Namibian Economics To The Point - June 2021

30 Jun 2021

AUTHOR: Brigitte Weidlich

During the cold weather in June, winter has firmly established itself in Namibia. After twenty years of absence, a Lufthansa passenger aeroplane has again landed at Hosea Kutako International Airport this month. Lufthansa has now resumed regular flights to Namibia.

After about 20 years absence a Lufthansa passenger plane landed again in Namibia in June and was welcomed with water from the airport's fire brigade. Photo: Namibian Sun

Bank Windhoek became the first local commercial bank to join the Nasdaq sustainable bond network in New York after the successful issuance and listing of its first sustainability bond in southern Africa.

The Windhoek high court has ruled that the company Namibia Marine phosphate (NMP) is not allowed to start mining phosphate along the Namibian coast due to the absence of an environmental clearance certificate.

Covid-19 infections have risen in the country this month, the government cut times for alcohol sales and banned travels to and from Windhoek, Okahandja and Rehoboth municipalities between 15 and 30 June, except for emergencies and transport of goods.

President Hage Geingob has appointed a special task force, which will map out interventions to save companies and jobs while the economy is under pressure due to the Corona virus.

Namibia will soon export more beef from the northern communal areas, which lie north of the veterinary cordon fence to West Africa, including Ghana and Congo Brazzaville, the Meat Corporation (Meatco) has announced. The Windhoek municipality will embark on strengthening its electricity supply through a 25-megawatt solar power plant.

The Bank of Namibia has retained its repo rate unchanged at 3.75 percent in June. Inflation stood at 3.8 percent at the end of May (April:3.9%) according to the National Statistics Agency.

President Geingob appoints business task force

President Hage Geingob appointed a team of experts at the end of June that will explore interventions aimed at protecting businesses and saving jobs. The Head of State said that the primary purpose of the Business Rescue Task Force (BRTF) would be to review business and insolvency laws and policies, and to propose changes. President Geingob says the BRTF will consult representatives of businesses, banks and officials in government and conduct research to identify areas that require inventions. Geingob said the need for the Task Force was recognised with urgency following the outbreak of COVID-19 and its impact on the Namibian economy.

The task force must ensure the efficient and effective rescue and recovery of businesses, which are in financial distress, preserving jobs and entrenching a stronger entrepreneurial culture in the country.

“At the end of its mandate, the task force should provide the government with a framework that can serve as the basis for policy interventions that can contribute meaningfully to business recovery, including an environment that promotes sustainable entrepreneurship,” Geingob said.

The task force will consist of 11 individuals with experience in corporate management, banking, legal, insolvency, and entrepreneurship. It will be chaired by Thinus Prinsloo, who is Managing Director of Namibia’s Capricorn Group, a banking and investment holding company group, which also owns Bank Windhoek. Other members include Vivienne Katjiuongua, CEO of the Business and Intellectual Property Rights Authority (Bipa), Puye Haufiku who owns a tourism company, banking expert Sarel Van Zyl and Leonie Dunn, who runs the financial intelligence centre at Namibia’s central bank. The BRTF will conduct its activities over a period of eight months from 1 July to 28 February 2022.

Investments in new energy projects

The port of Walvis Bay will receive another power plant to boost its electricity supply. The state-owned power utility, NamPower, has invited bids for the construction of a 50-megawatt (MW) power plant, costing approximately N$1,2 billion (about 70 million Euros). Project completion is envisaged by 2023. This back-up power station will run on liquid fuel (heavy or light fuel oil), liquefied natural gas, or compressed natural gas. According to the tender specifications, the envisaged ‘Anixas II’ fuel power plant will be switched on if the country experiences a shortage of imported electricity. It will be constructed next to the existing 22,5 MW ‘Anixas I’ diesel plant. Before ‘Anixas I’ was constructed, the old Paratus diesel plant was used as back up, which has now served its time.

The Windhoek municipality plans to enter the renewable energy market and invest in 25 MW solar power over the next three years. The Namibian capital wants to become an independent power producer (IPP). The project will be divided into five individual solar plants of 5MW each, the municipality said. Total envisaged costs are estimated to be around N$420 million (about 24,7 million Euros). The sites for these photovoltaic plants will be at the southern outskirts of the Namibian capital near the Cimbebasia suburb and the B1 highway.

The city invited interested bidders to submit proposals for a public-private partnership. They must be self-financing partners so they can construct and maintain PV plant for Windhoek for 25 years. After that, the ownership will be transferred back to the municipality.

Local bank issues sustainability bond

A local bank, which is wholly Namibian-owned has successfully issued and listed the country’s first sustainability bond on 2 June. As with the bank’s green bond in 2019, the sustainability bond is also a first for commercial financial services institutions in southern Africa.

The headquarters of Bank Windhoek in the Namibian capital. Photo: Namibian Sun

As a result, the National Association of Securities Dealers Automated Quotations (Nasdaq) in New York welcomed Bank Windhoek as member. Nasdaq shared the news on its official website, social media platforms, and the main billboard in Times Square in New York City. Bank Windhoek becomes the first Namibian commercial bank to join the Nasdaq sustainable bond network.

The Bank obtained alternative sources of funding to the value of N$227 million (about 13,3 million Euros) through the sustainability bond on a private placement basis. These bonds are unique, fixed-income instruments and investment vehicles for commercial and institutional investors. The proceeds are exclusively applied to finance or re-finance a combination of both green and social projects, in part or in full, new, or existing projects. The projects will be benchmarked and aligned with the core components of the International Capital Market Association's (ICMA) green and social bond principles and follows the ICMA sustainability bond guidelines. Projects eligible for funding include renewable energy, energy efficiency, green buildings, sustainable waste management, a focus on sustainable agriculture and tourism, and investments into quality, accessible and innovative healthcare, and education facilities.

Bank Windhoek becomes the first Namibian commercial bank to join the Nasdaq Sustainable Bond Network after the successful issuance and listing of its first sustainability bond in southern Africa.

Sluggish economic growth in first quarter

Namibia’s economy experienced a reduced output of 6,5 percent or N$2.2 billion (about 13 million Euros) during the first quarter this year. According to the National Statistics Agency (NSA) local economy recorded N$31,9 billion output value from January to March (Q1 of 2020: N$34,2 billion (about 200 million Euros).

Construction, mining manufacturing, hotels and restaurants showed a decline due to the Covod-19 pandemic. However, the communications and health sectors recorded growth. Home office, virtual conferencing and higher internet and data usage caused the information and communications sector to grow by 17,6% in real value-added growth in the first quarter (Q1 in 2020: 11,5% growth).

According to the latest NSA statistics, the Namibian health sector grew by 12,8% during the first quarter (Q1 in 2020: 0,8%). This was because more health personnel is required and increasing demand for health services due to the Corona virus.

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