Old Mutual Namibia celebrated the anchoring of its business footprint in Africa last week at an event where finance minister Calle Schlettwein also called on the private sector to break free from its wait and see approach and begin to fully participate in stimulating the subdued economy.
Schlettwein said the domestic economy has endured one of its most precarious states, from a perfect storm in 2016 and 2017, to resurgent growth prospects this year going forward.
Various experts that aired their views at a panel discussion were in tacit agreement that the workable approach going into the future is an inclusive concerted effort between government and private sector with labour at the centre.
Said the minister, “The financial services sector, is most suited to break this shield through its catalytic effect on capital investments and the supply of productive credit for growth, jobs and the reduction of poverty and inequalities.”
He said in spite of the subdued economic environment during 2017 in Namibia, the non-banking financial sector’s assets grew to N$288.9 billion from 244.9 billion in 2016, led by pension funds with a total of N$152 billion which constitute 52.9% of the sector’s total asset.
This, he said, is followed by long-term insurance (N$53.9 billion) and collective investment schemes (N$47.5 billion).
“Short-term insurance, medical aid funds, investment management, micro-lending and friendly society assets were all worth over a billion but less than N$10 billion in total during 2017. Given Old Mutual’s relative size in the industry, accounting for almost 50% of the total assets in the long-term insurance sector, your role and importance in the economy cannot be overemphasized,” he said.
Business should begin to feel the weight of the albatross taken of its neck given that GRN has created a “conducive policy environment for private investment and concerns on the key provisions of the national empowerment framework have been addressed”.
“The SME Financing Strategy with its mutually reinforcing instruments of Venture Capital Fund, Credit Guarantee Scheme and Mentoring and Coaching Scheme are approved and preparations are under way to operationalise these instruments in collaboration with the Development Bank of Namibia,” he added.
He also confirmed that amendments to lift the minimum threshold for domestic asset requirements are now due for gazetting and will come into effect by July 2018, after having been considered by the Insurance Advisory Council.
“I am informed that Old Mutual Insurance already satisfies the increased limits of 45% of its investment locally,” he said.
After lengthy consultations and drafting process, the legislation for the non-banking financial sector will now be tabled in parliament.
Schlettwein said he anticipates a spirit of partnership from all industry players to move this reform forward and continually address emerging needs in future considerations.
He also expects final consumption demand to remain moderate in the near-term, given a largely neutral policy stance.
“In this environment, investment injections in the real and services sectors of the domestic economy are critical to lifting growth prospects,” he said.
The low-hanging fruits
Uranium remains under pressure but commodity exports are benefiting from price improvements and new mining activities for minerals such as lithium and tin.
The minister said he expects final consumption demand to remain moderate in the near-term, given a largely neutral policy stance.
In this environment, investment injections in the real and services sectors of the domestic economy are critical to lifting growth prospects, he said.
Activity in the agricultural sector remains firm, thanks to better rainfall over the past two years.
The construction sector is bottoming out of a protracted contraction and so is the wholesale and retail sector.
The current account balance and the international reserves are significantly better than two years.
“Better nominal GDP numbers and revenue outturn for the past fiscal year relative to targets support fiscal benchmarks and the implementation of the budget.”
“As you are aware, the essence of the 2018 budget is to provide for a targeted growth stimuli and resource realignment from operational consumption to capital investment budget within a generally consolidative fiscal stance.”
“We are pressing ahead with project-financing arrangements by the budget and financial institutions such as the African Development bank, these reassuring realisations and policy interventions are consistent with the policy stance to work towards regaining our investment grade sovereign credit rating and stabilize growth in public debt at no more than 45 percent of GDP,” he said.