This time of the year is always a welcome opportunity to reflect on what really matters.
President Hage Geingob has declared 2024 ‘The Year of Expectation’.
As Namibia approaches the general elections this year, there is immense pressure on political leaders to tackle these economic challenges and implement policies that would deliver an inclusive and competitive economy.
The economy plays an important role in presidential and National Assembly elections.
By unlocking big, bold investments we can drive sustainable development and climate action and put the Namibian economy on a stronger growth path for all.
Hence, factors such as higher interest rates and increased unemployment contribute to the uncertainty surrounding Namibia’s economic trajectory.
To address these challenges, policymakers must focus on strategies to stimulate growth and reduce inequality.
Furthermore, the economy will grow at a softer pace in 2024. Inflation will remain eminent, eating into consumers’ pockets.
Power supply issues will further jeopardise activity due to geopolitics.
Moreover, social rifts and violence ahead of the November elections could undermine momentum.
Also, social tensions and violence could increase going forward.
Economic growth is officially projected to contract by 0,5% , bringing it to 3,4% after a growth forecast of 3,9% last year.
The Africa Development Bank projected Namibia’s real gross domestic product (GDP) to grow by 3,5% in 2023 and 3% in 2024, due to economic recovery, particularly in diamond processing and exports, and increased consumption in wholesale and retail trade and tourism.
The fiscal deficit is projected to decline.
The country’s trade balance deficit is still high despite improvement in exports.
Therefore, Namibia should consider implementing policies that promote domestic production and reduce the country’s reliance on imports.
Additionally, the lack of sufficient, productive, and decent jobs is complicating efforts to end poverty.
Inequality is on the rise, according to the World Bank report indicating that Namibia’s Gini index stood at 59,1, ranking as the second-most unequal country in the world.
The high public debt represents an impediment to sustainable economic growth and employment creation in the economy.
The cost of servicing the debt continues to crowd out fiscal resources that could have been invested in critical social services such as healthcare and education.
This pessimism about the outlook creates a downside risk for the recovery and suggests that policymakers should be wary of removing supportive measures too rapidly.
Furthermore, the most important thing to keep in mind is that economic outcome variance has radically increased, fuelled by the wars in Ukraine and Gaza.
The year 2024 at least promises to be another year for the history books.
Policymakers should work together and inspire action to meet Namibia’s commitment to leave no one behind throughout its implementation of the sixth National Development Plan (NDP6).
It is imperative to reflect on the previous NDPs’ shortcomings by coming up with well-researched and well-reasoned mechanisms that prioritise and synchronise activities to yield the desired results and avoid the economy faltering.
We should look at our failure as a necessary stepping stone to achieve our desired goals and not as a deterrent not to try again.
On our journey, the real solutions can therefore not come from the pessimists among us, but from those who are prepared to face the uncertainty of the future and willing to overcome the fear of failure.
Industrial policy should be revisited or reformed to incorporate the informal economy.
The current industrial policy narratives tend to either neglect the informal economy or even view the informal sector as potentially threatening to the formal economy.
Therefore, recognising the precarious nature of the informal economy has also brought marked attention to the resilience of the informal economy and its creative energies.
Additionally, oil discoveries in Namibia are likely to bring in an equivalent of N$53 billion in revenue for the state, a prominent global consultancy group has estimated.
These discoveries would significantly improve energy security in a nation that relies heavily on petroleum imports.
The development of a consistent domestic energy supply will prove critical for the economy while reducing imports from neighbouring countries.
I view green hydrogen as the path forward to full decarbonisation in a way that is reliable.
The agricultural sector in Namibia needs serious reforms and an increase in public investments in agriculture.
To reach these goals the development of skills and knowledge plays a key cross-cutting and value-adding strategy.
The fact remains that Namibia operates in the phenomenon of globalisation, hence we have to diversify our economy to have a viable playground to compete.
This would help Namibia to succeed and bring a developmental package that would cater to the well-being of our people.
Namibia must realistically anticipate and be positioned to harness the opportunities embedded in the fourth Industrial Revolution and adopt policies.
In conclusion, policymakers should look to build resilience and remain growth-minded amid a volatile economic backdrop.
More than ever, it’s important to be proactive, seek a better understanding of the outlook and discover how to turn potential pitfalls into new prospects.
- Josef Sheehama is a banking industry professional with 20 years’ experience. He writes in his personal capacity.
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