Despite numerous regional and global headwinds, domestic economic activity expanded during the first ten months of 2023, although at a slower pace compared to 2022. According to official figures, notable improvement was observed across many sectors, specifically mining, power generation, livestock agriculture, wholesale and retail trade, tourism, communication and transport.
However, domestic construction activity remained subdued, which remains a thorn in the side of local employment creation and industrialisation.
Overall, for the year 2023, GDP growth is estimated to decline to 3.9% from 7.6% in 2022, largely on account of slower growth in the primary industry, following a high base set during 2022. Likewise, the central bank expects general domestic growth to slow further to 3.4% in 2024.
Herewith a look at some the main business stories during the last 12 months:
January 2023
NamRA to tax all natural resource income
The Income Tax Amendment Act, 2022, came into force on 01 January with an objective, amongst others, to ensure that any income derived from the exploitation of Namibia's natural resources is taxed. This means whether such income is of revenue or capital nature, it will be taxed. In the previous financial year, which ended 31 March 2022, the taxman collected over N$60 billion, surpassing its collection target of N$49.4 billion.
Global oil explorers focus on Orange Basin
The deep-water Orange Basin of f shore Namibia, where TotalEnergies and Shell last year confirmed the largest oil discovery of 2022 with the detection of light crude oil, is becoming a more attractive destination for global oil explorers. This is as independent French oil company specialising in the production of hydrocarbons, Maurel & Prom, is set to join the scuffle for black gold with the commencement of a potential five-well drilling campaign in the vicinity in 2023.
February 2023
O&L cements European expansion plans
As part of the Ohlthaver & List (O&L) Group's recent expansion plans, which include developments for its Namibian subsidiaries, such as establishing a new Hangana Seafood factory and rebuilding Mokuti Etosha Lodge, Germany has been further selected as a suitable destination to strengthen the group's resilience and offerings with the formation of a new European holding company, O&L Europe. Officially established in November 2022 and headed by Steffen Kammerer as managing director, the company will house the O&L Group's European businesses and operations primarily in Germany.
GIPF exceeds domestic investment target
The Government Institutions Pension Fund (GIPF) has invested N$5.3 billion in the domestic economy in 2022, up from N$4.8 billion in 2021. This was mainly done through their unlisted investment programme, which is invested in 22 unlisted investment managers and at least 83 Namibian portfolio companies.
Despite this significant investment, more than N$2.1 billion is still available to be invested. These figures are contained in the fund's 2022 integrated annual report launched last week with a review panel that included CEO David Nuyoma, board chair Nillian Mulemi and deputy board chair Faniel Kisting.
March
New employment conditions for fisheries workers
Certain provisions of basic conditions of employment or service for employees and employers in the fisheries industry have been varied by the labour minister.
This means provisions of the Labour Act, as provided for these conditions, have been substituted by the varied provisions, which were published in the Government Gazette of 1 March 2023. The variation came into force on 1 March 2023 and will remain in force for the next five years.
Germany applauds Namibia's green hydrogen potential
German Minister of Education and Research, Bettina Stark-Watzinger said the future of climate neutrality belongs to green hydrogen. She made these remarks yesterday in the capital at the launch of Green Hydrogen Namibia pilot projects and the awarding of youth programme scholarships to beneficiaries. "Namibia has outstanding conditions for the cost-effective production of green hydrogen and the development of hydrogen supply chain. It has ideal wind and sun conditions, large areas available, and stable democracy," said Stark-Watzinger.
April
Germany to support Namibian beneficiation
German chancellor Olaf Scholz said his country wants to help mineral-rich countries build their processing infrastructure to cut dependency on China and source it straight from countries like Namibia, Indonesia and Chile. "At the moment, we import raw materials from China, which is despite the fact that rare earth copper or nickel are often not even extracted from the earth there but rather from countries like Indonesia, Chile or Namibia - from countries that often do not profit nearly enough from the richness of their natural materials. We want to change this," stated Scholz while opening
Germany's industrial trade fair in Hannover Messe last week.
Green ammonia breakthrough for EU market
Hyphen Hydrogen Energy, the preferred bidder for Namibia's first-ever large-scale vertically integrated green hydrogen project, has secured an agreement with Koole Terminals to use its infrastructure to import green ammonia for the European market. According to a statement, Hyphen signed a Letter of Intent (LoI) with Koole Terminals. With these and many other developments falling into place Namibia's ambitions of becoming a significant player in the green hydrogen industry keeps on moving closer to fruition.
