Urban areas dominate economic activities

THE Development Bank of Namibia’s funding for 2018 was largely skewed to the more urbanised and industrialised Erongo and Khomas regions, compared to rural regions.

Out of the N$1,7 billion approved by the Development Bank of Namibia for economic development, rural areas only managed to secure N$613,6 million, while urban areas took N$960 million, translating to 57% of the total funding.

The rest of the N$110,8 million was mixed funding for rural and urban areas, the Development Bank’s ‘2018 Development Impact Report’ showed.

Although rural funding improved from 2017, only N$73,2 million was approved, compared to N$1,4 billion for urban areas. The bank ascribed the skewed flow of loans to low buying power in rural areas, compared to urban areas.

“The rural economy tends to be underserved in terms of the provision of vital goods and services, often due to more attractive locations and greater buying power in urban areas,” said the report.

Extending loans/funding to all regions will ensure development proceeds, reducing urbanisation, which puts pressure on the resources of more economic regions, it added.

The bank’s regional loan approval for 2018 shows that out of the 14 regions, the Khomas region tops the funding list with N$423,4 million (16,8%) approved.

The Erongo and Otjozondjupa regions received the second-highest loan approvals, receiving N$234 million and N$210,3 million, respectively, for 2018. The Oshana region followed suit, receiving a loan of N$61,4 million, while Oshikoto received N$31,4 million.

Loan approvals to the Kunene, Omusati, Ohangwena, and Kavango East regions accounted for only 2,9% of the total loans in 2018.

The Kunene region had a N$22,4 million loan approval, whereas the Omaheke and Omusati regions managed to secure N$16,9 million and N$15 million, respectively. For the //Karas region, the entire N$500 million approved for 2018 was directed to the Neckartal Dam.

The Ohangwena region secured N$6 million, while the Kavango West, Hardap, and Zambezi regions did not receive any loans.

This is the second consecutive year that the Kavango West region received no loans, as indicated in the 2017 and 2018 reports. Kavango West has a youth unemployment level of 46,8%, according to the 2018 Labour Force Survey. The impact report explained that different profiles of the regions present different challenges for economic and finance development, leading to varying finance demands.

“Less economically active regions need to be stimulated with the establishment of enterprises and the building of infrastructure,” the report stated.

According to the 2018 Labour Force Survey, rural areas have a high unemployment rate at 33,5%, compared to urban areas. Almost half of the youth population in rural areas are jobless, with the rate at 49,1%.

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