The Year of Expectations: Converting uncertainty into opportunity!
By Josef Kefas Sheehama.
This time of year is always a welcome opportunity to reflect on what is most important seeing that the President, HE Dr Hage Geingob, has declared 2024 as “The Year of Expectations”.
As Namibia approaches the general elections in 2024, there is immense pressure on political leaders to tackle the pervasive economic challenges and implement policies that will deliver an inclusive and competitive economy. The economy plays an important role in presidential and national assembly elections, as voters often determine their satisfaction with the incumbent administration based on perceptions of how well the economy is doing.
By unlocking big, bold investments we can drive sustainable development and climate action and put the Namibian economy on a stronger growth path for all. Hence, factors such as higher interest rates and increased unemployment contribute to the uncertainty surrounding Namibia’s economic trajectory. To address these challenges, policymakers must focus on strategies to stimulate growth and reduce inequality.
It is forecast that the economy will grow at a softer pace in 2024. Inflation will remain eminent, eating into consumers’ pockets. Power supply issues will further jeopardize activity due to geopolitics. Moreover, social rifts and violence ahead of the November 2024 elections could undermine momentum. Also, social tensions and violence could increase going forward, as political party members and opposition party divides are heightening the stakes of the November 2024 presidential elections.
Economic growth is officially projected to contract by 0.5% in 2024, bringing it to 3,4% after a growth forecast of 3,9% in 2023. The Africa Development Bank projected Namibia’s Real GDP to grow by 3.5% in 2023 and 3% in 2024, based on economic recovery particularly in diamond processing and export, and increased consumption in wholesale and retail trade and tourism. The fiscal deficit is projected to decline. The country’s trade balance deficit is still high despite improvement in exports. Therefore, Namibia should consider implementing policies that promote domestic production and reduce Namibia’s reliance on imports.
Additionally, the lack of sufficient, productive, and decent jobs is complicating efforts to end poverty. Inequality is on the rise, according to the World Bank report indicating that Namibia’s Gini index stood at 59,1 ranking us as the second most unequal country in the world. The high public debt represents an impediment to sustainable economic growth and employment creation in the economy. The cost of servicing the debt continues to crowd out fiscal resources that could have been invested in critical social services such as health care and education.
This pessimism about the outlook creates a downside risk for the recovery and suggests that policymakers should be wary of removing supportive measures too rapidly. There has been improved allocation and spending on critical sectors such as education, health care and infrastructure but these improvements are regional.
Furthermore, the most important thing to keep in mind is that economic outcome variance has radically increased fuelled by the wars in the Ukraine and Gaza. The year 2024 at least promises to be another year for the history books.
Moreover, the attainment of economic prosperity in 2024 depends on the ability to formulate policies as a driving vehicle to open markets. The policymakers should work together and inspire action to meet Namibia’s commitment to leave no one behind throughout the implementation of the Sixth National Development Plan (NDP6). It is imperative to reflect on the previous NDPs shortcomings by coming up with well-researched and well-reasoned mechanisms that prioritize and synchronize activities to yield the desired results and avoid the economy faltering.
We should look at our failure as a necessary stepping stone to achieve our desired goals and not as a deterrent not to try again. Our journey to real solutions therefore can not come from the pessimists among us, but from those who are prepared to face the uncertainty of the future and willing to overcome the fear of failure. The Industrial Policy should be revisited or reformed to incorporate the informal economy. The current industrial policy narratives tended to either neglect the informal economy or even view the informal sector as potentially threatening to the formal economy, needing elimination and control rather than support and investment for inclusive structural economic transformation.
Therefore, recognizing the precarious nature of the informal economy has also brought marked attention to the resilience of the informal economy and its creative energies not only to cope and adapt to change but also its potential as an untapped engine of innovation and growth that is worthy of policy attention, investment, and support for inclusive structural transformations and pathways to formality.
Additionally, oil discoveries in Namibia are likely to bring in an equivalent of N$53 billion in revenues for the state, a prominent global consultancy group has estimated. This discovery will significantly improve energy security in a nation that relies heavily on petroleum imports. The development of a consistent domestic energy supply will prove critical for the economy while reducing imports from neighboring countries.
I view green hydrogen as the path forward to full decarbonization in a way that is reliable. It is important to note that green hydrogen can create more space for renewables by driving electrolysis with energy that would otherwise be curtailed. The agricultural sector in Namibia needs serious reforms and an increase in public investments in agriculture. To reach these goals the development of skills and knowledge plays a key important cross-cutting and value-adding strategy.
The fact remains that Namibia operates in the phenomenon of globalization, hence we have to diversify our economy to have a viable playground to compete. This would help Namibia to succeed and implement a developmental package that would cater to the well-being of our people. We are living in a time of exciting technological innovations. Namibia must realistically anticipate and be positioned to harness the opportunities embedded in the Fourth Industrial Revolution (4IR) and adopt relevant policies.
In conclusion, policymakers should look to build resilience and remain growth-minded amid a volatile economic backdrop. More than ever, it’s important to be proactive, seek a better understanding of the outlook, and discover how to turn potential pitfalls into new prospects.
