Namibian Economics to the Point – May 2017 - News - Gondwana Collection


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Namibian Economics to the Point – May 2017

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The 'Lego' type brick system of Germany's PolyCare company was showcased at the investment conference in Windhoek in November 2016. (Photo: B. Weidlich)

May spelled the end of the rainy season in Namibia, during which some areas recorded above average rainfall. High-ranking visitors from abroad looked at investment opportunities, while several statistics were released in this month.

Investors from abroad

Brazilian Foreign Minister Aloysio Nunes Ferreira, who only took up office in March, visited Namibia on the first leg of his maiden African trip. Ferreira told President Hage Geingob that Brazil’s economy was recovering. His country wanted to rekindle trade relations with African partners, Ferreira said. Namibia’s transport organisation, Walvis Bay Corridor Group (WBCG) has an office in Sao Paulo. Since 2012 a direct shipping line between Brazil’s Santos, one of the busiest container ports in Latin America, and Walvis Bay has existed. Namibia acquired several of Brazil’s Embraer jets, which its national carrier Air Namibia uses for local and regional flights. Many of Namibia’s navy cadets and naval officers receive training in Brazil. 

Visitors from afar

A delegation from Iran visited Namibia to explore investment opportunities. This could include a tractor assembly plant in northern Namibia and a natural gas storage facility at the coast. “We discussed investments such as auto-manufacturing, a tractor assembly line, the pharmaceutical industry and Namibia’s need for healthcare facilities like hospitals and clinics,” said Farhad Zargari after meeting President Geingob. Zargari is board chairperson of Iran’s State-owned Foreign Investment Company (IFIC). The delegation also had a meeting at the Ministry of Mines and Energy. The Iran government since 1976 - through its IFIC - owns a 15 percent share in Rio Tinto’s Rössing uranium mine near Arandis in Namibia.

The Russian delegation also offered its Sukhoi jets, helicopters and fishing trawlers. Russia is interested to export grain, animal fodder and fertilisers to Namibia. Other trade opportunities like diamond mining and mechanical engineering were also discussed. 

Royal visit

Africa's last absolute monarch, King Mswati III of Swaziland came to Namibia in his capacity as chairperson to the world’s oldest existing customs union. The Southern African Customs Union (SACU) was founded in 1910 and its secretariat is seated in Windhoek. Namibia, Swaziland, Lesotho, Botswana and South Africa are SACU members. Namibia joined after its independence in 1990. The SACU revenue sharing formula is to be revised, King Mswati III said. He told President Geingob that Swaziland would also like to increase trade with Namibia. Swaziland produces sugar among others. Namibia produces salt, dried (fresh water) fish, mutton and beef.

Brick factory for Namibia

Thuringia’s Premier Bodo Ramelow briefly visited Namibia. Thuringia is one of Germany’s 16 federal states. Ramelow inspected a prototype house in Windhoek constructed by the Thuringian company PolyCare. The bricks appear similar to Lego bricks. PolyCare developed the technology to mix a special resin with sand. Houses can be built faster and much cheaper than with conventional methods. The company considers investing in a brick factory in Namibia.

More tourism development 

The Ministry of Environment and Tourism launched an Advisory Council to improve Namibia’s competitiveness in the tourism sector. Some Council members were also selected from the private sector. Tourism Director Sem Shikongo explained that Namibia’s tourism sector was in need of transformation. Rural areas should benefit more from tourism.

 The second body launched was an inter-ministerial tourism committee. Government officials from each Cabinet ministry and the Office of the Attorney General serve on this committee. 

Air Namibia has big plans

The US Department of Transport recently granted Air Namibia approval to fly passengers in and out of the USA. Only a few other African airlines have such approval: South African Airways, Ethiopian Airlines, Egypt Air, Moroccan Royal Air Maroc and Cape Verde’s TACV airline. 

“This approval will be used for revenue generation out of the USA in collaboration with our code-share partners,” said acting MD of Air Namibia, Mandi Samson. “This brings to an end, the days when Air Namibia could not book and issue tickets for flights to and from the USA”.

Air Namibia was also awarded certification to fly to any EU member state. In March the national airline finally completed the important International Civil Aviation Organisation (ICAO) re-certification audit process, which started in 2013. The airline could thus renew its Air Operating Certificate.

Air Namibia flights to Harare in Zimbabwe and Lusaka in Zambia were recently separated into two destinations to optimise the utilisation of its aircraft. During a stakeholder meeting this month, Samson noted that three new African destinations would be introduced this year. “We are just waiting for government approval then announcements will follow,” she said.

Samson further told stakeholders that return ticket fares for domestic flights would cost N$3,999 maximum. “If any one gets priced more than N$4,000 you must call me personally,” she said. 

Employment, inflation and vehicle sales 

The National Statistics Agency (NSA) released the latest employment figures in May. Namibia’s population stands at 2,32 million, of which 1,02 million (69.4%) people could be economically active. Only 676,885 (66%) of employable people are employed. A total of 349,383 (34%) people are unemployed. “Compared to the previous labour survey done in 2014, the 2016 survey shows that unemployment increased by 6.1 percent from 27.9 to 34 percent, the NSA’s Statistician-General Alex Shimuafeni disclosed. Youth unemployment - persons aged between 15 and 34 years – increased from 39 to 43.4 percent. While 220,519 young persons had no work in 2014, this increased to 246,262 jobless youth.  

Inflation in Namibia dropped from 7 percent in March to 6.7% in April, according to the NSA. This is a small but welcome relief for consumers who will have to brave an 8 percent electricity tariff increase soon. The Electricity Control Board (ECB) granted the government power utility NamPower an eight percent hike to charge bulk electricity consumers. 

Vehicle sales in Namibia slowed

Vehicle sales dropped considerably in April. Only 946 new vehicles were sold, 32.5% down from the 1,402 vehicles sold in March, according to the financial institution IJG. “Lower government spending, specifically on capital assets had a direct effect on vehicles sold. Slower economic growth means that consumers will have lower disposable incomes. Many consumers reign in their spending as a result,” says IJG. Also, the Credit Agreement Act was implemented in August 2016. It stipulates a 10 percent deposit on all vehicle loans. Repayment periods are limited to 54 months.

Economic hardships

The Construction Industries Federation (CIF) said that 63 percent of building companies that are CIF members, surveyed said they would close down. Once again, the CIF urged government institutions to pay arrears for work done and to consider local contractors when building projects materialise. A Chinese company constructing a tar road between Grootfontein and Otjinene had to retrench 300 labourers as the government failed to pay for the work done.    

Finance Minister Calle Schlettwein announced that the African Development Bank granted the government a loan of N$10 billion over two years to be paid out in 2 tranches. N$6 billion will cover the 2017-18 budget deficit of N$6.1 billion. The remainder will be used for infrastructure, Schlettwein said. 

Windhoek Mayor Muesee Kazapua with his delegation had a first ever meeting with President Geingob at State House. Government institutions owe the City N$105 million in unpaid municipal bills. This money is badly needed for infrastructure requirements and water supply improvements, Kazapua said. He requested a financial subsidy from the government for the municipality. President Geingob said project-based financial support might be considered.      

Brigitte Weidlich

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