Prime Minister Saara Kuugongelwa-Amadhila says the assessment by a local newspaper that Namibia’s foreign exchange reserves would run dry in seven weeks is wrong, but conceded that foreign reserves are indeed worryingly low.
Kuugongelwa-Amadhila said this at the official opening of the Helao Nafidi Trade Expo last Thursday.
The Prime Minister said foreign reserves were “worryingly low, thus there is a need to build adequate international reserves to a level of at least three to five months of import to lessen the vulnerability of our economy to sudden exogenous shocks.”
According to the premier, the decline in foreign reserve holdings in Namibia is the result of excessive foreign currency outflow and slow foreign currency inflows – mainly by the current account.
She said in recent years, the capital account on the balance of payments has largely yielded surpluses, which are the result of sizeable foreign direct investment inflows. However, portfolio outflows by institutional investors remain a major concern.
“There is still a glaring paradox in the sense that foreign investors bring billions of dollars into the country – investments in lucrative ventures. However, institutional investors do no see these prospects, but invest their money in foreign financial markets,” she said.
Kuugongelwa-Amadhila urged Namibian businesspeople to seriously consider investing at home and to concentrate on local value addition.
She said the country’s economy (or the economy of a specific area) would only grow if local businesspeople take an active interest in growing the economic base through value addition at home.
“If you want to do business in Helao Nafidi, so that your children and your grandchildren can take over and grow the business in Helao Nafidi, consider value addition,” she said.
She added that local investors should optimise the opportunities offered through policies aimed at ‘Growth at Home’ in order to expand their businesses and contribute to national efforts to eradicate unemployment and poverty.
“The increased trade within our region that governments within SADC are promoting – including here at Helao Nafidi – should translate into increased economic activities in all the partner countries to ensure that the increased growth in the region is equitably shared among all member countries,” the PM said.