WINDHOEK – Despite the gradual recovery of the country’s economic growth, Governor of the Bank of Namibia (BoN) Iipumbu Shiimi yesterday cautioned that the multi-billion dollar construction and wholesale sectors are still struggling.
Shiimi said this when he addressed the media after he held closed-door talks with President Hage Geingob and his Cabinet at State House on the prospects of the Namibian economy. He said he briefed Cabinet that 2018 is a better year in terms of economic growth compared to 2017 when it had shrunk registering negative growth. Because of the impact of the global economy on commodity prices tens of thousands of people were laid off in 2016 and 2017.
“The economy is in a better shape than last year. We also highlighted that although we see growth becoming positive, growth is not significantly high yet. Therefore, we will still continue to see per capita income being depressed because the growth of the economy is less than the growth of the population,” he noted.
He said growth is concentrated and is mainly coming from sectors such as mining, agriculture and tourism.
However, he stressed the construction and wholesale sectors are still struggling, with little growth experienced.
“We have seen deep contractions in the construction and wholesale sectors in the region of 40 percent. The rate at which these sectors are contracting is becoming slower and we hope it will be positive in the future. They are not growing, in fact they are registering negative growth,” said the BoN chief.
However, Bank of Namibia director for research, Florette Nakusera, was quick to react that they don’t expect further job losses in those affected sectors. She said that in 2019 they foresee positive growth in the construction and wholesale sectors.
BoN also recommended to Cabinet to devise ways to contain the huge wage bill. Currently, Namibia’s public sector wage bill amounts to 50 percent of revenue and is one of the highest in the world. Budget allocation for this financial year indicated that government would spend N$28.9 billion on personnel expenditure.
Shiimi said the government is already taking measures to contain the wage bill which include freezing certain new appointments in the public sector. However, he warned that when government is restructuring “we should not add fire to something which is already a problem [unemployment]. The idea is not to fire people. We don’t support that but the idea is to restructure.”
Shiimi encouraged the Prime Minister’s Office to continue restructuring because it will not be in a position to sustain the current level of the wage bill in the future.
“The new measure is if you want to create a position, you have to give up another position. It’s nothing new, it’s a matter of continuing with that strategy and over time we will see the wage bill coming down,” he suggested.
Presidential advisor on economic matters John Steytler echoed Shiimi, saying with the unemployment rate the country faces the government cannot afford to lay off people.
He said there is need for government to continue with its fiscal consolidation policy as it’s starting to show positive results.
“His Excellency has on many occasions said we have to rebalance our growth model from a model that is too reliant on government spending to a model that is more led by private sector investment. We have to continue with economic reforms to make it easy for investment. Not only foreign investment but also domestic investment to find opportunities in Namibia. So red tape, we have to continue removing it,” he said.
He also advised that one way to stimulate the construction sector is to gradually increase the capital budget.
He added that as the economy is recovering he foresees the private sector coming on board to invest in the current struggling construction industry.