“Policymakers must be very intentional in passing policies that support the local economy as well as work closely with the business community to understand their needs and put into place policies that address those needs,” said Hano-oshike
By: Nghiinomenwa Erastus
A cloud of uncertainty is approaching not only over the Namibian economy but for the global, all due to the new Covid-19 variant, which could unleash more economic-impactful restrictive measures for 2022.
As a result, it presented a handful of tasks, moves, innovation and unconventional decisions for the country’s policymakers, financiers, and entrepreneurs for 2022.
Consumers are warned to watch where they spend their dollars, not strictly for health reasons but to buy locally made products, services and take care of the environment.
During the second and third quarters of 2021, the Namibia economy finally broke the curse of consecutive negative quarterly growth that started at the end of 2018, after a three-quarter growth.
During the second quarter of 2021, the country produced N$953 million more goods and services, while for the third quarter, N$765 million worth of goods were produced compared to 2020.
The Villager spoke to an investment professional, economist/researcher and policymakers on what needs to be done to stimulate production and consumption, moreover get the financiers to fund entrepreneurial moves and projects.
In terms of funding, lenders’ risk tolerance has decreased as non-performing loans shoot up.
According to Jesay Hano-oshike, an investment professional, since the country and the world are still in the middle of the pandemic, businesses will most likely continue to find it difficult going into 2022 to access debt funding.
He said the recent spike in Covid-19 cases worldwide have led to travel restrictions and greater uncertainty. This has severely hurt the domestic tourism industry and has had a knock-on effect on sectors that support tourism activity.
Additionally, Namibia’s low Covid-19 vaccination rate will likely lead to another infection wave during the 2022 winter season, further hurting the local economy.
Hano-oshike explained that financiers are likely to continue being risk-averse when it comes to financing businesses with a gloomy economic outlook.
“Only approve funding for business activities where revenue has a greater degree of certainty,” as credit providers will be more secured with regards to debt repayments,” he stated.
He also highlighted that more early-stage risk capital is needed to develop the Namibian economy.
Investors should look at home for opportunities to invest in local businesses.
He added that many compelling business opportunities find it challenging to attract funding, especially early.
On what type of economic/policy moves the country needs to implement to stimulate economic activities in 2022- he said the government needs to become more liberal and enforce pro-business economic policies.
“Many promising policies are often stifled by a bureaucratic process or lack urgency on the side of the government,” Hano-oshike highlighted.
He also said that come 2022, policymakers should focus on finalising a number of policies to provide investors certainty regarding the legislative environment in which they will operate if they decide to invest in Namibia.
These include the Special Economic Zones Policy/Bill, National Equitable Economic Empowerment Framework Bill, the Namibia Investment Promotion Act, and others.
Hano-oshike also highlighted that the government is still the largest single consumer in the Namibian economy despite fiscal consolidation. It should use its spending power to strengthen the local economy as much as possible.
He further said spending power could be quite helpful in assisting entrepreneurs if the government will enforce two of its various directives that set to prioritise Namibian suppliers and producers for procurement as per the Public Procurement Act.
“This will mean much of the government spending will remain in the local economy, further boosting consumer spending, creating jobs and helping to improve the economy,” he said.
Further, Hano-oshike said for 2022 and onward, policies that should be looked at must create supportive structures for entrepreneurs to start and build their businesses.
This includes finalising the long-awaited government-backed venture capital fund and implementing policies to support Namibian startups and MSMEs.
High Economic Intelligence managing director and economist Salomo Hei said that the credit criteria have not changed in terms of funding, and access to capital remains the single biggest impediment to SME growth.
He said going forward, policymakers and financiers should look at the potential target funding for sectors and SMEs.
Hei explained that “we should look at the domestic economy and inward linkages” to stimulate economic activities.
Hei also said the country should ramp up production capacity locally and use it to build efficiencies.
“This would lead to competitiveness of our products and increase export quality,” he stated.
Hei added that the country needs to foster a culture of entrepreneurship. Still, banks must also support entrepreneurs and access to capital must be top of the agenda for high growth potential sectors.
Minister of Finance, the country treasurer, Iipumbu Shiimi, explained that to stimulate the economy in 2022, the government implementing agents needs to enforce HHP2, specifically on the economic front, aggressively.
At the same time, he and responsible ministries will focus on the diversification strategy launched this year, 2021.
Shiimi said for the economy to grow, the nation needs to be healthy, “let’s do the responsible thing and get vaccinated- with a healthy nation, we can create more jobs, provide more housing opportunities and reduce poverty”.
The finance ministry has been issuing local directives to government’ offices, ministries and agencies but the directives are barely followed up.
Recently, the same ministries have directed preference procurement for locals through a code of conduct directive.
Shiimi was asked what his ministry intended to do to ensure compliance to the procured local directive and preferential treatment for SME.
He said that come next year; they will strengthen their compliance program to ensure that public entities comply with the directives.
While for consumers, economic observers and fixers advised that individuals should spend on locally-made products where possible and support local businesses to grow and thrive, especially during these difficult times.
Entrepreneurs should become more innovative in their business solutions and look to solve real-world problems.
Additionally, they should look at the Namibian market to build their business and look outside its borders for expansion.
As observed around the world with advanced economies, policymakers play an important role in keeping the economy afloat during difficult times.
“Policymakers must be very intentional in passing policies that support the local economy as well as work closely with the business community to understand their needs and put into place policies that address those needs,” said Hano-oshike. Email: email@example.com