Namibian Economics to the Point - Review 2017 - News - Gondwana Collection

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Namibian Economics to the Point - Review 2017

Avatar of inke inke - 30. December 2017 - Economics


Brigitte Weidlich

2017 brought Namibia a second year of economic difficulties and tight fiscal measures on the side of the government. Here a review of the past 12 months. 

Economic slowdown

Low commodity prices, which seriously affected the mining sector and currency volatility – the N$ is pegged to the South African Rand – which increased import prices, caused negative growth from January to September 2017. Namibia slipped into a recession. Statistics for the fourth quarter will only available in early 2018. 

Government ran out of fiscal space, its debt increased to nearly 43 percent of GDP (Gross Domestic Product). Revenue earnings decreased due to reduced income from the Southern African Customs Union (SACU). The national budget for 2017–18 remained similar to the year before at N$62.5 billion (about 41.6 million Euros). Infrastructure projects were halted. As a result, the construction industry was hit hard; over 1,000 workers lost their jobs.

There were better rainfalls during this year, improving agricultural prospects with high livestock prices. The Bank of Namibia, the country’s central bank predicted only 0.6 percent economic growth for the country during 2017, it said in a media release in December. In July the BoN still predicted1.2 percent growth. In 2016 the economy grew 1.1 percent. The International Monetary Fund (IMF) however foresees up to 4 percent growth for 2018. Namibia’s inflation remained steady at 5.3 percent. The government will scrap the wintertime from 2018, keeping it at 2 hours after GMT. 

In December the European Union added Namibia to a list of 17 countries which do not cooperate with the EU regarding tax reforms. 

Namibia again explained to the United Nations that it was adhering to UN sanctions against North Korea. Allegedly all workers from that country had left Namibia by April.

Namibia downgraded

Two international rating agencies downgraded Namibia’s international creditworthiness in 2017. Moody’s lowered the country’s creditworthiness from ‘Baa3’ to junk status at ‘Ba1’ in August. Fitch followed in November with a junk status rating it at ‘BB-‘. 

44 MW wind power for Lüderitz

Local black economic empowerment (BEE) United Africa Group partnered with the British firm Quantum Power to develop a 44 megawatt wind farm near the coastal town of Lüderitz. The energy generated will be sold to the national power utility NamPower. A supply contract was signed in December. The N$1.5 billion (about 100 million Euros) wind power project is a first for Namibia.

NEEEF empowerment framework

Government announced in December that an updated version of the equitable economic empowerment draft law – NEEEF – has been completed. It will be submitted to Cabinet in early 2018. A public workshop will take place after Cabinet approval. 

Tourism shows good growth

Many tourism companies saw an increase in room and bed occupancy for 2017, though official statistics are not yet out. Figures for 2016, released only in December, showed that 1.46 million tourists visited in 2016 – an increase of 5.9% from 2015. Most foreign visitors in 2016 came from Angola (398 939) and South Africa (342 044).

Some 294 889 tourist arrivals came from Europe, 26.2% more than 2015. About 122 142 German tourists visited Namibia – up 34.6 percent from 2015.

Local tourism company, Gondwana Collection reported 15 percent growth and a 67 percent average room occupancy for 2017. A brand new lodge, ‘The Desert Grace’ is currently under construction in southern Namibia. The company opened a new lodge in the Zambezi Region in November, called Zambezi Mubala Lodge (former Kalizo Lodge) about 40 km east of Katima Mulilo. 

US-President Trump promotes “Nambia”

US-President Donald Trump’s ‘Nambia’ blunder in September put Namibia on the world map, which was free advertising, as President Hage Geingob put it. The tourism company Gondwana Collection published a tongue-in-cheek video on YouTube in reaction to Trump’s Freudian slip. In October the renowned South African television programme ‘Maggs on Media’ showcased the Gondwana video. Presenter Jeremy Maggs said it was “one of the best inadvertent country marketing campaigns [he had] ever seen”. Gondwana Collection declared Trump in December as “Nambia Ambassador of the Year 2017” on a satiric photo. 

Oranjemund now open to all

The once isolated town of Oranjemund in the forbidden diamond area (Sperrgebiet) in southern Namibia has officially opened its doors on 21 October. Special permission or Police clearance certificates are no longer necessary. On-land diamond production will cease by 2022. Oranjemund is preparing for a future without diamonds, focussing inter alia on tourism. The new tar road from Rosh Pinah along the Orange River to Oranjemund has been completed and is accessible.

Donkey meat abattoirs

Two Chinese companies plan to erect an abattoir for donkey meat in Outjo and Okahandja respectively. The Windhoek Society for the Protection of Animals (SPCA) has warned together with the British-based organisation Donkey Welfare, about the danger of donkey abattoirs. Several African countries have stopped exports of donkey skin and meat to China or donkey abattoirs altogether. Prices for donkeys have skyrocketed and the animals are often stolen from poor rural people to be sold to these abattoirs. Donkeys are the only means of transport for rural people. Gondwana Collection has together with Namibian musician Ees and production company, ProStudios, created a donkey video via YouTube, which is linked to a petition “Save our Donkeys”. Thousands of people signed the Avaaz online petition.

SME Bank liquidated

Namibia’s High Court at year-end finally put the SME Bank under liquidation after an interim period July to September. Two liquidators were appointed for the SME Bank, which was supposed to cater for micro-, small and medium (SME) enterprises. The government-owned bank had parked some N$200 million (about 13 million Euros) into shady investments outside Namibia.

Investments in diamond mining

Founding President Sam Shafishuna Nujoma christened the world’s largest and most modern diamond sampling vessel at Walvis Bay this year. Debmarine Namibia, a subsidiary of Namdeb, in which diamond giant De Beers and the Namibian government have equal shareholding, invested N$2.3 billion (about 154 million euro) into the “SS Nujoma”.

Part of the financing came from a bank loan package. The 113-metre-long vessel of 12,000 tonnes was built by the Kleven shipyard at Ulsteinvik in Norway. Towards the end of the year, Debmarine Namibia announced it will invest in a diamond mining vessel for US$ 142 million (about N$2 billion). The ship will be 176 m long. It will also be constructed by Kleven and is to be completed in early 2021.

Loan from AfDB

Finance Minister Calle Schlettwein announced that the African Development Bank (AfDB) granted the government a loan of N$10 billion (about 660 million Euros) over two years to be paid out in two tranches. N$6 billion will cover the 2017–18 State budget deficit of N$6.1 billion. The remainder will be used for infrastructure projects, Schlettwein said. 

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