Windhoek-The underpinning fundamentals of the Namibian economy are stronger today than they were a year ago. President Hage Geingob said this during a media briefing yesterday, where he noted that the domestic economy has passed through the brunt of the economic downturn and is now on a recovery path.
To support this view, Geingob pointed out the significant rain received earlier this year, which is fuelling a recovery of the agricultural sector; consumer price inflation, which has been on a downward trajectory during the past six months and hit a low of 6.1 percent in June 2017; demand indicators such as monthly credit extension by commercial banks and improved vehicle sales, as well as “remarkably” improved liquidity conditions.
Geingob also mentioned a notable improvement in the trade deficit, a relatively strong local currency during the first six months of the year, coupled with reduced fuel prices, which he said provide an additional boost to private consumption during a period when government resources are stretched.
“There are encouraging signs of economic recovery in Sub-Saharan Africa, in particular in South Africa and Angola, two key trading partners. South Africa has reduced its lead interest rate by 25 basis points, citing an improved inflationary outlook and the need to stimulate economic activities. Similarly, the Angolan authorities are cautiously optimistic about recovery and have forwarded the adjusted payment schedule of outstanding loan obligations to Namibia,” Geingob said.
“It is true that 2016 was one of the most challenging years for Namibia from an economic growth viewpoint. However, it was also one of the hardest years globally and with the exception of eastern Africa, most other countries in Sub-Saharan Africa experienced flat or negative growth.
“This notwithstanding, Namibia’s consolidation plan is deemed to be credible and has earned the country the status of being the only Sub-Saharan African country which has issued a Eurobond at investment grade rating,” he added.
The president went on to say government has instituted some of the deepest fiscal cuts since independence to rescue the economy and put it on a sustainable long-term growth trajectory.
The cuts include the shelving of massive expenditure items, such as the Kudu Gas to Power project, the upgrading of Hosea Kutako International Airport, the construction of a new parliament building and a second office building for the Office of Prime Minister, as well as putting on hold the construction of major new projects.
“Had these projects proceeded as planned, the cost incurred could have crippled the economy. Some of these projects were also shelved as a result of poor governance in the tender awarding process,” he noted.
Through the Ministry of Finance, government has also carried out structural reforms to make the economy more resilient and vibrant once the economic downturn is overcome.
These reforms include the passing of a new Public Procurement Act with high local content requirement to support SME development; the passing of the Business Intellectual Property Authority Act to enable easier business registration; and the passing of the Public Private Partnership Act to attract more private investment.
“While there is a lot of public discourse on the state of the economy, the actual state of our economy is better than currently portrayed in the public domain. As a matter of fact, opinions and perceptions on the state of the Namibian economy are in wide circulation. It is our view that the minister of finance and the economic advisor to the president have tried their level best to provide clarity on the state of the economy and to project a positive trajectory and narrative of economic recovery,” Geingob stated.