Namibian Economics To The Point – October 2021

1 Nov 2021

Brigitte Weidlich

The first notable rainfalls were recorded end of October which were welcomed by farmers after devastating bush fires destroyed thousands of hectares of land.

President Hage Geingob travelled to Scotland on Saturday morning, 30 October to lead the Namibian delegation attending the climate summit (COP26) in Glasgow between 1 and 12 November.

The Namibian government has lifted the countrywide night curfew on 16 October, which had been introduced some 18 months ago due to Covid-19.

The diamond company Namdeb has announced it would extend operations in Namibia for another 20 years until 2042.

The National Assembly approved a request of the agriculture minister Calle Schlettwein to give farmers relief and waive the land tax for the financial year 2019-2020. Due to Covid-19 having severely affecting their activities and sales of livestock and other farming products, the relief was granted.

The Namibian government intends to set up a sovereign wealth fund by year-end as a buffer against economic hardships.

During November, Namibia takes part in a trial for the IATA travel pass; which South Africa’s private airline Airlink will introduce on flights to Namibia. This smart phone app provides accurate information for passengers on their COVID-19 health status. The app also shows entry requirements for any countries they intend to visit.

Namibia’s central bank kept its repo rate unchanged at 3.75 percent in October. The inflation rate of the country rate stood at 3.5 percent at the end of September (August 3.4%) as announced by the National Statistics Agency.

President Geingob attends climate summit

President Hage Geingob leads the Namibian delegation to the COP26 climate summit in Glasgow. The 26th Conference of parties (COP26) will reflect on successes of major decisions taken during the 2015 summit in Paris on reduction of greenhouse gas emissions, funding for developing countries to adapt to climate change and to make the planet greener. The summit starts with the world leaders’ summit on 1 and 2 November, where Geingob will deliver a statement on Namibia’s actions. Namibia is already affected by climate change with severe droughts alternating with heavy rainy seasons causing floods and destruction of infrastructure. The Namibian head of state will also attend the fourth Peace Forum in the French capital from 11 to 13 November. In-between he is expected to deliver a statement during the 75th anniversary of the UNESCO on 12 November, also in Paris.

Onshore diamond mining extend for 20 years until 2042

The Namdeb Diamond Corporation, which is a 50:50 joint venture between the De Beers Group and the Namibian government, announced a new long-term business plan to extend the current life of mine for Namibia’s land-based operations until 2042.

Namdeb employees use special equipment to find diamonds on Namibia’s southern coast. Photo: Namdeb

Under the previous business plan, the land-based Namdeb operations would have come to the end in 2022 due to unsustainable economics. After successful negotiations between the Namdeb and the Government, a new business plan was crafted that extends the life of the mine by up to 20 years.

The government granted Namdeb relief from 2021 to 2025 for the payment of diamond royalty rate by reducing it from 10 to 5 percent. This royalty relief has in turn made an economically sustainable future for Namdeb possible until 2042. About 8 million carats of diamonds are expected to be mined over the next 20 years. Namdeb forecasts to generate approximately N$40 billion (about 2.27 billion Euros) in taxes, royalties and levies for the Namibian fiscus until 2042. Some 600 additional jobs will be created starting next year.

Sovereign wealth fund set up by year-end

After announcing plans in June 2020 to establish a sovereign wealth fund (SWF), the government intends to have it up and running by this December. According to finance minister Iipumbu Shiimi the fund will secure the country's future savings and transform the economy,

Shiimi said investments would be in equities and overseas shares. "The investment return that you can get on shares and equities are much higher than from other money market instruments," Shiimi said. It is envisaged that the SWF will have a short-term and a long-term fund. "The (short-term) stabilisation fund’s objective will be liquidity.

The finance minister added that the (long-term) intergenerational wealth fund will consist of 70 percent risky assets such as equities and 30 percent will be fixed income assets, private equity, real estate and infrastructure.

The seed capital is to come from government savings, income from green renewable energies, a percentage of mining royalties, income fishing quotas, as well as income from the Southern African Customs Union (Sacu) of which Namibia is a member.

Central bank extends COvid-12 relief

The Bank of Namibia will extend the Covid-19 relief measures for businesses it introduced last year until 2023. This includes loan repayment breaks that are bow extended to 24 months form the initial six months, it announced at the end of October.

New measures announced include that banks do not blacklist loan holders who are given repayment periods. Banking institutions now may not charge clients higher or punitive interest rates, in excess of the initial contractual interest rate, when any Covid-19-related loan moratorium expires.

Container shortages cause break-bulk shipments

A second break-bulk shipment of copper cathodes for export was facilitated at the port of Walvis Bay. The ‘Unisea’ vessel docked loaded some 8,500 tonnes of copper cathodes in October destined to the port of Panama in the US. The shipment is the second consignment of copper being exported Walvis Bay in a break-bulk format as an alternative to containerised export.

The second consignment of break-bulk copper cathodes from Zambia was exported through Walvis Bay. Photo: NamPort

“The copper cathodes are from the Mopani Copper Mine in Zambia and were transported to Walvis Bay via road. Due to the ongoing global shortage in containers, it has become a phenomenon for shippers to opt for their consignments to be carried by bulk vessels to ensure continuity of operations and less dependency on containers,” the Namibian Ports Authority (NamPort) stated.

Testing the IATA Covid-19 travel pass in November

The privately owned South African airline, Airlink will in November test the International Air Transport Association’s (IATA) travel pass on its flights between South and Namibia during November.

The IATA Travel Pass is a secure digital smart phone app for passengers to provide accurate information on their COVID-19 health status and information about entry requirements of any countries they want to visit.

It is developed to support the re-opening of borders without quarantine and safely restart international air travel and tourism. It is more secure and efficient than current paper processes used to manage health requirements like the International Certificate of Vaccination or Prophylaxis.

During the Airlink trial, the IATA travel pass will confirm to passengers before departure that they meet the COVID-19 test requirements on flights between South Africa and Namibia.

The Namibian laboratories participating in the November trial are DiagnoLab and Namib Laboratories.

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