and wide open spaces on a gigantic screen. 

Donkey meat for China

A total number of 295 217 Namibian cattle were marketed between January and December 2016. Live cattle exports to South Africa accounted for 56 percent or 165 927. Cattle slaughtered at the export abattoirs accounted for 35% or 103 097 animals. Local abattoirs slaughtered 26 193 cattle in 2016, constituting 9 percent of the total market share. 

Two Chinese companies have applied to open abattoirs in Outjo and in Okahandja for the slaughter of donkeys. The Outjo community, however, is against a donkey abattoir and has handed over a petition to the municipality. The Okahandja municipality is of the opinion that a donkey abattoir could stimulate that town’s economy. In some parts of China donkey meat is considered a delicacy. There is also a rising demand for gelatine from donkey hides, to produce ‘ejiao’, a medicinal blood tonic, which is becoming increasingly popular with the Chinese middle class. In developing countries, poor communities rely on donkeys for transport and even ploughing. The demand for donkeys to satisfy Chinese customers causes a sharp price increase for live donkeys in developing countries. Some African countries have banned the export of donkey hides.

Winter time

The turning back of the clocks by one hour for winter is set for Sunday 2nd April. A new draft bill was tabled in Parliament in February to cancel the winter time. It was referred to a parliamentary standing committee for stakeholder consultations. For this year at least, winter time will remain. Summer time starts on 3rd September.

The big wait

President Hage Geingob wants to delve deeper into matters he disclosed on 21 March. His State-of-the-Nation address is planned for 12 April. He did not elaborate, but he has mentioned land expropriation and NEEEF.

Brigitte Weidlich

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