Namibian Economics To The Point - March 2021

31 Mar 2021

Some parts of the country received fairly good rainfall in March, but the north-west is still plagued by the drought. The government has sent over 60,000 bales of alfalfa and hay to the Kunene Region to support community farmers who have already lost most of their herds. The northeast is currently fighting a plague of locusts.

Finance Minister Ipumbu Shiimi presented the new state budget of N$ 67.9 billion (around 3.9 billion Euros) to the National Assembly. In addition, the African Development Bank has granted the Ministry of Finance a loan of N$ 1.5 billion (around 87 million Euros).

Fisheries Minister Albert Kawana has announced which applicants have received fishing rights. Of the 5,176 applications submitted in 2018, 213 new applicants were successful, and rights were renewed for 85 companies.

The state-owned Namibia Petroleum Corporation (NamCor) announced at the end of March that it had taken over the management of the fuel depot, which has now been built for over N$ 5 billion (around 290 million Euros).

Caption

A government delegation has visited Dubai to promote investments in Namibia.

President Hage Geingob unveiled his second Harambee Prosperity Plan.

China has donated 100,000 doses of its Sinopharm vaccine, which was used for the first 1,000 Covid-19 vaccinations. Despite a down payment and pre-order, no further vaccines have arrived in Namibia by the end of March.

Namibia's monthly inflation rate was unchanged at 2.7 percent at the end of February, the statistics office said.

New prosperity plan should also boost the economy

Five years after the first Harambee prosperity plan, President Hage unveiled the second version. Public administration is to become more efficient by 2025, a state fund to support projects is to be introduced, and natural resources are to be used in an optimized manner. The public mobile phone operator MTC is to list on the local stock exchange. The government intends to raise at least N$ 3 billion (about 174 million Euros) by selling around 30 percent of the shares. A national strategy for the development of green hydrogen and the associated extraction of ammonia is to be drawn up.

"As we pursue this strategy, we have the opportunity to be the first country in Africa to achieve carbon neutrality and to use the African Continental Free Trade Area to export clean energy to our neighbours," said President Geingob. Various projects from a total of N$ 27.7 billion (around 1.6 billion Euros) are to be implemented, creating around 42,000 jobs by 2025. The government plans to provide around N$ 400 million (around 23 million Euros) for economic recovery.

The Harambee Prosperity Plan 2 (HPP 2) also undertakes to review and expand the legal framework for rescuing companies in Namibia in order to limit economic damage to companies.

Loan from the African Development Bank

The African Development Bank has approved a loan of N$ 1.5 billion (about 87 million Euros) for Namibia to address the effects of the Covid-19 pandemic and maintain the country's welfare programs. The finance ministry said the loan will help create fiscal space to finance development spending and implement reforms to maintain macro-economic stability. The COVID-19 pandemic threatens to reverse profits from this programme, the ministry said. The latest support is aimed at the government's Covid-19 response and on achieving inclusive post-pandemic economic recovery through improved governance and real growth in various economic sectors. The three main priorities of the loan are the sustainability of public finances, the private-led transformation of the agricultural and industrial sectors, and economic and social inclusion.

New National Budget trimmed to austerity

The finance minister Ipumbu Shiimi has presented the new state budget for 2021/22 in the amount of N$ 67.9 billion (about 3.9 billion Euros) with N$ 4.9 billion less than in the previous year. This year's state budget provides funding for 3 main areas, including providing Covid-19 vaccines through procurement and distribution, supporting economic recovery goals, and ensuring continued and essential public services.

An amount of N$ 8.5 billion (about 490 million Euros) is earmarked for interest payments, which the government deems appropriate. The Ministry of Education, Art and Culture receives the largest share with N$ 13.8 billion (about 800 million Euros). The economic and infrastructure sector receives N$ 11.7 billion (about 670 million Euros). The budget deficit will be around 4.7 percent of gross domestic product (GDP) (2020: 4.1%). The national debt will climb to N$ 130 billion (about 750 million Euros). Minister Shiimi said the domestic economy is expected to see moderate growth of 2.1 percent this year and around 2.8 percent in 2022.

New fuel depot should generate profits

The state-owned Namibia Petroleum Corporation (NamCor) announced at the end of March that it had taken over the management of the fuel depot, which has now been built for over N$ 5 billion (around 290 million Euros).

The Cabinet decided in 2019 that NamCor will operate and maintain the state-owned facility after completion, after several international bidders were also interested. The main objective was to increase the security of fuel supply in Namibia from 7 to 10 days to 30 to 45 days. It was also decided to operate the depot on a commercial basis. It has one tank with 5 million litres and 2 tanks with 20 million litres for, among other things, diesel, also 2 tanks with 10 million litres for unleaded petrol, a tank with 5 million litres for heavy fuel oil (HFO) and a "Jet A1" tank 5 million litres of aviation fuel.

The new state fuel depot in Walvis Bay. Photo: NamCor

The first shipment of various fuels of 37 million litres arrived on December 1, 2020. NamCor has so far achieved total sales of N$ 152 million (around 8.8 million Euros) with the three products sold.

NamCor has now set up almost a dozen filling stations in various parts of the country in order to establish itself in the retail sector. In total, NamCor plans to build over 30 filling stations in all 14 regions.

Commercial apple tree plantation near Stampriet

Namibia could significantly reduce its import dependency on fruit and vegetables by 2025, as the “Roots Agriculture” project plans to produce 35 percent of the country's fresh produce by then.

Roots Development is a project in Stampriet in the Hardap Region east of Mariental. According to newspaper reports, the director Marius Greeff stated that the project, founded in 2017, followed the concept of an "agro-city". The plan is to create a mini-economy around agriculture and to grow products for the international export market.

Greeff was confident that the project, co-financed by the state-owned AgriBank, will have a positive impact on the country's economic growth. Recently the first harvest of 30 tons of apples was obtained from his first commercial apple cultivation in Namibia.

Next door, land parcels of around 10 hectares could be bought as part of an agricultural village. Roots Development aims to combine intensive farming with livestock and permanent crops, agricultural training with a focus on food security, a village for retirees and a lifestyle village, as well as numerous business opportunities.

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