With Namibia’s real GDP growth projected at 4.4 percent and 5.4 percent for 2016 and 2017, respectively, the country’s ability to prudently manage its resources is now more crucial than ever.
Several Namibians, who spoke to this publication, are of the view that corruption within government needs to be addressed while others urged government to ensure that resources are shared equitably among all Namibians, and yet others welcomed the manner in which government handles the state’s financial affairs.
With growth expected to slow down and fiscal space all but disappearing due to increasing public debt – which now stands at N$143 billion – Namibians will have to tighten their belts if government borrowing and wasteful expenditure continues.
The projected growth for 2016 represents a slowdown from the preliminary national account estimates of 5.7 percent for 2015.
“The expected slowdown in 2016 is mainly attributed to the decline in growth of the construction sector, as well as, the diamond mining sub-sector. There are notable improvements in the uranium mining sub-sector and a lesser contraction in the agriculture sector. However, these developments may not be sufficient to avoid a slowdown in overall growth for 2016,” according to Bank of Namibia’s July outlook.
This week, Namibians learned how the public debt grew by N$50 billion from 2010 to 2016.
In fact, detailed figures provided by local stockbrokerage firm Simonis Storm in its recently released Namibian Fixed Income & Economics report shows that Government debt significantly grew by 415percent over six years ago from N$12.1 billion recorded in January 2010 to N$62.1 billion recorded in June 2016. In addition, Government debt as a percentage of total debt stood at 43.3percent in June 2016 compared to 24.7 percent recorded in January 2010.
The total public debt currently stands at N$143.6 billion as of end of June 2016 compared to N$109.9 billion recorded in the previous year.
Since Namibia is highly integrated into the SA economy, Namibia’s inflation is driven by SA to a large extent because a large percentage of goods consumed in Namibia come from SA. This has led to Namibia importing most of South Africa’s inflation. Economic experts have in the past cautioned that higher inflation in Namibia have a negative effect on real returns, particularly when bond prices do not reset to take that into account. Simonis Storm is of the view that the impact of financial repression is starting to have an impact on Namibia. “For instance, the 10 year government bond yield at the end of July 2016 stood at 10.7 percent, while inflation for the corresponding period came through at 7.0 percent.”
This week the Namibia Statistics Agency also announced that the country’s trade deficit was valued at N$7.3 billion during the second quarter of 2016, representing a decline of 36.8 percent from N$11 billion recorded during the corresponding quarter of last year.
The decline in the deficit was attributed to the growth in exports revenue during the reported period.
During the period under review, merchandise exports from Namibia rose by four percent to account for N$16.4 billion, up from N$15.9 billion registered in the same period a year earlier. The growth in exports was mainly driven by high export values of diamonds, fish, copper ores and live animals. With the civil service having surpassed the 100 000 mark and the wage bill of civil servants expected to reach N$25 billion during the current financial year, efficiency within the civil service is key. Economists have warned that a growing economy without jobs is pointless. Despite that, critics have questioned government’s practice of using the civil service as a means to create employment, instead of creating an environment that facilitates the private sector to create more jobs.