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Author: Daniel Steinmann

Frontloading is painful but it created space for the new budget

It is scary to drive around Windhoek and see so many large construction projects stalled. A rough calculation indicates that about 2000 construction jobs were lost in Windhoek alone. If the whole country is included in this estimate, then it is not farfetched to say about 10,000 jobs were lost since last year September. By now, I hope the powers that be have realised it is far more expensive to build stop start than to push through and finish a project. Unfortunately, when the money is gone, it is gone. This is exactly where we are now. When the finance minister last year May for the first time grudgingly told us we need to tighten our belts, there were no reference to sanitising government expenditure. But when he confronted us again in November with the ugly truth, hiding the facts, or ignoring them, was no longer possible. When he announced the expenditure cuts, he used an interesting term – frontloading. This word can mean many things, but in construction projects, it usually means making the first half of a project more expensive, cashflow-wise, than the second half. What it entails is that the developer cum investor has to pay more upfront, or in the early phases of a project to get it going, than what would be required during the latter stages. It makes it heavier on the investor...

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Witness Protection for job creation. What about catching crooks?

Two extremely important bills were tabled this week before the National Assembly when on Thursday Dr Albert Kawana, the Minister of Justice introduced the Whistleblower Protection Bill and the Witness Protection Bill. Both pieces of legislation come as a welcome relief. In the ongoing fight against corruption, this is an important development to invite more people who know of graft, to come forward and finger the culprits. For the ordinary employee of a big company, a ministry or a parastatal, it takes a lot of guts to point the finger at wrongdoing. If individuals whose conscience force them to disclose criminal activity do not feel safe, whatever they know will remain stuck in the realm of hearsay. The criminal justice system needs a witness or witnesses, an investigation, and facts that can be proven in a court of law. As long as these are absent, the chances of a suspicion leading to a conviction are slim, if indeed such cases ever make it to the court. So, great was my expectation when I started digesting both bills. What a disappointment. While comprehensive in scope and about as detailed as one can expect for such important legislation, both brilliantly demonstrate our flawed way of thinking. Take for instance the Witness Protection Bill. Its point of departure is a whole new diretorate. Now, any sane person can run a check through...

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Investment conference follow-up targets South African prospects

When the High Commissioner to South Africa, HE Veiccoh Nghiwete was given his commission at the end of 2015, little did he realise that in the short period of just over one year, he would be involved in three events to promote Namibian investment opportunities to South African investors. High Commissioner Nghiwete hosted the official launch of the Invest in Namibia conference in Johannesburg in October 2016. Just a month later, he was instrumental in bringing a very large South African delegation to the actual Invest in Namibia conference in Windhoek, and next week Thursday, he is again playing...

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Now is the time to rethink the entire economic model

By now, every person tracking our economy knows we have had a very hard landing. From a growth rate of over 6% in 2014, to a revised 5.2% in 2015, to an estimated 1.6% in 2016, the economy has fallen off a cliff. With two negative quarters already confirmed for 2016, that is indeed a very hard landing. The Namibian economy now displays a close resemblence to the South African economy of the apartheid years. Following the staggering 6% annual growth rates of the mid-sixties, the SA economy became beset with political problems throughout the seventies culminating in massive stimulus in the eighties, just to keep liquidity at a functional level. The result was growth rates between 3.5% and 3.8% in some years, interspersed by catastrophic years when the economy easily shrank by more than 1% in a single year. And the South African economy was already the biggest in Africa by far, even during the apartheid years. But the incessant borrowing from rogue lenders and the continuous inflation of the money supply, took its toll on growth rates, and through run-away inflation in particular. Of course, this had to be offset with exorbitant interest rates, which is the reason why the older generation does not flinch at a prime rate of more than 10%. They remember too well the years when prime was a cool 24% and inflation...

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Is the economy healthy or is it not?

