By:Nghiinomenwa Erastus
With so much recent marketing to attract Foreign Direct Investment into the domestic economy, the central bank governor has reminded us that appropriate policies would be required to create a business-friendly environment.
Johannes !Gawaxab made the remarks during his presentation on the state of the economy to the 7th Public Enterprise Chief Executive Officers Forum’s Annual General Meeting early this month.
In terms of the country’s economic recovery strategy, !Gawaxab stated that “the recent emphasis on attracting much-needed Foreign Direct Investment should be accompanied by appropriate policies to create a business-friendly environment”.
The country is reviewing and drafting new policies; however, the time taken has been criticised.
The country scrapped the skewed Special Economic Zone, revoked some special treatment for the manufacturing sector and the taxes were also revoked. However, to date, no replacement has been made.
While other critical legislation, such as investment bills and Special Economic Zones Policies, is still in draft format and yet to reach parliament- with uncertainty and policy gap being highlighted impediments.
The governor indicated that growth-enhancing strategies for the post-Covid-19 era to drive economic recovery require concerted efforts and mobilisation of stakeholders.
He also urged the implementation of the Diversification Plan developed by Harvard Growth Lab, the finance ministry, and the National Planning Commission in key economic sectors.
!Gawaxab also pointed out that the country should prioritise the productivity and competitiveness of its economy and enhance resource allocation to productive sectors.
Despite the country’s struggle to diversify, the governor still believes it should leverage its natural resources endowment (green hydrogen, oil, mineral resources (gold, rare-earth metals) and create wealth.
However, he reminded us that the policy environment needs to create confidence to enable more ventures downstream for the country’s minerals and other natural endowments.
Regarding economic growth and livelihood, the governor indicated that rising food and energy prices would dampen prospects for a stronger recovery in growth, likely exacerbating unemployment, poverty, and inequality in the country.
On the increasing inflationary pressures, he also accepted that the constant price increases are straining the Namibian economy, as the cost of living increases, especially for the most vulnerable members, disproportionately affected.
This year, prices for wheat and maise increased by 58.0 and 50.1 per cent, respectively, and they are driving inflationary pressure as production reduces and demand increases.
As a net importer of food and fuel, Namibia’s inflation is highly dependent on external factors such as international prices for crude oil and food items.
The central bank estimation says annual inflation is expected to average 6 per cent in 2022, up from 3.6 per cent in 2021.
Domestic economic growth is expected to improve in 2022, “but we have to live with high inflation and high-interest rates as these are dictated by external factors,” said !Gawaxab.
Overall, the domestic economic growth is expected to improve in 2022, supported by growth in diamond mining and gradual recoveries in secondary and tertiary industries.
Primary industries are expected to grow by 9.6 and 8.3 per cent in 2022 and 2023, respectively, an improvement from 8.0 per cent in 2021. The least growth in the sector will come from agriculture (3,1 per cent and 3,8 per cent this year and in 2023, respectively).
While mining is to expand by 15.5 per cent and 12 per cent in 2022 and 2023, respectively, supported by diamonds.
However, the expected growth is mostly extractive compared to other sectors.
Email: erastus@thevillager.com.na
