By Josef Kefas Sheehama
During the course of 2022 I published 100+1 articles compare to 26 articles in the middle of 2021 talk to Namibia economy challenges and solutions. I thank all Media houses and journalists who helped me. Thank you for the amazing insights and feedback that you provided on the articles. It’s always a wonderful experience to collaborate with you. I really appreciate all that you’ve done for me.
The year 2022 was a rough for everywhere. Namibia was no exception. The economy and how it impacts families is a burning issue today, as inflation and high interest rates dominate the news in Namibia, becoming a key element. The hesitant post-pandemic recovery was derailed in 2022 as the global economy was confronted by a rare convergence of misfortunes, triggered largely by the unprecedented war in Ukraine. No one could have predicted the length of time that the economy has required to recover. A variety of economic headwinds have battered the recovery, causing output growth to be somewhat slower than was expected in prior projections. It was a year of highs and lows, and anything but normal. The new chapter in the history of football documented. The Qatar 2022 sets record for most goals in FIFA world cup history. There were 64 matches played at Qatar 2022, meaning that the tournament average was 2.6875 goals per game. According to People Daily Sport page asserted, First World Cup held on Arab soil. First World Cup kicking off in November. First World Cup with an Olympics-style opening ceremony. First men’s World Cup with female referees. First modern edition based around a single city. Argentina’s forward Lionel Messi lifts the World Cup trophy during the Qatar 2022 World Cup trophy ceremony after the football final match between Argentina and France.
Review Economy and business 2022
As Namibian face continued uncertainty, supply disruptions and soaring food and fertilizer prices, trade policy can potentially play a key role, amid limited fiscal space, policymakers must look to innovative solutions such as temporarily reducing or waiving import duties on staple foods to provide relief to the Namibians.
Covid-19: Omicron has sparked more anxiety than any other variant since the emergence of Delta, itself already much more contagious than previous strains. However, lack of knowledge about omicron has caused fear to grow. Omicron reinforces that the economy remains tethered to the pandemic. Building and supporting economic resilience have become key strategies to reduce business interruptions and economic losses caused by shocks.
Russia/Ukraine war: The war erupted in February and has featured in the news every day since. The EU and USA have sanctioned Russia. The conflict has been a profound shock. At the start of the year, we were looking at an economy that was recovering from the Omicron COVID variant. Activity was picking up; we were seeing a recovery in consumer spending and business investment. This all now looks in doubt. We are now facing an environment of significantly higher commodity prices, which could persist for longer than many would anticipate Since the onset of the pandemic, Namibia has been encountering episodes of rising inflation but the headline number has stayed fairly and has tended to revert back to the target as each supply shock has receded. Global spillovers are impacting core inflation on an ongoing basis and keeping it elevated. The most crucial negative impact of the sanctions over the course of the Nine months is likely to be from energy prices. We have seen a sharp spike in the price of oil and gas, which is going to impose a significant cost on our economy. The costs significantly impact both consumers and companies as well as force governments to consider ways to protect the economy from this energy price shock.
Bank of Namibia (MPC): The highest annual inflation rate recorded was 6.7% on average in June 2016 from 3.4% in April 2015 approximately. In January 2022, Namibia’s annual inflation rate increased by 4.50%, compared to 4.10% recorded in December 2021. Domestic annual headline inflation remained 7.1% in October 2022, but reduce to 7.0% in November 2022. Furthermore, inadequate supply of locally produced and imported commodities, the high price of imported commodities, the high price of imported goods arising from increases in foreign prices being instability of foreign exchange, thereby effecting our economy and its growth. Bank of Namibia raised its key interest rate for every MPC meeting, safeguarding its currency peg with South Africa’s rand. These challenges underscore the need for policies that would stimulate the economy. I appreciate the concern about inflation, which informed the decision of the Bank of Namibia. But the bigger worry is how to stimulate growth and rebuild confidence in the economy. . Driving up such inflation was the rise in the prices for items such as electricity, gas, fuel, food and transport. To policymakers, inflation hampers economic growth and development as it discourages investment and savings.
Rising oil Prices: The disruption caused by an oil price hike depends on the state of the business cycle, the response of macroeconomic policies, and the flexibility of the underlying economies. Russia’s attack on Ukraine helped push the price of oil to over $100 a barrel for the first time since 2014. This is contributing to rising inflation and concerns about economic recovery. An increase oil price will not only be seen at the gas station, but it will be felt in virtually all the goods and services we use. Because oil is a feedstock, source of energy and is used in the transportation of many things. A rise in prices impacts the current account deficit, which means that the value of imported goods and services exceeds that of exports. Consumption is the largest variable in the economic growth measurement. This means, once micro economic variables are affected by fuel prices, economy growth rate derail causing unemployment and inflation.