The jury is still out on this all-important question. Few analysts concern themselves with the economy’s fundamentals, opting rather to take a short-term view and asking the question, How stable is the economy right now? Fundamentally, there is only one overarching economic problem and that is, the government has gradually crowded out the private sector. Now that the government generates about two thirds of overall liquidity, it has become futile to ask any analytical questions about the economy’s inherent generative capacity. For all practical considerations, the economy is the government (mostly) and the government is the economy (overwhelmingly). Since the end of the nineties, following the disastrous budgets of 1996 to 1998, it became government policy to turn itself into an active economic player. The groundwork was laid from 2000 to 2008. A year later the fallout of the international financial crisis struck us, setting the stage for the so-called counter-cyclical budgets of 2010 to 2015. This cycle has now come to a conclusive end with government finances hitting a brick wall at the end of 2015 and the aftermath harassing us throughout 2016. Make no mistake, 2016 would also have been part of the extended gravy train were it not for the economic storm that hit us last year on several fronts. The government derives its revenue roughly one third from international trade managed by the Customs Union,...

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Powerful lift-off for Katuka Mentorship with largest intake ever

The first training sessions for the mentors and mentees in the 2017 Katuka Mentorship programme was conducted this week in Windhoek. It is the largest intake since 2001 when the programme was started by the then Namibian Businesswoman of the Year, the late Lena Markus. The mentees are Beaulah Garises, Hileni Rijnen, Milly Awaras, Teopolina Fillemon, Asnat Neumbo, Anna-Abia Shigweda, Aile-Alleta Mutumbulwa, Lovisa Indongo-Nemandje, Nair Diniz De Moura, Hileni Natanael, Georgia Kauapirura, Magdalena David, Elizabeth Haingura, Erna Aisindi and Tulonga Neputa. They are mentored by Annemarie van der Riet, Naita Awene, Dantagos Garosas, Elke Hanstein, Mathilde Ishitile, Gloria Kapingana,...

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Problems? What problems? Everything is on track in cuckoo land.

Nobody seems to get it. The government is too big and the government’s participation in the economy is way too big. It was a brave attempt by the Minister of Finance earlier this week to assure us of the soundness of the fiscus. Coming from such a high-ranking government official, it was a great comfort to be told everything is hunky dory. But is it? What is happening on the ground, at operational level so to speak, does not support the minister’s view, or least the view he tries to sell us. Companies are not doing well, banks are tight on liquidity, households are struggling, stagflation has taken hold of the broader economy, and thousands of people have been retrenched across the board. Let’s reconsider for a moment, the size of the government. The government directly employs roughly 120,000 people through the ministries and some agencies. This is according to its own published figures. How many are employed by so-called parastatals is not known to anybody outside those companies. I am also not aware of a published figure for total employment by parastatals. The government contributes directly about 44% of the economy. A multiplyer of 1.65 pushes this figure up to just above 70%. This may be exaggerated and a more conservative estimate will probably state 65%. This means almost half of the economy is directly driven by government...

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Two negative outlooks, one overhauled budget

What is going to happen to the economy after the new budget? When Moody’s revised Namibia’s sovereign outlook in December from stable to negative, it created a flurry of opinions in the local financial services industry. But it will be good to remember the words of the finance minister on 29 October last year when he reminded his co-parliamentarians that the rating has not been downgraded, only the outlook revised. This he had to do after Fitch revised their outlook in September, also from stable to negative. Now it must be fairly obvious that both ratings agencies will not change the outlook if circumstances did not change. And while the ratings methodology is very technical, and in a sense academic, it is based to a large extent on the outcome of the so-called Article IV consultations between the International Monetary Fund and the Namibian Ministry of Finance during November. So it is quite telling, that Moody’s revised the outlook shortly after the release of the IMF Country Report, but still went to the trouble of confirming the existing rating only two weeks later on 18 December. For the ordinary, non-technical person who still depends on the direction of the economy, this must be rather perplexing. In many discussions, the reality confronts us that 2016 was a terrible year. This is immediately obvious from the available facts but there is...

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