What lessons to take from Angola’s woes

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Instead of puffing out our chests, and suspiciously looking at our northern neighbours across the Cuvelai plains, we ought to pause and contemplate our current economical and fiscal problems.

Yes, our Angolan brothers did fail to pay on time the money owed to us through the 2015 currency conversion agreement. And yes, they are struggling to pay. Which is the reason they needed to come look into our eyes and make the promise to honour the outstanding N$2.6 billion.

Yet, if anything this should be for us Namibians a lesson in humility. Four years ago Angola would not even have blinked twice at settling a tab of N$2.6 billion – that was really spare change. But the economy tanked, as economies do these days, and what was once spare change is the most treasured asset.

Besides the positive predictions of a good economic growth for this year, and those ahead, there is really no clear affirmation that it would indeed be so. Suffice to say Namibia cannot invest in the hope that the economy would turn around for the good by the end of the financial year, and that 2018 would be a year of bounty and plenty.

We too have debts, owing both domestic and foreign creditors. Our Treasury owes billions to local private business entities. Treasury officials are now splitting hairs to evaluate beyond seeing which invoice is fake and which is genuine. They are even looking at the signatures and description of service levels versus the value being claimed. All to save dollars, – yes it is that bad.

Cash flow, by the government’s own admission, since the last quarter of 2016, has been tight. Investor confidence has waned – they are holding on to their money to wait for what comes out at the end of the cycle. The lack of confidence extends to bond traders, and others within the money market, who have become averse to our Treasury Bills and bonds.
In fact, what the market is doing is to question and doubt our ability to pay back or honour the very money market instruments we are issuing. And it is only five months into the 2017/18 government financial year.

Not to scare you, but does it not have similarities with how the Namibian public are doubting Angola’s ability to pay back the N$2.6 billion?

If we do not rein in our fiscal spending, and provide fiscal and economic stimuli now, we may be in this economic downward spiral for a long, long time.

Unless, as Angola has now realised, we also look at re-fortifying our public revenue streams, both locally and in the region, that our economy’s linkages to big brother South Africa, and other traditional markets, become more diverse and connected to other markets.

Our diamonds can be beautiful but the market will not always buy more of them to line our tax coffers. Angola realised that a little bit too late with their oil.

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