REGIONS MIDDLEEAST&AFRICA

Namibias quiet progress

Namibia is outperforming its old associate South Africa, with strong growth predicted in 2013 and 2014 but, As Barbara Njau finds, vulnerabilities remain in the countrys economic profile
he vast southern African country of Namibia is often perceived as a proxy for its neighbour South Africa. Its fortunes have in the past been closely tied to those of South Africa, having historically been occupied by the country. Despite the fact Namibia officially achieved independence from South Africa in 1990, the two countries continue to be seen as politically and economically interlinked. So when South Africas economy entered the doldrums in 2009, contracting by 0.9% according to the African Development Bank, international investors watched to see if Namibia would fall as its neighbour had. Although Namibias economy contracted by 0.5% in the same year, its rebound has been greater and more sustained than South Africas. While South Africa is expected to grow by just 2.8% in 2013, the African Development Bank expects Namibia will outperform it and achieve 4.2% growth, increasing to 4.3% next year, primarily on the back of its diamond and uranium exports. Strong macroeconomics Namibias economy may be highly exposed to South Africas, but minister of trade Calle Schlettwein maintains that Namibias strengthening macroeconomic framework will enable it to weather potential headwinds in a more sustained manner. We have a similar monetary area [to South Africa] and we have therefore experienced similar effects, says Mr Schlettwein. The weakening of the South African rand, which is pegged to the Namibian dollar on a one-on-one basis, has weakened [our currency]. But Namibia is very well placed. We are beating the trend, even in our own region... We have maintained macroeconomic stability over the past 23 years, and we have a good track record with regards to our political stability and safety. Namibias mining and construction sectors, which collectively represent 14.5% of GDP, have continued to grow, enabling the country to maintain a solid growth rate in 2012. Namibias government, which moved swiftly to stabilise the economy with a stimulus package to boost GDP in 2009, is perceived as progressive and proactive in its FDI policies, especially when compared with regional counterparts such as Zimbabwe. But the perennial worry is that Namibia has not done enough to diversify its sources of growth, with its focus on the lower end of the minerals and commodities value chains. The main vulnerability is that we rely on the primary sector, more specifically mining,
August/September 2013 www.fDiIntelligence.com

PROFILE: Calle Schlettwein

says Mr Schlettwein. If we want to sustain even higher growth rates, which are necessary to adjust the sharp discrepancies in income distribution, then we need to industrialise in both the non-renewable and renewable [sectors]. Our challenge is to restructure the economy to achieve that. Namibia may be one of the few sub-Saharan African economies to have attained middleincome economy status, but it has consistently been sliding down the ranking of the World Economic Forums (WEF) global competitiveness index. Although Namibias infrastructure is ranked as relatively interconnected particularly when benchmarked against other subSaharan African countries the WEF notes that it is still insufficient to cope with the countrys growth. In addition, Namibias educational system is seen as ill-equipped to serve the needs of international investors who wish to recruit local talent for their operations in the country. Mr Schlettwein maintains that it would be unfair to overstate Namibias weaknesses. [The WEF index] is a half truth because the slippage is a relative level, he says. We started at a high level and we did not slip relative to ourselves it is just that others reformed faster. We are still in the top five of Africas most competitive economies, which is not bad. Although institutions in other African countries are developing quicker, Mr Schlettwein says that they still trail Namibias higher institutional standards. A plan in progress Pointing to the governments Fourth National Development Plan, Mr Schlettwein says the country has been implementing measures that will improve doing business in the transport, logistics, tourism, agriculture and manufacturing sectors. We have started the Business and Intellectual Property Authority, which will be a one-stop centre of all [company] registrations, and it will coordinate aspects such as work permits, land availability and so on, says Mr Schlettwein. We have also increased the resources we allocate to infrastructure. Our seaport is destined to be a regional gateway for the landlocked Southern African Development Community countries, and we have offered dry dock facilities to neighbouring states. In spite of being a very small and open economy, we managed to beat the trend of the global economy and we are doing well. I have a positive outlook for the economy this year.

Curriculum Vitae Calle Schlettwein

2012 2010

Namibia Minister of trade Namibia Deputy minister

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