The Namibian economy shrank by 2,6% between April and June this year, the second-worst economic performance per quarter since the government started cutting spending.
The current figures show that the private sector is struggling to carry the economy out of the ditch after the government started on its prolonged fiscal consolidation course, leading to economic activity now recording the 11th consecutive quarter with no growth.
The Namibia Statistics Agency’s statistician general, Alex Shimuafeni, said when he revealed the figures yesterday that the deterioration in performance is observed across a host of major sectors, with more than half of the sectors posting declining growth rates in real value added.
He stated that the main contributors to the continued slump is led by the agriculture sector dropping by 28,1%, mining and quarrying down by 20,2%, and construction dipping by 5,5%.
The Namibian engaged some local executives, who appear to be upbeat in the midst of the depressing numbers.
The Government Institutions Pension Fund (GIPF)’s chief executive officer, David Nuyoma, said although the numbers are bad now, he is optimistic that the private sector will come through, especially with the N$20 billion private investors pledged to plough into the economy.
He noted that the bigger the project, the longer it will take to pull off as many aspects to be considered, especially environmental impact assessments.
Nuyoma added that this is indeed the time to invest for all those with opportunistic eyes.
“If more opportunity comes and they look bankable from the feasibility point of view, we are in,” he enthused.
Nuyoma furthermore indicated that despite the sluggish economic activities observed, growing the fund is not affected, as according to their sensitive analysis, their returns are in line.
He explained that they will not struggle to find investment opportunities to satisfy the 45% local investment rule, as there is a huge deficit of energy and water shortages which all represent investments for their large pool of funds.
The Namibia Chamber of Commerce and Industry’s chief executive officer, Charity Mwiya, said there are no short cuts to coming out of the ditch.
“Realism must prevail in terms of economic recovery expectations. It is a process, and not an overnight event that requires focus and commitment on the part of all,” she observed.
Mwiya said the private sector is working flat-out, but it is a mammoth task which requires collective efforts by all partners (the government, labour and civil society).
She thus called on the government to re-examine the expenditure freeze.
“They should keep the lid on wastage and unnecessary expenditure by all means. But they should not close the proverbial tap, to the extent that the public sector goes into hibernation and suspends all programmes and activity,” she stressed.
Mwiya added that the government as the largest procurer of goods and services needs to inject the funds collected from taxes and other sources back into the economy.
The Development Bank of Namibia’s chief executive officer, Martin Inkumbi, said cutting government spending was not working, but alternative stimuli to incentivise various sectors could work.
“Namibia should consider incentives in targeted sectors such as agriculture, particularly for cash crops for exports. Incentives do not have to be only reduced taxes or tax holidays,” he stated.
Inkumbi argued that luring renowned investors in unexplored sectors such as health could inject life and economic impact across the board.
Northern businessman Ben Hauwanga lauded Inkumbi’s sentiments for diversification and looking for different markets to make up for local depressed demand.
He urged the government to capitalise on the Angolan market’s size, saying “Angolans buy their groceries and come for medical services here. Every cent we spend on them will come back here”.
Instead of putting policies in place which hinder trading between neighbouring countries, it should be enhanced, Hauwanga said, also calling on the government to start taxing the Chinese business people as money is just flying out of the country under the government’s watch.
Sectors that posted positive performance during the quarter under review, manufacturing, electricity and water sectors at 18,8% and 2,7% growth, respectively, as well as the financial intermediation and fishing sector, which posted growths in real value added of 1,9% and 0,6%, in the second quarter of 2019 compared to 0,7% and 6,2%, respectively, in the corresponding quarter for 2018.
The first 2019 quarter numbers were also revised from a 2% contraction to 2,9%, largely coming from the agriculture sector that was revised to a 31,4% decline.