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It’s not a bucket list but it provides some focus

The year is galloping towards its end. In the wake follows a host of issues which I believe will show 2014 was just a transitory year. Many unresolved issues in both the world economy and in our local economy, will come to a head next year.

Topping my list is the price of crude. The decline which started in June took several months to show clear direction but when oil broke the key technical level of US$114 per barrel, it became a deluge. Just as oil at US146 per barrel broke the camel’s back in 2008, so I fear oil has the potential to be even more disruptive should it go to US$45 per barrel. This may sound like hogwash, but in about ten trading days, oil plummeted from above US$70 per barrel to a tad above US$55. The distance from 70 to 55 is substantially bigger than from 55 to 45. If oil were to go to 45, we shall see no end of a calamity in financial markets and in international trade.
Next up is the almost inexplicable disregard for volatility. Markets, equities, capital and commodities – are as volatile as ever yet the indices that reflect companies’ attempt either to hedge or to insure against volatility, are basically flat. Volatility has become the new normal and together with that, I sense a not-too-concerned attitude. What a trader loses today in a deal, he know he make up soon, just by playing the enormous gyrations. This unprecedented but largely ignored volatility is perhaps the most disconcerting factor when trying to assess market movements. What I realised is that it is futile to attempt to apply a rational analysis. Markets have become volatile because they function erratically and irrationally. The disturbing fact is that there does not exist any cognitive means to tell when the next plunge would be the last. I liken it to somebody playing Russian Roulette, blindly believing the odds remain the same, every time the cylinder is spun.
In the domestic economy, I think 2015 will be the year when we learn how sustainable our bloated nominal growth figures are. The Bank of Namibia is concerned over household debt and rightly so. Until about two years ago, the only statistics we had on new and outstanding credit, were the figures provided by commercial banks to the regulator. Then were added the outstanding loans from cash loan outfits, and after that, the outstanding debt to providers of instalment credit, other than banks. These figures shocked every analyst particularly those at the central bank for it implied that household credit is at a much higher level than previously thought, and disposable income became a dirty word.
I estimate that when all the types of credit are included in the overall assessment, disposable income is roughly only five percent of take-home pay. The other way around, I suspect that gross household debt comes close to 95% of net income. This situation requires immediate and effective monitoring, and a Plan B to make provision for additional liquidity should a large number of indebted households hit the wall.
Next year should also be a watershed year to test the sustainability of government debt. A government can only build so many new buildings, and add so much to the infrastructure in any particular year. What seems to be forgotten is that economic stimulus requires an accompanying human element, to sustain that stimulus and turn it into long-term growth. I am wondering where that human element will come from given that the economy is expanding at about twice the rate of the population.
Population growth brings me to my hobby horse – fertility. It has become critically important that we explain to all groups active in development, upliftment and social protection, that fertility is an economic concept and has very little to do with sociological considerations. Procreation can be regarded as a function of the study of society, but fertility is the one with the economic undertow.
We need leaders to be honest and direct. It can be explained by drawing pictures that X number of children equals X amount of money. If you do not have the means, then do not have the children.
This is arguably one of the most complex social issues facing us. There are limited resources to spend on education and education is the determinant of family size. If the family grows faster than the means of living, then the family gets progressively poorer. This is often called a debt trap but to me it is more like a death trap. When the number of children in desperately poor societies keep increasing, that group of people becomes poorer by the day. If, already they have very little, life becomes survival, and the children are relegated from birth to a life of abject poverty, ignorance, exploitation, exposure to disease, destruction of social norms, and eventually, crime and lawlessness.
What each thinking Namibian must resolve for the new year is where we want to go in terms of quality of life for everybody, and then we have to channel our energies into strategies to reduce fertility. Only a wanted, loved child, is a person with an inviting future.

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