Local stock brokerage firm Simonis Storm has issued a stark warning to financial authorities to rein in the rising levels of public spending, which will negatively affect future economic output.
Simonis Storm predicts higher levels of liquidations, bankruptcies and auctions in 2019.
It also warned of rising unemployment, crime and retrenchments as well as increased spending because of the 2019 national polls.
Non-executive Director Andrew Jansen said this in his presentation when Simonis Storm presented its economic review yesterday.
He pointed out that the nation could experience low business confidence and investment which could result in divestments.
Jansen spoke of the lower liquidity saying “we can already see this when clients want to sell NSX listed shares”.
He said high budget deficits coupled with low revenue and tax collections, SACU, VAT and Income Tax will also dent the economy.
Jansen urged investors to start looking at Namibian Government Bonds because “as an individual you can get 10-11.5% tax free and risk free”, adding that the diversification of investments across geographies, currencies, investment instruments and companies will be key.
He also called on potential investors to increase their direct offshore investments, at least 30% of their total wealth.
On a more positive note, Jansen expects regional economies to pick up.
The privatisation of SOEs, fiscal consolidation, property price drop and the strengthening of global commodity prices are some of the low-hanging fruits pointed out by Jansen.
Meanwhile, the financial advisory firm’s economist Indileni Nanghonga pointed out the economic slowdown has affected businesses and households, slashing borrowing appetite to record lows while taxes on products also contracted as spending subsides.
She said more headwinds than tailwinds can be expected in the various sectors in the country
On the agricultural, she said, cattle restocking will take time while Meatco exports to the US market is positive but supply remains a concern.
She also expressed concern over the uncertainty in fishing quota allocations.
“The global fishing industry is experiencing overcapacity and resource challenges, putting pressure on prices, while fuel price increases will negatively affect the sector,” she noted in her outlook.
Nanghonga also cautioned that misappropriation of public funds especially in the education sector coupled with fiscal consolidation will derail the sector.
On a more positive note, she said developments around the revenue agency, iTax system should provide some transparency and fast-track the collection process.
With the global commodity prices expected to rebound positively in the mining sector, Nanghonga “NEEEF already caused damage”.
This comes after government has undertaken a benchmark exercise with South Africa to provide additional context and scope for improving the textual and substantive provisions in the New Equitable Economic Empowerment Framework (NEEEF).
In a statement issued a few weeks back, Prime Minister Saara Kuugongelwa-Amadhila said the benchmarking exercise with the Department of Trade and Industry in South Africa is also to draw lessons from experiences that may help the government improve the NEEEF framework and its implementation.
She also said the team consisting of the Office of the Prime Minister and the Law Reform and Development Commission (LRDC) is continuing to target stakeholder consultations to strengthen understanding of public views to address persistent concerns about the viability of NEEEF.
According to her, there is no doubt that the impact of systematic colonialism and apartheid, which deliberately disadvantaged segments of the society economically, socially and educationally, continues to manifest itself 28 years into independence.
“The wealth gap and income disparity remain glaring.
The proposed empowerment legislation is an attempt to reduce this gap by creating an environment in which no Namibian should feel left out, while optimising opportunities for further sustainable economic growth,” she said, adding that it is an opportunity for Namibians to create an environment of solidarity and unity and increased prosperity for all.
Over the next few months, she said, the team is expected to produce a revised draft Bill, consult with stakeholders, develop empowerment standards and scorecards and initiate discussions on sector-specific charters.
The intention is to exhaust internal discussions with government players and private sector stakeholders to ensure that the information that is returned to the broader public is clear and thoroughly consulted on.
“It is intended to have the Bill tabled in the National Assembly before the end of the financial year,” she added.