‘Namibia can profit from South Africa’s decline’

By Magreth Nunuhe

WINDHOEK – NAMIBIA is fantastically well positioned to take advantage of South Africa’s economic decline, with looming recession in the southern neighbour coupled by struggling manufacturing, hostile mining policies and consumers being driven to the brink due to rising inflation.

This is the view of Frans Cronjé, the CEO of the South African Institute of Race Relations (SAIRR).  Cronjé made the analysis in a paper he presented at a recent investment conference held under the theme: ‘South Africa: State of the Economy and Economic Scenario to 2029’.

He noted that South Africa is still at risk of being lowered to junk status amid a decline in commodity prices this year that has been slowing growth unless the situation is averted by higher GDP growth, while the rand has breached the 13 per US dollar mark for the first time in almost 14 years.

Cronjé said that Namibia is not exploiting South Africa’s situation fully to its advantage, adding that the latter would inevitably be downgraded to junk status even if it is given a break for another six months.

When South Africa is downgraded to junk status, it means that their ability and willingness to repay their debt will at best be viewed with suspicion and would  dramatically increase the interest rate at which the South African government and companies lend and interest rates.

Namibia, with its excellent coastline, excellent air and logistics infrastructure is advised to develop growth policies in order to exploit emerging markets. “It takes a visionary country. Africa is waiting for visionary leadership,” Cronjé pointed out.

He has presented scenarios about South Africa’s long-term economic and political prospects to over hundred corporations, government departments, foreign governments and political parties.

Cronjé’s position is supported by prominent Namibian economist, Klaus Schade, who observed that the country is still doing relatively well within the region, and in Africa and for investors focusing on regional markets, it will still be attractive to choose Namibia.

“However, we need to address the weaknesses in order to not only remain competitive in the region, but to strengthen our competitiveness, since other countries are also moving on,” he said.

On the downside, Schade added that Namibia not only has a small population, but also a much skewed income distribution, which limits its purchasing power.

“However, Namibia is part of a customs union (SACU) with Botswana, Lesotho, South Africa and Swaziland, which increases the population to more than 60 million,” said Schade.

Also speaking at the economic conference, Nangula Uaandja, Senior Partner at PwC Namibia said the country needs to focus on public-private partnership (PPP) to attract investment other than the exploitation of the country’s natural resources.

Using PESTEL Analysis, a tool used by marketers to analyse and monitor the macro-environmental (external marketing environment) factors, Uaandja said that there was a lot going for Namibia, such as its stable democracy, peace, accessible leadership, mixed market economy, good GDP growth and tightening of the fiscal policy.

But, she said there were concerns of inequality, high unemployment rate, low productivity and limited markets due to the low population density.

Tom Alweendo, Namibia’s Minister of Economic Planning and Director General of the National Planning Commission, shared Uaandja’s sentiments, saying that “we need to reorganise our goals and live within our means”.

He said that Namibian economic challenges are unemployment, an economy that is not inclusive and benefits accrued that are not shared equitably.

“We must start to believe in our capabilities. If we do not have determination, things won’t get any easier for us given the smallness of our country. There are certain things that we can do better, let us prioritise what we can do best,” he said.

Alweendo was optimistic that although Namibia is experiencing economic headwinds, it will be temporary and “if we are consistent, we will get out of this”.

The economic conference follows on the heels of the Invest in Namibia Conference held on November 8-9, 2016, with the objective to mobilise potential investors in the country.

There are several investment opportunities, especially in the transport and logistics sector. These include the deepening of Lüderitz port and development of a new port at Angra Point on the west coast; construction of the Trans Kalahari Railway, the Grootfontein-Katima-Livingstone rail, commuter rail service in Windhoek and upgrading of national highways, truck stops, bypasses and weighbridges.

The World Bank’s annual ‘Doing Business Report 2017’, which measures the ease of doing business from country to country, indicated that Namibia dropped by four places to 108 out of 190 countries, while South Africa slipped to 74th place.

November 2016
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