Debt, inflation, unemployment and interest rates in 2023

THE year 2023 was one of highs and lows for the Namibian economy. While Namibians were resilient, they had to deal with a plethora of challenges including rising debt, high inflation, unemployment, failure to service debt and high interest rates.

Here are some of the stories that topped the financial headlines this year.

REPO RATE
INCREASED TO 7,75%

The Bank of Namibia’s monetary policy committee maintained an upward trend in the repurchasing rate for 14 consecutive quarters before deciding to keep it stable at 7,75%, and providing some relief to consumers in the process.

Namibia effectively ends the year with the interest rates hovering at 11,50%.
The country is now 50 basis points behind South Africa and at par with other common monetary area countries such as Lesotho and Eswatini.

OVER 1,3M NAMIBIANS
HAVE N$25 000 OR
LESS IN THE BANK

Over 1,3 million Namibians have only N$25 000 or less in their bank accounts, attributing the decline to inflation eroding disposable income.
This underscores the urgent need for inflation control measures and income-boosting initiatives.

The figure was revealed by the Namibia Deposit Guarantee Authority as it launched its 2022 annual report in Windhoek.
Reacting to this, High Economic Intelligence head of research Salomo Hei said this was a true reflection of how inflation has eroded the disposable income of both businesses and individuals.

HOUSEHOLD DEBT-SERVICING COSTS SKYROCKET

Household debt-servicing costs skyrocketed, doubling since 2020 to 17,8% of income. This raised concern about financial vulnerability potentially impacting future spending and economic growth.

Overall, the financial system in Namibia remained sound, profitable and with no disruptions or disorderly functioning of key financial services, despite the economy performing below potential.

NAM YOUTH FINANCIALLY DEPENDENT ON PARENTS UNTIL 27

Young Namibians remain financially dependent on their parents well into their late 20s, unable to afford property due to high land prices and stagnant salaries.

Economists blamed land prices and average salaries as the root causes of this phenomenon.

These revelations were part of the Simonis Storm Securities report, titled ‘Namibia’s Property and Housing Market Overview’, which tracked the performance of Namibia’s property sector since independence in 1990.

NAMIBIA BANS EXPORT OF UNPROCESSED LITHIUM

Namibia banned the export of unprocessed critical minerals like lithium, aiming to maximise local benefits from their growing global demand in clean energy technologies.

This bold move paves the way for value addition and increased industrial development.

This was announced by the deputy minister of information and communication technology, Emma Theofelus, in a briefing on Cabinet resolutions.

“The Cabinet has approved the prohibition of the export of certain critical minerals such as unprocessed crushed lithium ore, cobalt, manganese, graphite and rare-earth minerals,” Theofelus said.

“Smaller quantities of the above-mentioned minerals may be allowed for export at the discretion of the minister of mines and energy, subject to Cabinet endorsement,” she said.

EU TO PUMP N$20B INTO NAMIBIA’S GREEN HYDROGEN, RAW MATERIALS SECTORS

The European Union (EU) pledged a significant N$20 billion investment in Namibia’s green hydrogen and raw materials sector.

This commitment was announced by EU Commission president Ursula von der Leyen during the EU-Namibia business forum on Wednesday in Brussels, Belgium.

Highlighting Namibia’s vast potential in renewable energy, Von der Leyen described the country as a leader in the green hydrogen domain.

N$600 000 WORTH OF FNB EWALLETS STOLEN

First National Bank (FNB) Namibia said a total of N$600 000 has been lost through 788 transactions made via the bank’s eWallet facility since August last year.

This was revealed by FNB executive for retail banking Nangula Kauluma at a press briefing in Windhoek.

Kauluma was responding to the complaints of clients who lost money through eWallet transactions, saying they were investigating the incidents.

NAMIBIA RANKED NUMBER ONE IN AFRICA ON FOREIGN DIRECT INVESTMENT

Namibia has been ranked as number one in terms of Africa’s foreign direct investment (FDI) performers relative to the size of their economies in 2022.

This was reported by the Namibia Investment Promotion and Development Board (NIPDB) after the recently ended United Nations General Assembly in New York.

According to NIPDB spokesperson Catherine Shipushu, this was data released by the Greenfield FDI Performance Index, which measures FDI attracted in proportion to a country’s economic size.

“Following the collective efforts of public and private sector stakeholders, Namibia is slowly reaping the results of persistent and deliberate investment promotion activities.

“Namibia is ranked number one in Africa and 13th globally in 2022,” Shipushu said.

THIRD QUARTER GDP EXPANDS TO N$38,7 BILLION

Namibia’s 2023 third quarter gross domestic product (GDP) stood at N$38,7 billion compared to N$36,1 billion over the same period in 2022.

This is according to the Namibian Statistics Agency’s GDP report released recently.

This is a N$2,6 billion growth from last year during the same period.

According to the report, GDP expanded by 7,2% compared to 5,4% in the corresponding quarter of 2022.

“The positive performance is mainly attributable to the primary industry, which recorded an expansion of 38,3% in real value added.”