Namibian Economics To The Point – January 2023

31 Jan 2023

Good rains at the beginning of the year in central Namibia and the central north have given rise to optimism in the agricultural sector. But the good rain also brought flooding to the north-central regions, due to heavy rains across the border in southern Angola.

President Hage Geingob announced in his New Year's speech that after three difficult years (2020-2022) the country has better economic prospects. Aside from planned green hydrogen projects, the development of offshore oil discoveries would provide better revenue.

Namibia's central bank has published new guidelines for supervisory boards in commercial banks. The Indian mining group Vedanta wants to invest around N$6.5 billion (about 340.4 million euros) in southern Namibia, but would like to see cheaper electricity tariffs from NamPower.

Namibia was able to reduce its trade deficit to N$1.5 billion (about 79 million Euros) last November.

Two EU commissioners visited Namibia as part of their trip to Africa.

The inflation rate stood at 6.9 percent at the end of December (November: 7.0%) according to the statistics authority.

President Geingob optimistic about economic outlook

President Hage Geingob expressed optimism about the economy for 2023 in his New Year's message. Apart from the well-known development projects for green hydrogen, the head of state also mentioned the future of the oil industry, which promises high revenues.

The discovery of potential huge oil reserves off Namibia's coast by Qatar Energy, Shell and Total Energies "will positively transform the economic landscape of our country and the well-being of our people," Geingob said. These discoveries were among the "top twenty of the last decade worldwide".

According to international experts such as Wood Mackenzie, Namibia can count on around N$500 billion (about 26.4 billion euros) in foreign direct investments. "The estimated production of 6.5 billion barrels of oil annually "could bring in between 60 and 95 billion Namibian dollars (about 3.1 to 5.2 billion euros) in taxes and royalties (per year)," said the head of state.

According to Geingob, the new oil and gas sector "could create over 3,600 jobs at peak production and take Namibia's GDP to around N$636 billion (about 33 billion euros) by 2040".

India's mining giant Vedanta wants to expand refinery

Indian mining group, Vedanta Resources, intends to invest N$6.5 billion (approximately EUR 340 million) in the conversion and expansion of its Namibian refinery.

But that depends on the Namibian power company NamPower, because Vedanta wants lower electricity tariffs.

Vedanta intends to feed the zinc refinery at Rosh Pinah on the border with South Africa with materials from its existing oxide mine and sulphide concentrate from its Gamsberg operation in South Africa. This requires the refinery to be rebuilt and expanded to handle sulphide concentrate.

According to Vedanta, the rebuild project will expand the refinery's current capacity from 150,000t of metal to 300,000t and create 1,500 jobs.

Vedanta executive director Pushpender Singla said in late January: “We are fully committed to implementing this plan. However, the refinery needs reduced electricity tariffs from NamPower to be economically feasible.”

Vedanta acquired the Skorpion Zinc, zinc mine and refinery from Anglo American in 2010. Both were placed under care and maintenance in May 2020.

Vedanta mines zinc in the Northern Cape near the Namibian border and intends to invest in a refinery there.

New regulations for bank supervisory boards

The Central Bank of Namibia published new rules for bank board members in early January. With the new rules, the Bank of Namibia (BoN) has limited the number of boards on which one person can serve as a member, to two. Furthermore, a member may only hold office for a maximum of ten years. The BoN has also set an age limit: independent directors, including the chairman, can only sit on the board up to the age of seventy.

“Regarding the provision, a prospective director of a banking institution or controlling corporation may not serve on more than two boards at any one time. Exceptions will be made for directors who are not in full-time employment or serving on boards of a banking institution, banking group, controlling company or holding company and any subsidiary of the same group counted as one,” the Bank of Namibia said.

Trade deficit significantly reduced

Namibia reduced its trade deficit last November. According to the latest report from the Bureau of Statistics, Namibia exported goods and commodities worth N$8.9 billion (about 470 million euros). Imports amounted to N$10.5 billion (about 550 million euros). The trade deficit narrowed by 25.9 percent to N$1.5bn (about 79m euros) vs. N$2.0bn in October 2022.

The top five exports in November 2022 were diamonds (30.3%), uranium oxide (17.5%), gold ore (8.8%), fish (5.3%) and copper ore and concentrates (5.1%). Diamonds were exported to Botswana, the United Arab Emirates and Hong Kong. Most fish was exported to Spain, followed by Zambia in second place. The largest percentage of copper exports went to Belgium.

Botswana ranked first for exports with 26.2%, mainly diamonds, while South Africa maintained its position as the main source of imports. In November, Namibia exported around 16.7% of its goods to South Africa, the second highest percentage. China was third with 14.8%, followed by Zambia (6.4%) and Belgium with 5.3%.

In November 2022, Namibia exported fruit (table grapes and blueberries) and nuts worth N$371.8 million, mainly to the Netherlands and the United Kingdom. In the same month, Namibia imported just under 10% of the export value of nuts and fruit.

Ohlthaver & List wants to expand to Europe

The Namibian group Ohlthaver & List has established a holding company in Europe under the name O&L Europe.

O & L announced at the end of January that the holding company, which was established last November, is headed by Steffen Kammerer as managing director.

O&L Europe now consists of the already established company O&L Nextury (renewable energies), O&L Immobilien (real estate development and investment), O&L Sustainable Finance (finance and investments). There will also be investments in hospitality soon.

"This is a truly historic opportunity for the O&L Group to demonstrate the tremendous growth potential of the German market and set the course for future expansion," said Kammerer.

According to the Executive Chairman of the O&L Group, Sven Thieme

“It is extremely exciting to start the New Year with the possibilities of O&L Europe on the horizon. An investment of this nature gives us, as a group, greater resilience to external factors and shocks and contributes to a more stable environment in which to operate.”

Two EU commissioners visit Namibia

EU Commissioner for Internal Market Thierry Breton and Commissioner for International Partnerships Jutta Urpilainen visited Namibia. They discussed how to move forward with the memorandum of understanding on the EU-Namibia partnership on sustainable raw materials and renewable hydrogen, signed by EU Commission President von der Leyen and President Geingob at the climate summit last December. This partnership will support both Namibia's and the EU's climate protection goals and will add value to the local economy.

EU-Commissioner Jutta Jutta Urpilainen after signing the action plan for Namibia with planning director Obeth Kandjoze. Photo: EU Embassy Windhoek

Commissioner Breton visited several companies relevant to the EU-Namibia partnership, including mining company AfriTin near Uis and Namibia's main port in Walvis Bay. He also took part in a round table with the Namibian Minister of Mines and Energy, as well as representatives from business and civil society.

Commissioner Urpilainen presented the annual EU-Namibia 2022 Action Plan for EU-Namibia cooperation over the coming months, focusing on education, inclusive green growth, good governance and gender equality. The EU is providing around N$437 million (about 24 million euros) for this.

Brigitte Weidlich

Sorry, we can’t seem to find any matches for your search. Have a look at our popular searches below.