Slow Economic Growth Worrying

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By Wezi Tjaronda WINDHOEK The Bank of Namibia (BoN) is concerned about Namibia’s continued slow economic growth despite the fact that the fundamentals that would lead to higher growth are in place. Namibia has had low interest rates for the past two years, its balance of payments is manageable, while its fiscal situation is good – fundamentals that would see higher economic growth than the current one. “With these fundamentals in place, one expects higher growth,” said Tom Alweendo, Governor of the Bank of Namibia, when he launched the Quarterly Bulletin and the Bank’s 2005 Annual Report yesterday. With the many needs that Namibia has in improving its education and creating employment among others, a growth rate of 3.9 percent, which is projected for the 2006/7 financial year, said Alweendo, is not enough. The growth rate of the last financial year 2005/6 was estimated to be in the range of 3.2 percent, while 2007 should see a growth rate of 4.0 percent. While growth would be accompanied by job creation, the growth recorded at present arises from price increases of some commodities such as diamonds, which does not translate into companies employing more people. To achieve substantial growth, the governor outlined three strategies through which he said Namibia could diversify and achieve growth, namely investing in the local economy, developing the country’s human capacity and also changing people’s attitude towards the local economy. He said rather than relying on non-renewable resources, it was time Namibia diversified its economy. “If we depend on non-renewable resources we should be worried because they do not last forever,” he said, adding: “diamonds will not always be there. If it is removed from the ground, it’s out.” The same sentiments were expressed by First National Bank’s Economist, Martin Mwinga yesterday, who cautioned that unless Namibia’s economy expands into other fields, the country would find itself in the same situation as countries having economic problems now. He said Namibia’s heavy reliance on non-renewable resources such as mining was not sustainable. “We do not know what will happen to diamonds and SACU receipts in future,” Mwinga said. Apart from education, Mwinga said the need to generate revenue also warrants a national conference. The governor mentioned tourism and agriculture as some of the sectors the country should be diversifying into, in order to achieve economic growth, adding that tourism would attract more tourists into Namibia and also create jobs in the sector, while agriculture would not only ensure food security but also export earnings. Strategies that would enable Namibia to invest in the local economy include extended road construction, financial infrastructure and developing rural areas, where the majority of the population resides. “Invest now while the conditions are favourable,” he urged. As far as infrastructure is concerned, the budget has allocated money to railways and road construction and to the equity participation in Nampower for the Kudu gas field development. Alweendo also added his voice to the ongoing debate about the lack of skills in the country. He said capacity development was one of the strategies that would lead to Namibia improving its economy. Although the focus now is the improvement of education, the governor felt that the private sector sorely needs technical and managerial skills. He also lamented the country’s attitude to the economy as being that of laissez faire because it is linked to that of South Africa. “There is a general perception that the Namibian economy is fine as long as it is linked to South Africa and we are in the Common Monetary Area,” the governor said. He added that people have adopted the attitude that why bother to manufacture if they can import from South Africa. While this would be permissible for Namibia in the short term, the governor stressed that the attitude was dangerous if it continues, as it would be to the detriment of the economy.