FIMA, City of Windhoek/Tollgate amongst other things: The reason given for the objection to the FIMA was as usual, lack of consultation. This seemingly indecisive posture of the NAMFISA makes people think that is not serious in their governance. More seriously, it portrays NAMFISA as living in the past. Living in the past in the sense that they still believe that they are operating under the old composition where because they are governing body, they didn’t need the public consultation and other stakeholders when they want to come out with a reform. The Municipality of Windhoek initiated to formulate a new policy to prohibit home shops from operating in residential areas. This decision could affect more than 820 registered small-scale shops across the city. The Road Fund Administration (RFA) official has indicated that they are expected to be collecting N$ 500 000 000 to N$ 700 000 000 through tollgates. The introduction of tollgates fees will have great impact on business, especially Small and Medium Enterprises (SMEs). The 7 seaters and minibus owners perceived exorbitant charges which, threatening their business operations. This could eventually push up the cost of transport and, consequently, prices of services and products. This burden could then be passed on to the consumer. The public needs assurance from the government that the money collected will be used for intended purposes and not diverted through fraud and corruption. From the economic point of view, tolling is an instrument that can be uniquely suited to the collection of efficient road use prices.
Municipal Debt write-off proposal: The National Assembly has received a proposal from the Landless People’s Movement (LPM) asking NamWater and Nampower to forgive the debts owed by local administrations. The local authorities owe NamWater and NamPower a combined total of nearly N$1 billion and N$807 million, respectively. This weak proposal was declined. Municipalities must be managed like businesses if they are to succeed. To execute reforms, local governments must have the resources and political will to do so. Therefore, the nation must first consider how much revenue autonomy is required because real revenue autonomy is a prerequisite for effective fiscal decentralization.
GDP growth: The Gross Domestic Product (GDP) in nominal terms, stood at N$50.0 billion, up by N$4.4 billion when compared to the N$45.6 billion registered in the corresponding quarter of 2021, according to the Namibia Statistic Agency (NSA). Pursuant to the latest Namibia Statistics Agency (NSA) trade data, the country’s trade deficit improved compare to N$4.6 billion from N$4.1 billion recorded in April 2022 and N$2.6 billion observed in May 2021. Trade deficit is acting as negative catalyst in the economic growth and GDP of a country.
Namibia Economic Outlook for 2023
A key source of uncertainty for the domestic growth outlook relates to the competing forces affecting household spending. However, high inflation and rising interest rates are raising the cost of living and will weigh on households’ income and spending in real terms. Household consumption will also be dampened by wealth effects as housing and other asset prices continue to weaken. Other important sources of uncertainty include the outlook for global growth and the possible knock-on effects of a sharper-than-expected downturn in a major economy.
The International Monetary Fund (IMF) projects Namibia’s economy is expected to grow by 3.7% in 2023 compared to 2.8% in 2022 and a negative growth of 0.9% in 2021. The Bank of Namibia (BoN) projects the domestic economy to grow 3.9% in 2022 before moderating slightly to 2.7% in 2023, largely driven by the recovery in the country’s mining sector. GDP growth in the Sub-Saharan African (SSA) region is expected to slow from 4.7% in 2021 to 3.6% in 2022 before improving to 3.7% in 2023 according to the Bank of Namibia.
In conclusion, the various energy price shocks and other supply-side issues facing the economy could intensify or persist for longer than expected, leading to higher inflation outcomes and lower output growth. The potential drought especially part of the country might increase the risk of further supply shocks.
On the other hand, global supply chain constraints are easing and there is much less upside risk from this source than has been the case for some time. Global prices of some goods could decline significantly in the period ahead, which would moderate inflation outcomes by more than expected, particularly if the simultaneous tightening of monetary policy across many economies affects demand by more than the sum of individual-economy effects would imply.
The economics of green hydrogen are challenging today, primarily because the underlying costs, skill, knowledge and availability of renewable energy sources vary widely. Furthermore, it is vital that Namibia’s transmission infrastructure be strengthened and bolstered, as the country pursues new renewable energy technologies and these are added into the mix, and as NAMPOWER undertakes its unbundling. Namibia has a range of supporting and enabling policy that can help steer the way to a green hydrogen economy. Namibia is on course to develop a green and blue economy as articulated under the national documents such as NDP’s and HPP2. For Namibia, climate change is as much an economic question as it is an environmental, or existential one. A key consideration for policymakers is what a circular economy looks like for Namibia. As the country braces for a low carbon future, it needs to pool adequate investments towards renewables, to scale up the universal access of clean electricity to avert climate disasters.
The Finance Minister Hon Iipumbu Shiimi will present the Mid-Term Budget Review on the 26 October 2022. The MTBR 2022 will coincided with the Monetary Policy Committee of the Bank of Namibia. The Bank of Namibia with the Ministry of Finance will officially launch the Sovereign Wealth Fund on the 12th May 2022. The Namibia economy need protection from volatile price changes and investments that are sustainable and capable of benefiting future generations.
Furthermore, Hon. Shiimi to unpack on the African Sovereign Africa Rating (SAR) agency as a very important step forward towards African integration, not only when seen from an economic point of view, but also politically. The challenge for Sovereign Africa Rating and how to overcome the skepticism around black people’s abilities to run countries with sophisticated market economies. How will international community recognize SAR as an alternative for S&P Global, Fitch ratings, and Moody’s International?
Therefore, risks to the global economy remain two sided, characterized by both easily modeled upsides and downsides. Namibia Investment Promotion and Development Board (NIPDB) to embrace investment opportunities as business focus on emerging economies can be a potential growth strategy.
Jeanna Smialek asserted, “The thing that has never happened would have to happen. “But, things that have never happened have been happening left and right.”