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Other Articles from The Villager

Youth unemployment expected to hit 47%

13/07/2018
by Kelvin Chiringa
News

As the going gets tough and the local economy still under stress, Simonis Storm Securities predicts youth unemployment to shoot from 43% recorded in 2016 to 47% in 2017.

This is on account of more jobs that were shed while the unemployment numbers are likely to ease back to 46%. 

The subdued economy will continue limping with subnormal growth as long as tax collections remain low while government continue to keep spending under the leash, Simonis Storm Securities has warned.

The firm has already revised its growth forecast to a meager 0.6% and 1.7% for this year and 2019 respectively from 2.2% and 2.4% previously.

Meanwhile the economy has suffered its third contraction (o.1%) since the third quarter of 2017 while high unemployment, a twin deficit, low tax revenue collection and highly indebted consumers continue to haunt the country.

Says economist, Indileni Nanghonga, “For us to have a pro-growth government structural policy we need to have the following in place: sound fiscal policy, a public sector that intrudes minimally on the private sector, competition within the private sector is encouraged, infrastructure and human capital development are supported and tax policies that are sound.”

Meanwhile, inflation is also expected to average 4.1% in 2018 and increasing moderately for the remaining five months as fuel prices tick up.

“The Minister of Finance tabled the fuel levy rates by 25c/l as proposed during the budget in February 2018. In addition to the levy, the petrol price increased by 70c/l for June and July 2018. We expect interest rates to remain muted at 6.75% in 2018,” she adds.

Economic developments: Simonis Storm 

Diamond production increased by 16.4% q-o-q to 552 136 carats in 1Q2018 while diamond sales increased by 28.9% q-o-q to 476 395 carats.

 Royalties increased by 13.1% q-o-q to N$2.5bn in the 1Q2018 compared to a decline of 10.5% in 1Q2017.

The firm says sentiment in the diamond industry remains positive and expects this trend to continue in 3Q2018.

On the gold front, the Otjikoto Mine had a solid start to the year.

The mine produced 39 499 ounces in 1Q2018 which was 6.0% above target.

However, this was 8.0% below gold production recorded in 1Q2017 due to a negligible amount of Wolfshag ore being mined in 2018 while Phase 2 of the Wolfshag Pit is being developed.

Otjikoto is expected to produce between 160,000 and 170,000 ounces of gold for the year.

Uranium production increased by 69.6% q-o-q to 3 055 381 lbs in the 1Q2018 but declined by 10.4% compared to 4Q2018.

Uranium production this year will be negatively affected by Langer Heinrich uranium mine that was placed under care and maintenance.

Husab mine is expected to produce between 3000 to 4000 tonnes in 2018 and increase to 6000 to 7000 tonnes in 2019.

The average sheep prices moderated slightly in 2018 to N$39/kg in April compared to a N$47/kg in December 2017 but remain higher compared to N$36/kg in April 2017.

Beef prices continue to skyrocket at N$42/kg in April 2018 compared to N$39/kg recorded in December 2017.

“In our view cattle take time to restock and we should expect beef prices to remain elevated over the medium term. Meatco is expected to ship its first consignment of beef to the US by the end of July 2018. This should be positive for the meat industry but we are concerned that supply will be constrained as cattle restocking lags,” says Nanghonga.   

PSCE increased at a slower pace of 5.5% y-o-y in May 2018 halting a four-month upward trend.

The slow growth rate can be ascribed to a continuous contraction in instalment credit (-5.5% y-o-y) coupled with slow growth in mortgage loans and overdrafts of 7.5% and 3.5% y-o-y, respectively.

On a monthly basis, Simonis Storm observed slow growth in mortgage loans of 0.2% compared to 0.9% in the prior month.

Instalment credit contracted by 5.5% compared to a 5.1% contraction in the prior month.