By Megameno Shikwambi
The domestic economy has been sailing with subnormal growth for the 10 months of 2019, but more bad news await next year with growth expected to be too sluggish to create enough jobs for thousands of unemployed youth.
What is apparent is that the finance minister, Calle Schlettwein has been able to reign on the budget to avoid a fiscal crisis by cutting back on major projects, but for the man on the street, fiscal consolidation has brought misery jobs’ wise as construction remained under pressure.
A crippling drought that has buffeted the entire SADC region leaving 4.1 million Zimbabweans in need of food aid has also beaten down the agriculture sector.
Simonis Storm’s latest report is not flattering.
The economists expect growth next year to register a paltry 0.9% before bottoming out to 1.5% in 2021.
While government has been blaming the global economy, which has also posted lackluster performance and projected to grind down to a 3% growth, economists are adamant Namibia’s problems are home grown.
Simonis Storm’s team of experts has reminded government of mismanagement of public funds, poor governance, high level of corruption, over-regulated industries and weakening consumer demand.
In the 2Q2019, GDP contracted by 2.6% making it the 4th consecutive quarter of contraction.
“We expect the 3Q2019 and 4Q2019 to contract further by 1.8% and 0.2%, respectively,” said Simonis Storm in their latest Economic Outlook Report.
Externally, unlike Tanzania, Rwanda and Botswana, Namibia has failed to resist shocks which for the greater part of 2019 came in the form of low commodity prices and the drought.
This by all means does not spell well for the new government coming in next year.
The question according to experts is whether Namibians can bet on the new blood entering parliament as they question the ability of this new crop to deliver sound practical policies and a rescue package to the beleaguered status quo.
The new government has a Herculean task ahead, which will keep it on its toes for the remainder of 2020 until 2025 when new elections will be held.
So far, experts have voiced that economic recovery will be unlikely if the following are not addressed: ambiguous communication to investors, slow or no structural reforms, lack of accountability, lack of private sector engagements, slow execution, corruption and lack of common goals.
This week, Florette Nakusera, when confronted by the question of what the High Panel of Economic Advisors was up to, months after the holding of the Economic Growth Summit, she did not want to divulge much, except that there was something cooking behind the silence.
Nakusera is the Director: Research and Financial Stability at the Bank of Namibia and also fulfills her role as one of the number that makes up the team of advisors to the President who have been tasked with the mandate to come up with a workable solution to the economic malice.
“I am sure that when you talk to the Chairperson of the High Panel, he will be able to provide you with the details but for now this is what is happening behind the scenes that the panel is quite busy with work,” she said.
This week, the Bank of Namibia decided to keep interest rates flat at 6.5% while at the same time admitting that 2019 has been a bad patch.
Yet what has the Bank of Namibia been advising government this year in the face of the precarious position the economy is in?
Governor Iipumbu Shiimi, when confronted with the question was at first hesitant before opening up.
“You are going to say Bank of Namibia told government ABC and government is not listening, that’s what you are going to say.
You don’t always reveal what you advise other people because otherwise you are going to destroy the confidence that the people you advise have in you and therefore they will stop listening to you,” he said.
But he did say there is a need for the deepening of conversation on “what else needs to be done” to revive the economy.
He said the bank has continued talking to government on the need to improve access to finance, a long time stumbling block for small businesses.
He added that there has to be created an ecosystem that is favorable to SMEs.
In the meantime, the wholesale and retail sector, which is the biggest contributor to real GDP, has been on a decline due to lower spending caused by high unemployment and consumer indebtedness.
“The mining and manufacturing sector, contributing about 10% to real GDP, are facing structural challenges.
Weak commodity prices coupled with mines going under care and maintenance (Langer Heinrich and Trekkopje) and facing possible closure (Weatherly and Scorpion Zinc) are threatening the medium-term growth of the sector. Policies and regulations are some of the worrying contributors to a struggling sector,” said Simonis Storm.