Namibia's total domestic savings as a ratio of GDP is estimated to have increased to 18.5% in 2020, from 11.9% in the preceding year, despite some significant dissaving by the government. This is according to the Bank of Namibia (BoN) annual report for 2020, launched last week, which indicated that national savings are critical in any economy as they contribute to investment funding, which in turn stimulates economic growth.
The improvement in the overall domestic savings was attributed to an increase in domestic private savings. As a ratio of GDP, domestic private savings is estimated to have risen to 26.5% in 2020, from 15.2% in 2019.
At the same time, the central bank stated that the domestic dissaving rate by the public sector increased to 8.1% of GDP in 2020, from a lower dissaving rate of 3.4% of GDP in 2019.
During 2020, Namibia's investment was equivalent to 16.5% of GDP, while total domestic saving was 18.5% of GDP, leaving a negative savings-investment gap equivalent to 2% of GDP.
"This gap was uncharacteristic for Namibia and was filled through dissaving from the external sector. Domestic savings were higher than investment and the excess amount was invested elsewhere in the world. The counterpart to this was that Namibia ran a surplus on the current account of the balance of payments in 2020," reads the report.
At the launch of the report, the bank also declared a dividend of N$278.2 million to the State Revenue Fund on account of its operations during 2020, despite a tough operating and low-interest-rate environment caused by the Covid-19 pandemic.
The dividend was lower than the N$399 million of the preceding year, representing a decrease of about 30%.