THE BRIEF

NAMIBIANS’ CONTRIBUTION GAP THREATENS COMFORTABLE RETIREMENT

Alex Forbes’ Head of Actuarial, Aimee Langford, says an average Namibian contributes only 13% of their income towards retirement savings, falling short of the recommended 23.5% needed to maintain a comfortable lifestyle in retirement. Speaking at Alex Forbes’ Hot Topics 2024, Langford said individuals should aim to replace 75% of their pre-retirement income when investing to maintain their standard of living in retirement. “And so ultimately we saw that members only contributed 13% on average towards their savings. Langford further explained that members contributing less than 8% of their income towards retirement savings could only expect to replace about a quarter of their previous income in retirement. However, the majority of members were still contributing at a level that would only allow them to replace less than half of their previous income in retirement. She also said that only approximately 41% of members could expect a replacement ratio of between 50% and 75%, but only 5% were projected to meet or exceed the 75% target. “The majority of members are contributing at a level that will not allow them to replace more than half of their pre-retirement income, which is concerning. To gain a more comprehensive understanding, we also analysed member projections, considering not only contributions but also accumulated savings and time until retirement,” she said. She further explained that another problem is the low rate of pension preservation. Only 15% of Namibians who change jobs preserve their pension savings, while the remaining 85% opt to cash out. Langford explained that this decision, while tempting in the short term, has devastating long-term consequences, especially for older workers who have less time to recover lost savings. “What we did see though is that more recently there was an uptick and as recently as 2022 that the preservation rate actually increased to just under 15%, so that’s very positive news. However, on the flip side, that does mean that 85% of members who left the fund during that year chose to cash their full benefit,” she said.

NAMIBIA REOPENS BORDERS TO SOUTH AFRICAN POULTRY, BANS BRAZILIAN IMPORTS

The Ministry of Agriculture, Water and Land Reform says it has lifted the ban on importing live poultry and birds from South Africa. Simultaneously, the Ministry has suspended the import and in-transit movement of live poultry from Brazil.The Ministry’s Acting Chief Veterinary Officer, Johannes Shoopala, said importers can now resume bringing in live poultry and birds from South Africa, provided they meet specific conditions. The conditions include that the poultry must originate from compartments approved by the South African Department of Agriculture, Land Reform and Rural Development and registered in terms of VPN 44.201201. “Additionally, the poultry must be from a compartment listed for export to Namibia in the monthly list approved by Namibia’s Director of Animal Health. Be from parent flocks that have not been vaccinated against Highly Pathogenic Avian Influenza,” he said. He also added that the ban on imports from Brazil also includes birds, raw/uncooked poultry products, live ostriches, and raw ostrich products from the State of Rio Grande do Sul, Brazil. This decision follows the outbreak of Newcastle Disease in the region. “The disease was detected on 9th July 2024; therefore, the suspension is effective as of 18 June 2024 based on an incubation period of 21 days as set by the World Organisation for Animal Health,” he said. He further explained that consignments from the State of Rio Grande do Sul containing poultry products packed in their final packaging on or after 18 June 2024, will be rejected and sent back to Brazil or destroyed at the importer’s cost. “Please note that a reefer container will be regarded as a consignment, and will be handled as an entity. We will not allow cartons (e.g., in case of chicken meat) to be sorted according to the date of production. All previously issued import and in transit permits issued to the State of Rio Grande Do Sul are hereby cancelled and recalled with immediate effect,” he said. Cooked poultry meat products for commercial purposes may still be imported into Namibia under a veterinary import permit.

NAMIBIA’S CARBON AND BIODIVERSITY CREDIT MARKET REMAINS UNTAPPED

The Perivoli Rangeland Institute says Namibia has immense potential for carbon sequestration projects but lacks a developed carbon credit market. Researcher Daisy Nielsen said the country faces key challenges, including high financial costs, transparency issues, and concerns over greenwashing.Nielsen highlighted the urgent need for effective regulatory frameworks and community involvement to unlock the market’s potential and drive sustainable environmental benefits as Namibia seeks to capitalise on these opportunities. “Namibia has significant potential for carbon credit projects in renewable energy, reforestation, agricultural transitions, and ocean-based solutions like kelp forest restoration. Proper bush management can restore environments, boost biodiversity, and increase soil organic carbon over time,” she said at a recent Biomass Conference. She said biodiversity credits, a new and rapidly developing market, involve payments for the protection, restoration, or management of biodiversity. Nielsen noted that although less formalised than carbon markets, countries like Australia have begun trading these credits, and Namibia has significant potential for projects that combine biodiversity and carbon credits, although combining them remains complex. “Namibia’s Ministry of Environment and Tourism supports carbon and biodiversity projects through policies like the Climate Change Policy and the Environmental Management Act. International standards also provide guidance, but challenges such as transparency, greenwashing, and financial limitations must be addressed,” she added. Nielsen noted these markets can diversify economic activities in agriculture, communal areas, and tourism. “Carbon and biodiversity credits transfer wealth from industrialised countries to developing nations like Namibia, building resilience to climate change and providing scientific solutions to land degradation,” she said. This comes as there is a global need to reduce atmospheric carbon from around 240 ppm to 350 ppm. “Carbon sequestration is central to this mission. Biodiversity has also gained significance, leading to the development of international frameworks guiding carbon and biodiversity markets,” she said. The Perivoli Rangeland Institute is currently conducting a feasibility study on a high-integrity biochar project while restoring arid land and sequestering carbon dioxide in Sub-Saharan Africa. The institute was established under the UK associate Perivoli Climate Trust, founded in 2020 to fund climate change research, which the Rangeland Institute implements through agri-ecological farming and converting invasive bushes to biochar, enhancing livelihoods and sequestering greenhouse gases. Last year, Presidential Economic Advisor and Hydrogen Commissioner James Mnyupe revealed that Namibia was exploring the possibility of venturing into carbon trading.

NAMIBIA RANKS SECOND IN INCOME INEQUALITY

Namibia has been ranked second in terms of income inequality, with an inequality index score of 59.1 according to a report by Rand Merchant Bank (RMB). RMB’s “Where to Invest 2024” report highlights a dramatic widening of the gap between the rich and poor in Namibia, placing it second only to South Africa on the income inequality index. “Namibia retains several troubling difficulties also entrenched in its southern neighbour. Both nations are among the world’s most extreme for inequality and unemployment,” the report said. It further reported that the country’s unemployment rate had positioned it in the 27th place with a rate of 20.6% on the RMB Where to Invest in Africa model, surpassing South Africa by four positions. The report also added that both countries were grappling with entrenched inequality. “To the investor, this may represent a low base with much to be gained if change is made,” the report stated. Despite these challenges, Namibia has shown potential in other areas. It ranks as the 18th most attractive investment destination in Africa, according to the RMB, scoring -0.05. While this places Namibia behind countries like Benin, Rwanda and Botswana, the report highlights strong fundamentals such as a sound GDP per capita, robust political stability, and high personal freedom as potential strengths. The report cites the country’s emerging oil and gas industry could also significantly boost its investment attractiveness. The country’s Orange Basin is considered one of the world’s most promising oil and gas regions, with the potential to transform Namibia into a petro-state. “Namibia’s most exciting prospect lies in offshore oil and gas discoveries. In fact, the country’s Orange Basin is emerging as one of the world’s most promising prospective oil and gas regions and, as the Financial Times puts it, “could make it the world’s newest petro-state,” the report reads. The report warns however that the successful commercialisation of these discoveries and the effective management of potential oil wealth through a sovereign wealth fund will be crucial factors in determining the country’s future economic trajectory.