Savings rate up again
The country’s savings rate has recovered after declining in recent years, the Namibia Statistics Agency said recently.
After declining markedly in the aftermath of the international financial crisis in 2009, Namibia’s gross savings to GDP ratio rebounded to 30.5% in 2012; the first time in two years that the savings rate has grown faster compared to the investment rate. For 2012, Namibia’s gross fixed capital formation or investment ratio stood at 21.1%, a 11.6% increase from the previous year.
Namibia has had historic low interest rates since August 2012 which analysts feared would fuel consumption while discouraging saving, but despite these fears, the country’s net savings increased 75.2% to N$19.3 billion last year mainly driven by savings by the private sector.
Namene Kalili, Manager of Research at FNB said while there was a 6.8% growth in consumption expenditure in 2012, most of the growth came from the government sector. He added that while private consumption was above average, consumers still saved up to almost 30% of their income.
Statistician General, John Steytler told The Economist that although he is pleased with the rebound in savings, he was concerned that the country was not retaining these savings.
Steytler said: “It’s a higher rate (savings rate), but my worry is that we don’t retain the savings; a big part of it is still leaving the country.”
He added: “The economy does not grow because we are saving; the economicy grows if we invest. So we have to understand what are the reasons that our savings cannot find investment opportunities, but they can find opportunities outside. Is it because there are no opportunities or is it because the investment climate is not conducive? If you say the investment climate is not conducive, why do foreigners find it attractive to invest here?”
Steytler said he was worried that mandates given by the Government Institutions Pension Fund to companies like Safland in an effort to satisfy the requirements of Regulation 28 which forces pension funds to invest part of their resources in local unlisted assets, will not be beneficial in the long term. “The GIPF have started giving mandates. Some of the mandates are to build shopping malls to Safland. The Grove Mall in the end will be South African shops and we are going to import more South African goods. In the short term we will create jobs during construction, but your import bill and dependence on South Africa will increase,” Steytler said.
The Statistician General advised that local savings should be used to fund Namibian enterprises. He called for the activation of an industrial policy that would allow for investments by locals in any sector with guaranteed protection from foreign competition.