Coen Welsh | Nov 14, 2017 | 0
What was once a flood is now only a trickle
Oshikango is turning into a ghost town right under our very noses. The former hustle and bustle is gone and its accommodation establishments are only too happy to receive guests two or three times a week. No more “Sorry Sir, fully booked for the next two weeks,”
The long queues of trucks on the Angolan side are also gone. Now, perhaps five or six trucks enter and leave every day. As a result, the Oshikango town planners had to halt all plans for future industrial and residential areas.
At what used to be a fancy hotel until late last year, guests now find there are no longer microwaves or kettles in the rooms. In fact, in one particular hotel there is not a single working microwave, not in the rooms and not in the hotel’s main kitchen. When asked where these formerly ubiquitous appliances are, the answer was remarkably startling. “They have all been stolen by the desperate Angolans, even the kettles and we have now removed everything from the rooms that is not tied or nailed to a wall or the floor.”
The reason why Oshikango and its lofty dreams have evaporated is not hard to find. It is because the substantial retail and commercial traffic which originated in Angola, has dried up.
I was also informed by a recent visitor that scores of Chinese shops have closed and the proprietors moved away. Oshikango is dead for all practical intents and purposes.
The reason why the Angolan traffic is gone is also not that hard to find although it has been cited in reputable reports lately. Even in the Bank of Namibia’s overview of economic conditions, the implosion of Angolan retail buying power, is mentioned as one of the reasons for the domestic slowdown.
Angolans no longer visit Namibia in droves simply they do not have any money. Of their once magical spending power, very little is left and only in the hands of a very few well-connected individuals who pull all the strings.
Why does the average Angolan trader no longer have money to procure in Namibia?
The answer is just as simple: because the price of oil more than halved over the past year.
From this observation, a number of logical inferences can be drawn.
First, the Angolan government was the big daddy, using all its petrodollars to run the economy. In fact, the Angolan government was the economy. The role of the private sector was seriously impaired, or in some critical industries, non-existent. When the Angolan government’s revenues slumped by more than 50%, the time of freebies to all party underlings came to an end. Private sector activity was so insignificant or depressed (often deliberately) that it could not fill the void once the petrodollars left. In a very real sense, there was no prosperous Angola outside of the government.
Oshikango is a serious reminder to what happens when the government crowds out all private initiative and then hits a wall of its own.
We run a serious risk of the same thing happening in Namibia. First we are also highly dependent on commodities albeit not oil, and secondly, if we continue to borrow in the capital market unchecked, we will soon pass the IMF cut-off benchmark for middle-income countries government debt. We are now at 37% of GDP, according to the figures of the Ministry of Finance, and the benchmark upper limit is 43%.
Consider that in 2009, our debt to GDP was an insignificant 18%. The then finance minister used to call this fiscal space. Well, this fiscal space has all been consumed from 2010 to 2015. If one considers that government debt has exploded from 18% to 37% of GDP in just six years, then the 43% ceiling does not look that far away.
I suspect we are in much bigger trouble than the government will concede. It is OK to clad this in all sort of impressive jargon, but the ordinary man in the street does not understand this. For him or her it is all about disposable income, and when the growing debt burden fuels inflation as another consequence, his and her hardships only get worse.
What is most disconcerting is that ever since 2010 when we were bombarded with one after the other “growth” programme, never have I heard mention of an exit strategy.
It is good when the government aggressively takes hold of development, but it must know, that if the gravy train stops like in Angola, then the whole shebang comes to a painful halt.