Namibian Economics To The Point - December 2020

30 Dec 2020

Brigitte Weidlich

The rain urgently needed in Namibia only came at the end of the month, with showers falling in many parts of the country.

President Hage Geingob convened his cabinet in early December for a retreat that lasted a day and a half. Permanent secretaries and the governors of the 14 regions were also present. Details were not announced thereafter, except that considering the Covid-19 pandemic, the government would present an economic recovery strategy in February 2021.

The Ministry of Environment, Tourism and Forestry announced in early December through a newspaper advertisement that it would auction 170 live elephants. The animals are to be removed in small herds mostly from communal areas in the northeast, where there are conflicts with subsistence farmers. There are strict requirements for applicants regarding the capture, transport and relocation of elephants.

Namibia wants to do more to protect the world's oceans and is involved as a member of the Ocean Panel in a protection plan, which was announced this month.

The government has started two planned rail network projects thanks to a loan from the African Development Bank (AfDB). The 107.5 km long railway line from Walvis Bay to Arandis will receive new rails that can carry a higher axle weight (18.5). Freight trains can then travel 85 km per hour and passenger trains up to 100 km/h. Around 44 percent of the cost of one N$1 billion (approx. 60 million Euros) comes from the AfDB. The railway line from Kranzberg near Usakos to Otjiwarongo will also be retrofitted, which will cost N$ 3.3 billion (around 186 million Euros).

The state electricity supplier NamPower will build a 20-megawatt solar power plant near Omaruru, which is scheduled to go into operation in November 2021. The construction costs are around N$ 317 million (approx. 17.7 million Euros). NamPower also announced in December that it would buy electricity from a planned private 20 MW solar system at Usakos towards the end of 2021.

The central bank again left its repo rate at 3.75 percent. The Bank of Namibia announces the level of its repo rate every two months. At the end of November, inflation stood at 2.2 percent (October: 2.3%), as the state statistics agency announced in mid-December.

Renewed restrictions due to the second Covid-19 wave

After some easing of the Covid-19 pandemic on 1 December, then after a surge in infections by mid-month, the government reintroduced some restrictions. The number of people allowed to attend events was reduced from 200 to 50 people, and restaurants had to close earlier again after 16 days instead of midnight. After a further increase in new infections within seven days, Health Minister Kalumbi Shangula announced on December 23 a new night curfew from 21h to 04h nationwide until January 13, 2021. The wearing of masks remains. However, there is an extension of the deadline for Covid-19 test results for foreigners entering Namibia: the PCR test results can now be up to 7 days old instead of the previous 72hours

Namibia helps protect the oceans

The heads of government of 14 countries have committed to managing their national ocean areas sustainably. The members of the Ocean Panel - a body for a sustainable marine economy - presented an action plan in Oslo on 1 December to be implemented by 2025. The goal is to protect around thirty percent of the world's oceans by 2030. Other countries are to follow suit. The countries participating in the Ocean Panel so far are Australia, Canada, Chile, Fiji, Ghana, Indonesia, Jamaica, Japan, Kenya, Mexico, Namibia, Norway, Palau and Portugal. Together they have a water area of over 30 million square kilometres - the size of Africa. Each of the 14 countries presented this transformation plan to its own population on 3 December. President Hage Geingob announced in Windhoek that given the current situation and taking into account Namibia's technical and financial capacities, the government had decided to select three critical areas: ocean wealth combined with sustainable marine fisheries for food; sustainable sea transport and sustainable energy generation from the ocean, sustainable marine tourism and, thirdly, a precautionary approach for the extraction of mineral resources on the seabed. President Geingob stressed that Namibia is committed to protecting and restoring its marine and coastal ecosystems. Namibia has expressed its willingness to be part of the first group of countries to develop the ocean plan by 2025.

Moody's prospects for Namibia

The international rating agency Moody’s downgraded Namibia’s long-term issuers in December from Ba2 to Ba3 with a negative outlook. Namibia's upper limits for long-term bonds and local currency bank deposits have been lowered from Baa1 to Baa2. The downgrade is based on the country's weaker financial strength and growth prospects amid the corona-virus pandemic.

Moody’s forecasts a budget deficit of 9.6% of the gross domestic product (GDP) for Namibia in the current budget year, which would increase the debt burden from 56% a year ago to 72% of GDP by the end of this year. The national debt at the end of October came to N$119 billion (around 66.5 million Euros).

Namibia's rising national debt is caused by a primary deficit and interest costs, factors that will continue to negatively impact debt over the next five years, Moody's said. The country's real GDP is expected to shrink 6.9% this year before growing 2.4% next year. The agricultural sector will recover after a drought. Moody's negative outlook reflects Namibia's challenge to introduce new reforms to generate revenue and collect taxes.

The rating agency Fitch had left Namibia's rating for long-term bonds in foreign currency at "BB" three days later with a negative outlook.

Vocational training for soldiers

The German ambassador to Namibia has donated a newly built wing at the Osona military base near Okahandja to the Namibian army. There, soldiers are to receive vocational training. Ambassador Herbert Beck officially handed over the “Central Mission Support Element (CMSE)” to the Deputy Defence Minister Hilma Nicanor at the Osona base. The support element, consisting of interdisciplinary training workshops as well as a workshop for medical technology and several workshops for vehicle and truck repairs, was built from 2017 to 2019. The construction was supported by Germany’s equipment aid programme, carried out by the technical advisory group of the Bundeswehr with N$ 60 million (approx. 3.6 million Euros).

The equipment of the classrooms and workshops was financed with an additional N$ 9.3 million (approx. 600,000 Euros). From the beginning of 2021, soldiers from the Namibia Defence Force (NDF) will receive certified training in the newly established facilities as bricklayers, carpenters, electricians, plumbers, welders, fitters and air conditioning technicians.

“The expertise in these areas will enable the NDF to repair and maintain a wide range of military equipment and to build its own infrastructure,” said the embassy. In addition, personnel and material are prepared for possible future assignments in international missions for disaster control and peace missions on the level of UN, AU (African Union) and the SADC community. The workshop for medical technology will also be expanded. A field hospital donated by the German government was already used a few months ago in Walvis Bay during high numbers of Covid-19 cases.

Donations for rhino protection

Shortly before Christmas, the embassy of the European Union in Namibia donated 200,000 Euros (about N$3.6 million) to the Save the Rhino Trust (SRT). The money comes from the OACPS (Organisation of African, Caribbean and Pacific States) and the EU through the BIOPAMA programme (Biodiversity and Protected Areas Management). Under this programme, trackers and rhino rangers of the SRT are to be given training and be provided with the necessary equipment over the next two years.