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Author: Daniel Steinmann

The signs of improvement are tentative but irrefutable

It is not easy to find dependable, up-to-date statistics to support my notion that the worst of the economic slump is behind us. All the available stats clearly show that Private Sector Credit Extension has been on a gradual decline since the end of 2015, that bank liquidity is severely restricted, that households are as indebted as ever, and that company profits have been vapourised. The endless string of retrenchments only corroborate this rather gloomy overall picture of the economy. So what other statistics are there to provide a reliable picture of trade conditions? The answer came in the form of the quarterly and annual trade statistics disseminated earlier this week by the Namibia Statistics Agency. The two reports provide the first tangible evidence of a slight economic recovery towards the end of last year. This is something I have suspected for a couple of months but the problem was to find stats to support this observation. For instance, everything that happened in the construction industry during the final quarter of 2016, flies in the face of the notion that the recovery may already be underway. The trade bulletins do not say anything about employment, remuneration, credit growth, or any of the micro-economic indicators that typically reflect economic activity at company and household level. The scope of the trade bulletins focus solely on trade, more specifically on imports and...

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Small moves stabilise fiscal ground

The much-anticipated 2017 budget has come and gone but it turned out to be more of a non-event than anything else. The new estimates presented to us earlier this week only confirm that fiscal space is extremely limited and were it not for the so-called frontloaded cuts in the Mid-term Budget Review, fiscal space would have been non-existent. By now it must have dawned on every person with an interest in the budget that it was basically set on 27 October last year. From then until 08 March 2017 nothing eventful has happened other than the government’s own admission that the civil service is far too big. For any proper understanding of current economic conditions, one must go back, not to the budget revisions but to the original budget tabled at the end of February last year. It is only once the new budget is compared to the first 2016 budget that it slowly emerges what damage the economy suffered last year. I would estimate that about one quarter, 25% of our initial 2016 expectations has evaporated. This is confirmed by cross checking many of the income categories as well as the expenses side. Nevertheless, I regard the budget as responsible given the shocks to the system during last year. My first impression is that it is a very static budget. About the only thing that will make a...

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Von Bach passes the halfway mark

Windhoek’s main reservoir, the von Bach dam just outside Okahandja, recorded a cumulutive inflow of about 6 million cubic metres on Thursday, Friday and Saturday last week. The water volume jumped from 20.8 Mm3 to 26.49 Mm3 in just three days. Widespread rains in the wake of the decayed cyclone, Dineo, during the previous week, took the dam to 42.8% of its full capacity, a level at which it remaind for almost a week. Good rains in the catchment area, north and north-east of Okahandja produced flooding in several of the Swakop River’s tributaries in the Okahandja and Hochfeld...

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More jobs lost during 2016 than created in the preceding six years

The number of small business that are closing up shop is astonishing. Every week more and more reports reach me of a small businesses, here and there, going out of business. Their employees have to find jobs and their former owners have to sell their assets and survive on their reserves. Since none of these small enterprises feature in the conventional economic metrices, it is very difficult, indeed impossible to quantify all the small businesses lost to the economy so far. The evidence is anecdotal at most, but certainly not hearsay. The difficult part lies in drawing valid conclusions from the numerous reports of businesses in trouble, or out of business altogether. The job losses at bigger companies, particularly in the construction industry, make it into the headlines almost every week. These numbers are easy to confirm and to quantify however I still need to see verified jobloss figures for construction as a whole. I assume it will be horrific. This is not based merely on opinion, it is underscored by many large projects where it is patently obvious there is nothing happening on those sites. So, the tentative indications from the industry itself are corroborated by emperical, observalble fact. When it comes to small business, the picture looks somewhat different. There is no single chamber or similar organisation that collects this data and although SME features in the...

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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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