Namibian Economics To The Point - May 2022

31 May 2022

Brigitte Weidlich

Mostly mild winter weather in May eased the transition from summer to the cold season.

Namibia showcased its diverse investment opportunities at the annual World Economic Forum (WEF) conference, in Davos, Switzerland in May.

The government launched of a sovereign wealth fund on 12 May, which will be managed by the country’s central bank.

The local tourism company Gondwana Collection Namibia announced a daily transfer service for tourists from Windhoek, which started on 01 June. It links Gondwana’s lodges along nine routes throughout Namibia. These include the Fish River Canyon, the Namib and Kalahari Deserts, Damaraland, Swakopmund and the Etosha National Park. The hop-on, hop-off service can also be used by other visitors to Namibia.

The ministry of labour has shut down a Chinese cement factory for a few days, after a visit by labour inspectors – prompted by employees – found a lack of safety and security measures.

The country’s inflation rate increased to 5.60 percent at the end of April, up from 4.50 % in March.

Namibia participates annual WEF meeting in Davos

The Namibian government has pulled out all stops to showcase the country’s various investment opportunities during the World Economic Forum’s (WEF) annual conference in Davos, Switzerland. It was the first time Namibia was invited to the prestigious annual gathering. President Hage Geingob was accompanied by several Cabinet ministers and several business people, among them Sven Thieme, executive chairman of the Ohlthaver & List Group. Supporting O&L and the Namibian government as brand ambassador was Michelle MacLean, the country’s former beauty queen, who became Miss Universe.

President Hage Geingob (L) with Spanish ecological transition minister Teresa Ribera (C) and Henrik Andersen of Vestas Wind Systems in Davos. Photo by: CNBC

During the four days in Davis, the Namibian delegation had 20 events in the specially prepared “Namibia House” in the Swiss town, presenting over 30 projects. These included green hydrogen, the outsourcing of 4 commercial irrigation projects, the development of tourism parks, desalination plants, solar parks, a tomato processing, and an agricultural produce packaging plant.

President Hage Geingob actively participated in several of the sessions and wooed business people to invest in Namibia.

Namibia launches a sovereign wealth fund

After intensive planning and preparation, Namibia launched its much anticipated sovereign wealth fund, to be known as Welwitschia Fund. It is named after Namibia’s famous and ancient desert plant. The Fund received a total of N$300 million (about 17,9 million Euros) of direct seed capital from the government and a contribution from the dividends declared by the Bank of Namibia, the central bank.

“The Fund will enhance national resilience by insulating the socio-economic structure against cyclical shocks while promoting inter-generational prosperity for all Namibians through the distribution of benefits flowing from the present utilisation of the country’s natural resource endowments, said the governor of Namibia’s central bank, Johannes Gawaxab. The management and administration of the Fund will be handled by the Bank of Namibia. The finance ministry will have an oversight role.

The Welwitschia Fund will receive 15 percent of mining royalties, 50% of budget surpluses, and 10% of all revenue obtained from the sale of fishing quotas.

“We are looking forward to the prospects and opportunities that will emanate from the recent discoveries of oil and from green hydrogen energy, which have the potential to further boost the Fund's capital and ultimately contribute to the development of the Namibian economy,” President Geingob said at the launch.

The launch of the SWF was a big moment for Namibia with Vice-President Nangolo Mbumba (L), Finance Minister Iipumbu Shiimi, President Geingob (C), Prime Minister Saara Kuugongelwa-Amadhila and BoN Governor Johannes Gawaxab. Photo by: BoN

It will consist of two accounts – a stabilisation account and an inter-generational account for stabilising the fiscus and saving for future generations.

It may not be used by the government as a guarantee to take out any loans on behalf of the state. Up to 2,5 percent of the funds may, however, be invested in Namibia.

Withdrawals can only be made once the Fund's assets reached 20 percent – about N$40 billion (about 240 million Euros) - of the national gross domestic product.

The capital will not be withdrawn, and only up to 10% of the accumulated returns may be withdrawn.

Last phase of highway construction to Kutako Airport starts

The construction of last phase of the southern by-pass road for Windhoek linking up with a dual lane carriageway to the Hosea Kutako International Airport (HKIA) has kicked off. This involves 21,3 km of the freeway, three interchanges, two river bridges and several drainage structures. This is funded by the Chinese government with N$1,035 billion (about 62 million Euros). It is the third and last section of the construction to dual carriage standards and will be completed in 36 months. A Chinese company and Namibian sub-contractors will carry out the construction. Once completed, the modern highways will allow long distance travellers and trucks to completely by-pass Windhoek, reducing congestion on the capital’s streets.

Chinese criticised for poor working conditions

The Ministry of Labour has shut down a Chinese cement factory for a few days, after a visit by labour inspectors – prompted by employees – discovered a lack of safety and security measures. The weeklong closure was preceded by peaceful demonstrations of labourers in front of Cheetah Cement outside Otjiwarongo.

The cement factory was allowed to operate again from 16 May, after labour inspectors were satisfied that occupational health and safety gaps are now complied with. This included personal protective clothing for workers, first aid provision and emergency arrangements for any eventualities.

During the same week, members, and sympathisers of the Namibia Economic Freedom Fighters (NEFF) political party, joined by members of the Affirmative Repositioning (AR) movement, demonstrated in front of the ‘Chinatown’ business complex in Windhoek’s northern industrial area.

An NEFF leader, Michael Amushelelo entered the site where dozens of Chinese shops sell imports from China and counterfeit goods. Amushelelo acted against the law when he shouted “Chinatown [is] fake, shut down!” cheered by NEFF members. The next morning, he handed himself over to the police, arriving at the Windhoek central police station requesting to be arrested.

Later that day more people demonstrated in front of Chinatown peacefully. The riot police used tear-gas and rubber bullets and arrested six more people. Among them was the AR founder member Dimbulukeni Nauyoma. He and Amushelelo were denied bail on 27 May. They will appeal the ruling. The other four were released.

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