Namibian Economics To The Point - December 2021

30 Dec 2021

Namibian economics to the point - December 2021

AUTHOR: BRIGITTE WEIDLICH

Many areas in Namibia are still waiting for rains after the northern and north-eastern parts received good showers in mid-December.

Most industrial countries, that banned entry from Namibia and other countries in southern Africa end of November due to the Omicron-virus variant, have now lifted the restrictions and/or will do so by 1 January 2022.

President Hage Geingob has during the 38th national briefing on Covid-19 noted that infections of the omicron variant were increasing in Namibia. He announced on 14 December that Namibia was experiencing the fourth Covid wave. The government reduced attendance of public gatherings from 500 to 200 people for gatherings and sporting events. These regulations came into effect from midnight 15 December to 15 January 2022. No curfew was imposed for the time being. In the meantime, Namibians can receive a third or booster vaccination against Covid and children from the age of 12 can also be vaccinated.

The renewable energy sector in Namibia will see two major investments early next year.

Namibia’s Investment Promotion and Development Board (NIPDB) has received an award by the European Society for Quality Research (EQSR).

Namibia’s central bank kept its Repo rate unchanged at 3.75 percent. Inflation jumped to 4.1 percent end of November, up from 3.6% end of October.

Namibia ready to invest in concentrated solar plant

After four years of preparations Namibia’s energy utility NamPower is planning to issue a tender for a 50MW-130MW concentrated solar power (CSP) project with a storage facility in early 2022. NamPower’s head of generation projects, Grant Muller said the CSP would produce between 50 and 130 megawatt (MW) and will have the capacity to store the energy.

Namibia’s current installed capacity for its population of some 2.4 million inhabitants is 680 MW but still needs to import from neighbouring South Africa’s coal-dominated grid. Namibia plans to decrease its dependence on imports and increase renewable energy sources. The CSP should be completed by 2025 at a cost of US$600 million to $1 billion (about N$15,5 billion).

According to Muller, NamPower favours the “build, own, operate, transfer” (BOOT) model through a public-private partnership for the CSP project.

The expected electricity tariff would be below 8 US cents per kilowatt hour (kWh), depending on the size of the CSP and energy storage capacity. NamPower has now appointed a transaction advisor. The request for proposals will be issued in the first quarter of 2022.

Germany supports renewable energy storage system

Namibia will be the first country in southern Africa to set up a large-scale renewable energy storage system, thanks to a grant from Germany. The German Embassy in Windhoek announced on 17 December, that the Kreditanstalt für Wiederaufbau (KfW) development bank provided a 20 million Euro grant (about N$334,7 million) for this purpose.

The agreement was signed in Windhoek with the National Planning Commission (NPC). The state-owned utility Namibia Power Corporation (NamPower) will implement the project.

The grant will go towards the construction of a 58 mega watt BESS (Battery Energy Storage System) plant at the Omburu substation some 12km southeast of Omaruru.

Electricity from renewable energy generation as well as cheaper electricity imports from the Southern African Power Pool (SAPP) can be stored in the BESS and supplied to customers during peak times. This capacity would offset fossil energy from the ageing local Van Eck coal power plant in Windhoek.

“As part of the agreement, NamPower has committed to contribute approximately twenty percent of the total project costs, to be used for the construction of the transmission interconnection as well as for the local taxes and duties, which are not included in the grant funds,” the German Embassy stated.

The managing director of NamPower, Kahenge Haulofu said: “The 20 MW Battery Energy Storage System project will contribute towards achieving the national energy policy target of 80 percent of the energy requirements to come from local sources by 2023. It will also support our renewable energy policy target of 70 percent renewables by 2030. It will further assist in the overall reduction in the cost of energy to the customers,” Haulofu stated.

European Award for Namibian investment board

The Namibia Investment Promotion and Development Board (NIPDB) was honoured with a Quality Achievement Award by the European Society for Quality Research (EQSR) at an award ceremony and convention held in Dubai.

The 2020 World Expo is currently underway in Dubai.

This is the first award the NIPDB received since starting operations in April this year.

Nangula Uaandja, the chief executive officer of the NIPDB said despite the institution being less than one year in existence, they are a determined, agile and resilient team fully committed to delivering on its mandate to facilitate investments into Namibia and unlocking opportunities that enable a better quality of life for all Namibians.

“This award is a feather in our cap and international recognition of the hard work the Board is doing to market Namibia to the world as an attractive investment and tourist destination,” Uaandja said.

The European Society for Quality Research, headquartered in Lausanne, Switzerland through the awards and honours and promotes quality awareness, recognizes good business practices, technological innovation, quality achievements in companies, public administrations and organizations worldwide.

The award winners are selected based on the results of the Society’s polls, consumer opinion research and market study.

Bank of Namibia launches strategic plan

Namibia’s central bank has launched a strategic plan early in December that will be implemented from 2022 to 2024.

The central bank’s governor Johannes Gawaxab said, with the adoption of the new plan, the bank would drive greater digital transformation, financial inclusion and economic growth while delivering a stronger all-round performance in fulfilling its core mandate of price and financial stability.

“Our operating environment has changed significantly, and our responsibility has expanded in its scope. In this regard, the macro-prudential oversight responsibility now resorting in the bank underlines our central role in the functioning of the financial system. Equally, the COVID-19 pandemic has led to decisions in the policy environment that have long lasting effects, while the stabilising force of the monetary authority during the pandemic was demonstrable and impactful,” !Gawaxab said.

Digital transformation will be on the forefront to automate, modernise and facilitate efficiency by utilising technology.

Some initiatives include assessing the viability of digital currencies and retail bonds, and the establishment of an innovation hub to promote innovation and creativity in the fintech sector.

In the meantime, President Geingob has extended the tenure of Gawaxab for five years. He was appointed in June 2020 to fill the vacancy left by Iipumbu Shiimi, who became finance minister. Shiimi’s term at the Bank of Namibia would have ended this month. The deputy BoN governor Ebson Uanguta retains his post, but for the first time a woman was promoted to the post of 2nd deputy governor. Leonie Dunn has steered the financial intelligence centre of the central bank since inception a few years ago. It is not yet known who will succeed her at the crucial FIC.