May
Trade facilitation increases corridor volumes by 50%
The Walvis Bay Corridor Group (WBCG) has announced a sterling performance for the 2022/23 financial year, specifically in reference to substantially increasing corridor volumes. Corridor cargo volumes entering and leaving the
hinterland increased by 50% year-on-year, climbing from 1 639 510 tonnes to 2 464 123 tonnes.This is the volume throughput recorded for the ports of Walvis Bay and Lüderitz, going to and coming from the target markets of Angola, Botswana, the Democratic Republic of the Congo (DRC), Malawi, South Africa, Zambia as well as Zimbabwe.
Relaunched Covid loan scheme gains momentum
Government's relaunched scheme is starting to play a more meaningful role in supporting the growth and sustainability of small and medium enterprises (SMEs), with over N$85.9 million or 17.18% disbursed to 80 SMEs across the country. This figure was released on Friday by central bank spokesperson Kazembire Zemburuka. In November 2020, the Bank of Namibia (BoN) launched a Covid-19 SME Loan Scheme, with N$500 million accessible to SMEs through participating banking institutions.
June
Interest rates close to peak - expert
Although there is no certainty as to when the current interest hike cycle will end, a major player in Namibia's financial market expects one or two more interest rate hikes before a peak is reached. What is however certain is that elevated and excessive living costs in the domestic economy will continue to weigh heavily on consumer demand. Responding to queries from New Era, assistant portfolio manager at Old Mutual Investment Group, Tumelo Thudinyane, believes one or two more interest rate increases will happen before the central bank abandons the strategy to rein in inflation.
Local mining procurement concerns Shilunga
Deputy mines minister Kornelia Shilunga told the mining sector that good relations, not just with the government but also with relevant communities, is crucial for the well-being of mining companies in Namibia. Shilunga was speaking on Monday during the launch of Rössing Uranium's 2022 Sustainability and Performance Report. "Always keep in mind that good relationships can protect a mine's licence to operate. Thus, it is important to constantly build good relationships with local communities by creating value for these communities," said Shilunga, adding the Rössing mine remains the pillar of Namibia's mining industry.
July
High prices and interest rates weigh on consumers
Namibia has not been spared from the rapidly rising inflation and interest rates experienced across the globe over the past year and a half. This has raised concerns around household consumption dynamics, given the pressure on disposable incomes. Weakening household consumption spending bodes ill for overall economic growth as consumption spending constitutes 78% of GDP. According to FNB Namibia economist, Ruusa Nandago, the 2022 Annual National Accounts surprisingly showed resilient household consumption whose growth was recorded at 14.4% - the highest since 2016.
Vast reserves key to economic emancipation
The discovery of vast oil and gas reserves by international companies TotalEnergies and Shell has catalysed a new dawn for Namibia. This is after Shell last week announced its fourth successive discovery, more than 270km off the coast in Namibia's Orange basin after hitting pay dirt with a recently-completed exploration probe. "These reserves, once fully appraised and eventually developed, will contribute meaningfully to our economy and will form a cornerstone in our strategy to alleviate unemployment and income inequality in our nation," said Vice President Nangolo Mbumba last week.
August
High claims decimated Bankmed reserves
An unsustainable increase in claim amounts, which adversely impacted its reserve level, was one of the main causes for the medical aid fund that caters to banks, Bankmed, going insolvent. The fund, established in 1997 as a closed medical aid fund for members of participating employers and their families, had 4 512 principal members and 5 470 dependants as at 31 December 2022. However, between 2022 to 2023, the fund experienced an increase of 13.5% in claims, which was more than double the increase in tariffs.
Iipumbu tells new boards to focus on economic revival
Trade minister Lucia Iipumbu has urged newly appointed board members and management at state-owned enterprises (SOEs) to focus on matters that drive economic revival. Speaking at Monday's inauguration of board members, Iipumbu said there is no room nor time to waste on unimportant issues.
"I wish to urge the board and management to foster a good professional working relationship, as we do not have time to waste on petty issues or in-fighting, but we should rather be dedicating our energies to the developmental agenda of our country," said Iipumbu on Monday during the inauguration of the Namibian Competition Commission (NaCC) and Namibia Estate Agents Board (NEAB) board of directors.
