Namibian Economics to the Point – March 2018 - Namibie Safari et Lodges - Gondwana Collection

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Namibian Economics to the Point – March 2018

Avatar of inke inke - 29. mars 2018 - Economics

President Hage Geingob and Russian Minister Sergey Lavrov at State House, Windhoek. © Russian Foreign Ministry

Brigitte Weidlich

Late rains were welcomed in many parts of Namibia in March, though rain fell almost too late for crops like maize, wheat and mahangu (sorghum). 

Russian Foreign Minister Sergey Lavrov, briefly visited Namibia on his five-country tour through southern Africa to deepen economic cooperation with Namibia, including nuclear energy. 

South Africa’s new president, Cyril Ramaphosa jetted to Namibia for a short stop-over. 

President Hage Geingob travelled to China for a State visit at month-end, just sixteen days after lawmakers granted President Xi Jinping an unlimited mandate to rule. 

Finance Minister Calle Schlettwein tabled the new government budget of N$64.2 billion (about 4.4 billion Euros) in Parliament. 

Inflation for February stood at 3.5 percent according to the National Statistics Agency, down from 3.6 percent in January. Namibia’s central bank announced that crypto-currencies like bitcoin are not legal tender in the country.

Geingob calls for joint efforts

Namibia’s 28th Independence Day was celebrated in Tsumeb on 21 March. In his keynote speech President Hage Geingob mentioned the “economic headwinds”, Namibia has suffered since 2016. “The reality of the economic downturn has necessitated new thinking in Government on how to ensure a diverse and inclusive growth model, based on fiscal prudence and sustainability to weather turbulent economic storms. We are now at a critical stage and all hands are needed on deck, in order to create the conditions for broad-based economic growth,” he said. 

“A country where inequality still exists cannot be successful. As I always emphasize, inclusivity spells harmony - and exclusivity spells conflict”, Geingob urged. The president announced that he would shed more light on broad-based economic empowerment and other interventions during his state-of-the-nation address on 11 April.

Important visits 

Newly elected South African President Cyril Ramaphosa briefly touched down in Namibia on 2 March on his three-nation tour which also included Angola and Botswana. South Africa currently chairs the sixteen member Southern African Development Community (SADC) and will hand over to Namibia this August during the annual SADC summit. The summit takes place in Namibia. South Africa is Namibia’s biggest trading partner. “For us as South Africa, this is a very special visit, we are renewing our bonds and our friendship”, said Ramaphosa. 

Just three days later, Russian Foreign Minister Sergey Lavrov arrived in Windhoek on 5 March. It was his first visit to Namibia on his Africa trip, which also included Angola, Zimbabwe, Mozambique and Ethiopia.

In Windhoek, Lavrov held talks with Namibia’s Foreign Minister Netumbo Nandi-Ndaitwah, who had visited Russia in 2017. Lavrov said the Russian State company ROSATOM would soon finalise an agreement on “the cooperation and peaceful use of nuclear energy, which will open up cooperation opportunities in this area, from medicine and modern technology up to the potential construction of a nuclear power plant in your country.”

Russia is further interested in economic cooperation in Namibia’s agriculture and mining sector, the diamond industry and tourism. Russia also wants to form a joint venture, NAMROS, in Namibia’s fisheries sector. Lavrov welcomed the creation of a new joint venture between the Russian company Intourist and a Namibian tourism company which developed the Leopard Lodge east of Windhoek. Minister Lavrov also had a short meeting with President Hage Geingob.

In Zimbabwe, Lavrov discussed military cooperation between the two countries and Russia’s offer for a joint venture in the US$3 billion Darwendale platinum project near Harare as well as opportunities in diamond mining. The Darwendale platinum deposits are among the largest in the world.

The Foreign Minister of Togo, Robert Dussy also visited Namibia this month to discuss bilateral cooperation. Togo is regarded as one of the aviation hubs for West Africa. Togo hosts the headquarters to A-SKY Airlines, which operates across several West and Central African countries. Namibia wants to finalise a bilateral air service agreement with Togo.

Geingob to China

President Hage Geingob and several Cabinet Ministers left just before Easter for a week long state visit to China and will return on 3 April. A large business delegation of approximately fifty business people accompanied him. President Geingob travelled on a commercial flight to cut costs. A large business delegation accompanied Geingob. Namibia imported goods for N$4.5 billion (about 310 million Euros) from China in 2017, of which N$351 million (about 24.3 million Euros) were arms and ammunition. Exports to China totalled N$3.3 billion (about 228 million Euros) in 2017. China is Namibia’s fourth-largest trading partner after South Africa, Botswana and Switzerland.

New budget tabled in Parliament

Finance Minister Calle Schlettwein tabled the new government budget of N$64.2 billion (about 4.4 billion Euros) in Parliament on 7 March for 2018-19, continuing the cost-cutting drive of the previous fiscal year. Education again received the largest chunk (21 percent) with N$13.4 billion (about 925 million Euros) followed by health (10%) with N$6.5 billion (about 449 million Euros) and N$5.9 billion (about 407 million Euros) for defence (9%). The budget deficit will come to approximately 4.5 percent. 

Minister Schlettwein announced higher taxes for high income earners. Income above N$1.5 million (about 104,000 Euros) per annum will be taxed with 39 percent. Annual income above N$2.5 million (about 173,000 Euros) will be taxed with 40 percent. The tax bracket for low income earners will be reduced from 18 to 17 percent.

A ten percent dividend tax will be introduced on dividends. Churches and charitable organisations will now have to pay normal corporate tax for income derived from commercial activities. 

All income derived from foreign sources must now be declared on income tax return and will be taxed. A profit tax of 37 percent will be deducted from entities which receive income from betting, gaming and gambling activities. Existing export levies mining, agricultural, forestry and other unprocessed and partially processed products will be expanded to other products not yet covered.

State pensions for all inhabitants above 60 years will increase by N$50 to N$1,250 (about 86 Euros). 

Government intends to abolish the existing Export Processing Zone law and replace with legislation for special economic zones.

Peugeot and Opel assembly plant

French company Groupe PSA has signed a deal with the Namibian government to start assembly plant in Walvis Bay for Peugeot and Opel vehicles. The automotive assembly plant will become operational in mid-year. Namibia’s Ministry of Industrialisation and Trade has already completed a large building at Walvis Bay in the hope of attracting foreign investors.

Groupe PSA wants to expand into African markets as well as the Middle East. PSA has similar plants in other African countries.

Huge power project shelved

The State-owned power utility NamPower cancelled the approximately N$5 billion (about 345 million Euros) Walvis Bay power plant deal, in March. The tender for the proposed 250 mega watt (MW) gas-fired power station outside Walvis Bay was given to an allegedly well connected new and hitherto company called Xaris Energy. Costs and alleged irregularities with regard to tender deadlines could have shelved the project. 

The gas was to be imported from the USA and to be landed at a new jetty still to be constructed at the Walvis Bay port extension. The jetty construction has been shelved for the time being.

At the end of March, another bidder for the construction of this power plant, Arandis Energy, received a court judgment on this matter. The court ruled that NamPower had awarded Xaris Energy the tender in March 2015 outside the tender validity period. It is not known if a new bidding process will start. 

Namibia monitors listeriosis 

Namibian authorities this month banned imports of certain cold food products like sausages and some chicken products from South Africa after authorities there traced listeriosis outbreaks to specific factories. The food ban was still in place by the end of March. Only one case of listeriosis has been reported in Namibia. The patient had bought a sausage at butchery in Tsumeb and is recovering well. 

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