Namibian Economics To The Point – June 2022

1 Jul 2022

June has brought unusually cold winter conditions for the Namibian interior while the Namib Desert and the coast endured warm to hot east wind weather.

A new solar plant of 20 megawatt (MW) was inaugurated in the Erongo Region, while the South will soon boost a 40 MW wind farm.

Germany and Namibia have signed a loan agreement for N$2.7 billion (about 161 million Euros), most of which will be used for infrastructure development.

The Angolan Vice-President, Bornito de Sousa paid an official visit to Namibia.

The government has during its monthly Covid-19 briefing announced all measures would remain in place until 15 July. Travel for children under the age of 12 years has been eased, as they no longer need to be vaccinated when entering or exiting Namibia. They also need not produce a negative Covid-test anymore.

The Bank of Namibia increased its repo rate by 50 basis points from 4.25% to 4.75% and is now on par with that of South Africa.

Inflation in Namibia stood at 5.4% at the end of May, according to the national statistics agency. This was a slight drop against 5.6% in April.

New 20MW solar plant inaugurated

The local electricity utility NamPower has inaugurated its first exclusively owned solar power plant, near Omaruru. It has 58104 solar panels and generates 20 MW of electricity, which is fed into the national electricity grid.

The NamPower Managing Director Simson Haulofu, said during the inauguration in June that the Covid-19 pandemic slightly delayed the construction, but it was completed within the set budget of N$317 million (about 18,7 million Euros).

Haulofu said that the Omburu Power Plant is constructed to be ready for battery energy storage.

Namibia obtained a grant of N$338 million (about 20 million Euros) through Germany’s KfW development bank, to construct the country’s first ever renewable Battery Energy Storage System (BESS). It is also a first for southern Africa.

It will have 58 MW storage capacity coming from the new solar plant near Omaruru and will be situated at the nearby Omburu substation.

 

Deputy Mining Minister Kornelia Shilunga (C) inaugurated the new solar plant near Omaruru. Photo: NamPower
Deputy Mining Minister Kornelia Shilunga (C) inaugurated the new solar plant near Omaruru. Photo: NamPower

 

Namibia signs loan agreement with Germany

Finance Minister Ipumbu Shiimi and German Ambassador Herbert Beck signed a financial cooperation agreement for interest-reduced loans for Namibia.

The N$2.7 billion loan (about 161 million Euros) will support three major areas of German-Namibian development cooperation. Firstly, NamPost, which also has a banking facility, receives N$338 million (about 20 million Euros) to provide loans to micro and small enterprises and low-Income households in support of overcoming the Covid-19 crisis.

The water sector support programme will receive N$1.25 billion (about 75 million Euros) to support Namibia's adaptation to climate change. Funds will be applied to new water projects to improve access, quality and sustainability of water supply and sanitation in Namibia.

Thirdly, the renewable energy sector will be boosted by supporting NamPower with N$1.1 billion (about 66 million Euros) to construct the country’s first major wind farm. It will have a capacity to generate 40 MW and will be located 30 km north of the mining settlement of Rosh Pinah.

 

Namibias FInance Minister iipumbu Shiimi (L) signed a loan agreement with German Ambassador Herbert Beck. Photo: German Embassy
Namibias FInance Minister iipumbu Shiimi (L) signed a loan agreement with German Ambassador Herbert Beck. Photo: German Embassy

 

Green hydrogen pilot plant outside Walvis Bay

The Walvis Bay Municipality has granted approval to the application of a Namibian-Belgian company to lease 20 000 hectares of land for the construction of a green hydrogen pilot plant. The area is part of the new industrial area near Dune 7 and the Walvis Bay airport, just outside the harbour town.

Cleanergy Namibia, a joint venture between the local Ohlthaver & List Group and the Belgian company CMB TECH will develop the plant. It comprises of a green hydrogen fuel station and a production plant for ammonia. The company will embark on an environmental impact assessment and environmental management plan in order to obtain a clearance certificate from the Ministry of Environment, Tourism and Forestry.

New law for land use in the pipeline

The minister of agriculture, water and land reform has informed the National Assembly that the revamped draft of a land bill would still be tabled this year. Minister Carl Schlettwein’s predecessor had withdrawn said bill a few years ago.

Schlettwein said that reports about a recent public hearing by a parliamentary standing committee with regard to a petition by the Affirmative Repositioning (AR) movement to disallow foreign land ownership had caused confusion. The current law of 1995 that regulates commercial agricultural land, grants foreigners the right to own land under certain conditions. A separate law regulates the use of communal land in rural areas.

The new land bill will combine the use of both communal and commercial agricultural land.

According to Minister Schlettwein, Section 102 of the new bill "completely prohibits the ownership of agricultural (commercial) land by foreigners.”

In addition, communal land cannot be owned through a title in communal areas, but various rights can be granted for different uses of land in Namibia such as leasehold, customary land rights and - where appropriate - land use rights for entities providing public services. The government considers a 25-year leasehold with an option for extension appropriate, he told the National Assembly.

Another gold discovery in Namibia

The Canadian company Osino Resources said it discovered gold resources of some 2,7 million ounces close to Karibib in the Erongo Region. The chief executive officer of Osino, Heye Daun explained at a mining conference in South Africa this month, that its Twin Hills discovery has in the past two-and-a half years advanced from “discovery to the pre-feasibility stage”. The company expects to start building the mining infrastructure next year and that between 100,000 and 200,000 ounces of gold could be produced annually. Osino expects the new mine to have a lifespan of 10 to 15 years.

The new mine will be located close to the existing Navachab gold mine outside Karibib. Another gold mine is B2B Gold and is situated near Otavi.

Fitch Rating Agency downgrades Namibia to BB-

The international rating agency Fitch has downgraded Namibia's long-term foreign-currency issuer default rating to 'BB-' from 'BB'. The outlook is stable.

The last rating was done a year ago, when Namibia was downgraded to BB.

The ratings agency forecasts that the rigid fiscal structure, rising interest costs and the gradual nature of Namibia’s economic recovery would see the government debt on an upward trend reaching 75% of GDP by March 2025, despite fiscal consolidation efforts.

Fitch predicts Namibia’s economic growth to increase to 2.8% this year and 3.1% in 2023, supported by increased mining production. It noted that global growth prospects and energy prices as well as tighter global financing conditions could hamper Namibia’s recovery.

“The adverse impact from the war in Ukraine on global growth prospects and energy prices, as well as tighter global financing conditions represents headwinds for the economy. Moreover, the gradual nature of the recovery, will result in real GDP not recovering to the pre-pandemic level until 2024”, the agency noted.

According to Fitch, Namibia’s exports increased by 1.4 percent in 2021, despite Covid-19. Diamonds accounted for 19 percent of total exports, followed by uranium and fish at 15% each. The rating agency expects Namibia’s average inflation to reach 6.1 percent this year, before dropping to 4.6% in 2023. 

Brigitte Weidlich 

 

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