Namibian Economics To The Point – June 2020

30 Jun 2020

Brigitte Weidlich

After a mild winter since May, the second half of June brought rather cold weather for inland Namibia, while the coastal areas enjoyed warm to hot east wind weather. A few rain showers were recorded in the far southern parts of the country.

Namibia moved out of Stage Two of the Covid-19 lockdown regulations to Stage Three on 2June until 28 June, upon which another easing of regulations started.

Due to the difficult economic situation as a result of the Covid-19 pandemic, several companies started retrenching employees. One of the oldest companies, the Pupkewitz Group, founded in 1925, offered voluntary separation packages to the entire workforce of 1,840 employees, due to restructuring.

Under the State of Emergency proclamation due to Covid-19, the government has prohibited retrenchments and salary cuts from May to July. Several companies and the Namibian Employers’ Federation took the government to court with regard to this matter. The Windhoek high court ruled in June, that these particular regulations were unconstitutional. The government could opt to appeal the judgment, but has not yet positioned itself on the matter.

President Hage Geingob delivered his annual State of the Nation Address in Parliament this month. He announced that the government would soon establish a sovereign wealth fund.

The Bank of Namibia again lowered its repo rate in mid-June, this time from 4,25 percent to 4 percent. Inflation at the end of May was 2,1 percent (April: 1.6%).The Fitch Ratings agency changed Namibia’s outlook from stable to negative.

The Windhoek municipality will build 600 single-family homes for the low-income earners from July, the Minister for Urban and Rural Development, Erastus Utoni, announced at the end of the month. The first 200 houses are expected to be completed by December and another 400 houses by mid-2021. The total project of N$138 million (around 6.9 million Euros) will be financed with social partners and the Khomas Regional council. In the medium term, 600 more houses for low-income earners are to be constructed.

Namibia had 203 confirmed Covid-19 cases at the end of June (30 June 2020 11:00)

Government slackened some Covid-19 regulations

Restaurants and coffee shops were allowed to open again from 2 June onwards, although guests are now required to book in advance and seats are limited to adhere to social distancing measures. Hotels, lodges and guesthouses are open for local tourists, as Namibia’s borders remain closed. Gondwana Collection Namibia opened its new lodge, Etosha King Nehale on 12June. This is located just a few km away from the King-Nehale entrance gate to the Etosha National Park.

Liquor sales also commenced again on2 June, but sales were limited from noon until 18h00 – excepton Saturdays.From the end of June, sales were allowed to start from 9h00 onwards.

Due to more Covid-19 cases confirmed in Walvis Bay, the government reverted the Erongo Region back to stage 1 from 22June until 6July. Schools in Erongo, which had opened tuition for Grade 11 and 12 learners, were ordered to close again.

In Namibia’s other 13 regions, schools were supposed to open on 22 June for pre-school learners and Grades 1 to 3, but this was delayed until 7 July, pending the developments in the Erongo Region.

NamPort handles over a million tons of cargo in 12 months

The Namibian Ports Authority (NamPort) announced that more than a million tons of cargo was handled by its two ports Walvis Bay and Lüderitz during the financial year ending 31 March 2020. This was thirty percent more than a year ago. The freight was transported to - and from the four trans-national corridor routes. The Trans-Kalahari Corridor to Johannesburg saw a 42% jump from 35,375 tons in 2018/19 to 50,368 ton by March this year. More cargo was handled through the Trans-Oranje Corridor, which recorded an increase of 205,835 tm up from 1,785 t in 2018/19 to 207,620 ton in 2019/20. This was an increase of 40 percent.

Cargo volumes along the Walvis Bay-Ndola-Lubumbashi Development Corridor increased by 4 percent from 718,086 tons to 743 646 t.

According to NamPort's executive for commercial services, Immanuel Hanabeb, the largest portion of growth is reflected by manganese ore exported from the Northern Cape in South Africa via the port of Lüderitzbucht.

“The benefit of the Trans-Oranje corridor is to serve the mines in the Northern Cape as it is a much shorter route than any South African based port,” stated Hanabeb. The first consignment of Manganese was exported from the port of Lüderitz last September. Exports of Namibian marble increased by 26 percent.

Namibia’s charcoal exports show increase

The export of charcoal produced from harvested invader bush in Namibia and exported to international markets via the port of Walvis Bay have tripled between 2013/14 and 2018/19 to 152 768 tonnes. The charcoal is used mainly in Europe to grill. Charcoal volumes increased from four percent of total export volumes through Walvis Bay in 2013/14 to 8,7% in 2018/19, according to independent economic expert Klaus Schade. He submitted a study on this topic to the Windhoek office of the German development agency GIZ this month. Some 30 million hectares of land in Namibia are covered by invader bush species, resulting in loss of grazing land. Harvesting the bush sustainably, opens grazing areas up again. Some invader bush species can also be converted into animal fodder by adding some basic ingredients like molasses. However, some more research is required to find the correct formulae for different livestock like cattle, goats and sheep.

Fitch rating agency changes Namibia’s outlook to ‘negative’

June was again the time for Namibia’s credit rating. The Fitch rating agency has affirmed Namibia’s long-term foreign currency issuer default rating (IDR) at ‘BB’, after the downgrade in October 2019. ‘BB’ means below investment status. The stable outlook from eight months ago was however revised to ‘negative’.

“The revised outlook stems from the anticipated shock of the COVID-19 pandemic on the Namibian economy and public finances,” Fitch stated. The rating agency forecasts a 5 percent economic contraction for Namibia this year, relatively mild compared to the forecasts emanating from domestic sources like the Bank of Namibia, and the Finance Ministry, which predicted a 6.9 percent decline. Fitch anticipates the Namibian economy to grow by three percent in 2021, but growth will remain subdued over the medium term.



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