September
Federation and union want in on local projects
The Construction Industries Federation (CIF) and the Metal and Allied Namibian Workers Union (MANWU) continue to engage government to cancel projects that have led to the exclusion or will exclude majority Namibian-owned contractors, due to mostly steep financial pre-qualification or qualification requirements. The main plea was addressed by these entities to President Hage Geingob to solve the matter as Head of State. Due to time constraints, the union and the federation urged that all projects currently excluding local contractors be cancelled and re-advertised.
Energy boom can save ailing construction sector A bleak short-term outlook remains in sight for Namibia's construction sector, but these misfortunes could be turned around by the green hydrogen and the oil and gas boom. These developments, should hopefully boost the ailing domestic construction sector in the medium- to long-term, particularly in the vicinity of Lüderitz and Oranjemund. Meanwhile, tight financial conditions for households and businesses due to higher interest rates are leading to less demand for mortgage loans.
October
Africa's first public hydrogen refuelling station
Bricklaying of Africa's first public green hydrogen refuelling station commenced last week Thursday, with Finance and Public Enterprises' minister Iipumbu Shiimi officiating at the event. The project is being implemented by Cleanergy Solutions Namibia, a joint venture between the Ohlthaver & List (O&L) Group and CMB.TECH. Commenting on Namibia's green hydrogen strategy, which eventually targets the production of 10 to 12 million tonnes per annum by 2050, Shiimi said: This strategy positions Namibia as a key player in the emerging global green hydrogen market".
Iipumbu:Time to capitalise on natural resources
Trade minister Lucia Iipumbu has noted with concern that developing economies, particularly in Africa, have a history of operating from a low industrial base, have few competitive products for world markets and even trade minimally amongst themselves. "Most developing countries, especially in Africa, have a dominant economic model of just extracting natural resources and exporting them unprocessed to world markets. The discovery of critical raw minerals or the increase in demand for them allows us an opportunity to reset the existing unviable economic growth framework," said the minister last week at the eighth World Investment Form 2023 in Abu Dhabi, United Arab Emirates.
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November
Shell to spend N$4.6 billion more on Namibian wells
Following promising signs from its oil discovery offshore Namibia in the Orange Basin, Shell has revealed plans to drill two more wells in its Namibian licence area. This is according to Shell's CEO Wael Sawan, who last week cited "encouraging data" for the possible development of a new oil basin off the coast of Namibia. Sawan stated that the additional wells will be drilled over the next six to nine months. The international oil major plans to drill one exploration well, one appraisal well and conduct one flow test at its exploration licenses offshore Namibia, said Sawan, according to international media reports.
Commercial collaboration welcomed in Orange Basin
The mines and energy ministry believes it prudent to maximise Namibia's gas production to support domestic industrialisation. In this regard, government is working hand-in-hand with the BW Kudu and the National Petroleum Corporation of Namibia (Namcor) joint venture to advance the development of the Kudu Gas Field, with the operator annually submitting a work programme and budget for review, input and final approval. This is according to former acting executive director in the ministry, Bryan Eiseb, who in response to queries from New Era stated: "We encourage the creation of synergies, open dialogue and the possibility of shared infrastructure for gas production, where it is feasible. The Kudu project is a priority for Namibia, and we welcome any commercial collaboration between companies operating in the Orange Basin".
December
Namcor's N$700m loss prompts bail out call
In a commitment to transparency and open communication, the Namibian National Petroleum Corporation (Namcor) has acknowledged challenges it has faced in the past, particularly in 2010, which led to significant losses. This follows exposure to fluctuating oil prices and a what the corporation termed a "flawed agreement" between Namcor and a third-party supplier, with ensuing financial implications which prompted a government bailout. In a statement issued last week, Namcor's acting managing director, Shiwana Ndeunyema, said these factors underscore the complexity of operating in a volatile market.
Namfisa temporarily caps medical aid increases
The Namibia Financial Institutions Supervisory Authority (Namfisa) last week placed a temporary cap on selected medical aid increases as part of proactive measures to secure the long-term sustainability of the domestic medical aid fund industry. The authority's intervention comes amidst revelations of a report by the Namibia Association of Medical Aid Funds (Namaf), calling for urgent intervention to rescue the ailing industry. Namfisa's decision was preceded by an observation of significant variances between actual and forecasted solvency numbers for medical aids over the past three to four years, often absorbed by members through contribution rates' and benefit limit adjustments.
