Change on the
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horison?
n last month’s issue we unpacked the origins of the current economic crisis gripping Namibia. We recounted the combination of external factors and domestic policy errors that contributed to the economy overheating, which has resulted in the depressed climate we find ourselves in. The latest quarterly GDP update (Q2) from the Namibia Statistics Agency (NSA) indicates that the Namibian economy contracted by 2.6% y/y in the second quarter of 2019 and yearto-date output is below that recorded for Q2 2015. The Bank of Namibia (BoN) now expects the Namibian economy to contract by 1.7% in 2019 and to grow by only 0.8% in 2020. Should these forecasts prove accurate, and it seems likely, it would mean that Namibia will have experienced the real GDP per capita decreasing during the five years between 2016 and 2020. The increase in headline unemployment from 27.9% in 2014 to 33.4% in 2018 provides further evidence of a slide in general living standards.
a start in what is likely to be an arduous process of regaining investor and business confidence.
REVIVING THE NAMIBIAN ECONOMY The policy direction embarked on in 2015 and 2016 damaged investor and business confidence and is arguably responsible for the duration of the crisis. This loss of confidence is glaringly obvious in the 53.5% drop
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in gross fixed capital formation (capital investment) between 2015 and 2018. Regaining confidence is, in our view, key to emerging from the current crisis. And the Namibian government concurs. In April the president inaugurated a high-level panel (High-Level Panel on the Namibian Economy or HLPNE) tasked to advise him on how best to revive the Namibian economy. The 22-member panel is currently serving on a voluntary basis (i.e. unpaid) until the end of March 2020, a relatively limited timeframe in which to attempt to solve the myriad of challenges that the country faces. Nevertheless, the panel has, by all accounts, been proactive, dedicated and focussed. One of the first tasks the panel set for itself was to arrange an Economic Growth Summit aimed at restoring business and investor confidence as well as showcasing opportunities for investment in Namibia. The HLPNE hoped to achieve the former goal by expediting guidance on the empowerment and investment policies (NEEEF and NIP Act) that have clouded the investment landscape in Namibia for a number of years. This focus aligned well with IJG’s views that these particular policies have played a major role in prolonging the current recession by deterring investment. The natural outcome of policy clarity should be improved business and investor
