Reacting to the 2016/17 National Budget speech recently delivered by Minister of Finance Calle Schlettwein, executive chairman of the Ohlthaver & List Group and president of the NCCI Sven Thieme expressed optimism about the direction taken by government and called on all stakeholders to collaborate to ensure the necessary speed of execution.
Thieme said Minister Schlettwein’s call for ‘Growth-At-Home’ and efforts to develop a self-sustaining economy need to be embraced by all, as socio-economic transformation could not be attained through social grants only, but require the development of sustainable industries.
“Growth at Home has never been more needed than now, as developing our own sustainable industries is imperative in protecting our economy against the impact of global and local factors, while creating employment and reducing poverty,” Thieme said.
He emphasised that the impact of the current drought was amplified by the effect of various externalities, such as the deterioration of the oil price, which he coined a double edged sword in that, while lower oil prices benefit the consumer at point of sale and the transport sector at large, its negative impacts were felt in other sectors, such as the domestic retail sector (when a once-thriving Angolan shopper-base withdrew its local spend due to less cash in that oil-dependent economy), and the domestic ship repair and marine engineering industries were impacted by oil price fluctuations.
Thieme also stressed that had Namibia’s industrial sector been firmly established, the devaluation of the South African Rand would have dealt the local economy a softer blow. “While depreciation enhances competitiveness to the exporting sector it has immediate effects on raising sovereign debt and debt servicing, as well as a higher import bill and, consequently, inflationary costs.
“Currency depreciation will drive up the price level of imported goods in the coming months, which, when combined with drought-related food price increases, will lead to higher inflation. With a forex impact of 27 percent on the price of some packaging materials in just five months, and the current drought situation impacting food production and pricing, it is a sad reality that the ordinary man on the street will not be left unscathed.”
Thieme added that from the sheer size of Namibia as an emerging market which largely consumes what it does not produce, is extremely vulnerable to externalities, which is why ‘Growth at Home’ is the key to a self-sustaining and free economy.
Expressing excitement at the national budget’s focus on economic growth and sustainable development, as well as poverty eradication, Thieme stressed that the services that need to be prioritised to effectively support the growth agenda include water, energy, and rail service delivery.
He stressed the importance of skills development, education and leadership in actioning the necessary change.
“While there are certainly some tough times ahead, I’m excited about government’s rally call to focus on poverty alleviation and job creation – and industrialisation is certainly a key driver to achieving this. But if Namibians do not support local, economies of scale cannot be achieved and we cannot become competitive.”
In conclusion, Thieme said the country does not have the luxury of wasting time and that this has to be “a year of doing”, so that the foundations are put in place to build a prosperous country.