Namibian Economics To The Point – August 2020

31 Aug 2020

Brigitte Weidlich

The cold winter weather prevailed during August with a short stint of slightly warmer temperatures in the third week and a few rain showers brushing over the southern parts of Namibia.

The Namibian government has, for the first time auctioned off a small percentage of the fishing quotas and earned an income of N$627,9 million (about 31.8 million Euros).

The Chamber of Mines announced that its contribution to Namibia’s GDP was 9.3 percent in 2019 (9.0% in 2018), despite an 11% contraction in mining mainly due to a large drop in diamond and uranium production.

The Namibian Competition Commission did not approve the sale of the majority shares in the local cement factory, Ohorongo Cement to a Chinese bidder.

The central Bank has lowered its repo rate from 4.0 percent to an all-time low of 3.75 percent this month. To date, the Bank of Namibia lowered its repo rate by 2.75% this year.

Inflation in Namibia stood at 2.10 percent on 31 July (June: 2.14%), the National Statistic Agency announced in mid-August.

The company Namibia Breweries, has introduced a 100 percent alcohol-free beer, called ‘Horizon’.

The government has moved the start of its tourism revival strategy from mid-August to 1 September, allowing foreign tourists to enter Namibia by air only at the Hosea-Kutako International Airport. Tourists must remain at their first destination for 7 days and may afterwards travel to other places in the country. Tourists must provide a negative Covid-19 test on arrival; which may not be older than 72 hours.

Due to an increase of Covid-19 cases in the central areas during August, the government has introduced travel restrictions for residents in Windhoek, Okahandja and Rehoboth in mid-August as well as a curfew from 20h00 to 05h00 in the morning. This was extended at the end of the month to 12

September and the curfew was extended throughout the country. However, travel restrictions for residents of Swakopmund, Walvis Bay and Arandis were lifted on 29 August.

Namibia registered over 7,000 Covid-19 cases at month-end. Schools for Grades 10, 11 and 12 opened on 01 September and tuition for all other Grades starts on 07 September.

N$627.9 million through fish quota auction for government

The Namibian government has auctioned off a portion of its own fishing quotas to local and international bidders to raise money for its public health sector to cope with the Coronavirus pandemic.

About 40% of the 72,000 tonnes of horse mackerel and the 11,000 tonnes of hake offered on auction were reserved exclusively for Namibian-registered companies to preserve jobs. Some 390 tonnes of monk fish were also put on auction.

According to the terms laid out for the auctioning of the quotas, the Ministry of Fisheries and Marine Resources signed a cooperation agreement with the 33 successful bidders afterwards. The silent auction was done away from the eyes of the public. Bidders had to email their bids to the Finance Ministry.

On 27 August, the Ministry announced it sold all quotas to the total of N$627,9 million (about 31.8 million Euros). Another condition for catching the quota is that this should only be done by Namibian-registered and licensed fishing vessels. According to a government statement, it only sold 4.3% of the total allowable catch (TAC) of hake, 95% had already been sold to existing fishing companies; 13% of the total horse mackerel catches were auctioned and only 5% of the total monk fish catches.

Ohlthaver & List Group goes international

The Ohlthaver & List Group has acquired the majority stake in CRONIMET Mining Power Solutions GmbH - a German-based renewable energy project development, engineering, procurement, construction, investment and asset management company. O&L announced that it took over the shares in August from the Swiss company CRONIMET Mining AG, which had sold its shares.

The merger comes following five years of successfully partnering with CRONIMET in Namibia through a joint venture. After the acquisition of the CRONIMET majority, the existing company O&L Energy merged with the international company under the new name O&L Nexentury GmbH. The former CRONIMET office near Lake Starnberg in Bavaria, Germany will continue operations.

Mining sector remains important economic pillar

The local mining sector contracted by 11.1 percent in 2019 due to a drop in diamond and uranium production but remains a strong economic pillar with a contribution of 9.3 percent to GDP. The Chamber of Mines published its 2019 review this month, saying that turnover of the mining companies was N$33.5 billion (about 169.8 million Euros), about the same as in 2018.

As of 31 December 2019, the industry employed 9,027 employees, of which only 283 were expatriates representing 3.1 percent of the workforce. Direct total employment was 16,324 and 800 employees were temporarily employed, while 6,515 were employed by contractors.

Big investment into gypsum factory in Arandis

A new company, Namibia Gypsum Industries intends to expand its manufacturing of gypsum ceiling boards for both the local and regional market. Founded in 2018, the company started a small factory in Arandis in the Erongo Region. According to the Arandis Mayor Risto Kapenda, the expansion entails receiving the raw material from a gypsum mine in the desert about 60 kilometers from Arandis. Another gypsum deposit is currently being researched that is only 15km away from the town. The gypsum is finely ground and processed at the factory to mainly produce ceiling tiles. The capacity of the plant will expand to around 12 million square meters produced annually and has already signed export agreements. The main customers are companies in South Africa. The company has so far created 150 jobs in the small desert town of Arandis. The construction of the large factory will be completed in November and production should run at full speed. "We are just waiting for the Covid-19 lockdown to end to celebrate the official opening of the factory," said the mayor. The Development Bank of Namibia (DBN) and the local investment company Baobab Capital are jointly financing the project, according to the mayor.

NamPower partners with MTN mobile technology

The state-owned company Namibia Power Corporation (NamPower) has through its fibre-optic subsidiary GridOnline signed a contract with the Namibian subsidiary of the South African mobile technology giant MTN, “This first commercial contract for bulk data transmission services. GridOnline is a service offered by NamPower, commercially providing managed bulk data transmission capacity to any licensed ICT operator on an equal opportunity basis. GridOnline is regarded as an important enabler for the ICT sector in Namibia. MTN Namibia will be sharing NamPower’s fibre optic network infrastructure by means of implementing managed data transmission services, allowing each and any licensed ICT network operator to connect and utilise the same, nation-wide network without having to invest in any new or duplicated infrastructure. “This ultimately brings down the cost for the consumer and for the nation and region at large,” NamPower said in August.

Sale of Ohorongo Cement not approved

The Namibian Competition Commission (NaCC) has blocked the sale of Ohorongo Cement to the Chinese company West China Cement. It wanted to buy 100 percent of Schwenk Namibia’s shares – the company which manages and owns 69,8% of Ohorongo Cement. The NaCC announced this month that after careful consideration it found that the proposed takeover would substantially prevent or lessen competition in Namibia’s cement industry. A second cement factory was constructed recently near Otjiwarongo by another Chinese company, Whale Rock Cement. The commission said due to the link between West China and Whale Rock, the merger could create conditions in the market conducive to collusion and the sharing of business information.

“If the deal was allowed, this could lead to less competition in the cement industry and enable possible collusion and price fixing, which would be to the detriment of consumers,” the NaCC said.

The Schwenk Group is based in Germany and has cement factories in several countries. Other shareholders in Ohorongo are the Industrial Development Corporation of South Africa (14%), the Development Bank of Namibia (11%) and the Development Bank of Southern Africa (4%).