Namibia set to benefit from wealth ‘rub-off’

THE Namibian economy and local investors are well positioned to benefit from the ‘rub-off effect’ as South Africa launches major strategic infrastructure investment and enters a period of sustained GDP growth.

The positive prognosis for investment opportunities over the next 14 months was outlined last week during in-depth presentations to investors and financial advisers at events in Windhoek and Swakopmund hosted by Stanlib Namibia, one of the country’s major unit trust innovators. The Windhoek-based wealth product marketer and asset manager is a subsidiary of South Africa’s Stanlib Group, the region’s largest unit trust company.The presentations were made by Paul Hansen, Director of Retail Investing at Stanlib South Africa.Hansen revealed that South Africa plans to spend R275 billion on fixed investment projects over the next five years.Construction spending will take over from consumer spending as the principal driver of the SA economy, with spill-over benefits for southern Africa as a whole.Continuing strong demand for commodities was projected.Prices for platinum, gold, copper, aluminium and coal were in many instances close to a 25-year high.Chinese demand, Japanese growth, an upturn in Europe and the continuing strength of the US economy would ensure no sudden collapse of commodity prices – good news for Namibian producers.Global growth may slip from the 4,3 per cent average in 2005, but was still robust at a projected 3,8 per cent for 2006.Hansen noted that Namibian growth was slower than the 2005 world average.Economic activity had become sluggish as a result of a strong Namibian dollar, poor first-half fishing results and lower diamond output.However, the Stanlib view was the Namibian dollar had now broken out of a three-and-a-half year uptrend against the US dollar, shedding 17 per cent of its value since the end of 2004.This would benefit tourism and many producers.Mining was positioned for a strong performance on the back of higher gold, copper, uranium and zinc prices, while Stanlib predicted that fishing would bounce back from seven consecutive negative quarters.Hansen said South African inflation was predicted to tick higher in the short-term, as were interest rates.However, they would remain low in comparison with the 10-year average.He added, “Namibia obtains 85 per cent of its imports from South Africa.Well controlled levels of inflation right next door are therefore good news for Namibian consumers.It means Namibia will be ‘importing’ moderate to low levels of inflation.”Local employers were also well placed to benefit from a largely benign economic outlook.Hansen explained, “South Africa’s planned construction spending is the largest infrastructure investment ever made in the history of our region.As development gathers pace, some capacity constraints may emerge – which may translate into contracting opportunities for Namibian companies.”In some instances, the expenditure is related to infrastructure to cater for larger tourist inflows expected on the run-in to the 2010 Soccer World Cup.Long-haul visitors often regard our part of the world as a regional destination; which means spill-over tourism as further ‘legs’ are added to the visit.”Again, Namibia will derive advantage from the rub-off effect.”Additions to strategic infrastructure, higher capacity utilisation by business and expansion plans by the private sector lent support for the Stanlib view that investors could see further gains by equities in the year ahead.Hansen also said, “The Namibian stock exchange has risen from close to the 250-mark at the end of 2003 to 450 by September 2005.In South Africa, the JSE is up 130 per cent since mid-2003 or 170 per cent in US dollar terms.The Windhoek-based wealth product marketer and asset manager is a subsidiary of South Africa’s Stanlib Group, the region’s largest unit trust company.The presentations were made by Paul Hansen, Director of Retail Investing at Stanlib South Africa.Hansen revealed that South Africa plans to spend R275 billion on fixed investment projects over the next five years.Construction spending will take over from consumer spending as the principal driver of the SA economy, with spill-over benefits for southern Africa as a whole.Continuing strong demand for commodities was projected.Prices for platinum, gold, copper, aluminium and coal were in many instances close to a 25-year high.Chinese demand, Japanese growth, an upturn in Europe and the continuing strength of the US economy would ensure no sudden collapse of commodity prices – good news for Namibian producers.Global growth may slip from the 4,3 per cent average in 2005, but was still robust at a projected 3,8 per cent for 2006.Hansen noted that Namibian growth was slower than the 2005 world average.Economic activity had become sluggish as a result of a strong Namibian dollar, poor first-half fishing results and lower diamond output.However, the Stanlib view was the Namibian dollar had now broken out of a three-and-a-half year uptrend against the US dollar, shedding 17 per cent of its value since the end of 2004.This would benefit tourism and many producers.Mining was positioned for a strong performance on the back of higher gold, copper, uranium and zinc prices, while Stanlib predicted that fishing would bounce back from seven consecutive negative quarters.Hansen said South African inflation was predicted to tick higher in the short-term, as were interest rates.However, they would remain low in comparison with the 10-year average.He added, “Namibia obtains 85 per cent of its imports from South Africa.Well controlled levels of inflation right next door are therefore good news for Namibian consumers.It means Namibia will be ‘importing’ moderate to low levels of inflation.”Local employers were also well placed to benefit from a largely benign economic outlook.Hansen explained, “South Africa’s planned construction spending is the largest infrastructure investment ever made in the history of our region.As development gathers pace, some capacity constraints may emerge – which may translate into contracting opportunities for Namibian companies.”In some instances, the expenditure is related to infrastructure to cater for larger tourist inflows expected on the run-in to the 2010 Soccer World Cup.Long-haul visitors often regard our part of the world as a regional destination; which means spill-over tourism as further ‘legs’ are added to the visit.”Again, Namibia will derive advantage from the rub-off effect.”Additions to strategic infrastructure, higher capacity utilisation by business and expansion plans by the private sector lent support for the Stanlib view that investors could see further gains by equities in the year ahead.Hansen also said, “The Namibian stock exchange has risen from close to the 250-mark at the end of 2003 to 450 by September 2005.In South Africa, the JSE is up 130 per cent since mid-2003 or 170 per cent in US dollar terms.