The country’s agricultural sector is expected to grow by 10 percent this year, Institute of Public Policy Research (IPPR) Economist, Klaus Schade, said this week when he spoke about prospects and trends in the economy.
According to the Bank of Namibia, value addition in the agricultural sector was estimated to have contracted by 4.7 percent in 2016, compared to 10,3 percent in 2015.
“Rainfall is expected to be average to above-average, however, rainfall patterns are unpredictable,” Schade said on Tuesday during a presentation in Windhoek.
“Diamond mining is expected to increase with the new commissioned exploration vessel by Debmarine Namibia, the mv SS Nujoma.”
The vessel, which cost N$2,3 billion and was co-financed by Standard Bank Namibia and RMB Namibia, will be used for exploring Debmarine’s mining area offshore near Oranjemund.
Last year, Debmarine produced 1,2 million carats, and the new acquisition is expected to boost output. The SS Nujoma brings to six the number of vessels in the company’s fleet.
Schade said the appreciation of zinc and copper prices due to demand in recent months, could result in return to production for mothballed mines elsewhere in the world.
Copper(purchased in cash) was trading for about US$50 per tonne this week, the highest since 2009.
Schade expects the Husab mine to have limited impact on the economy this year, but to increase its impact on GDP next year as production reaches full capacity.
Good uranium prices will also have a good impact on Rossing and Langer Heinrich mines.
Husab at full production of 6800 tons per year, will be one of the largest uranium mine globally.
Schade expects the construction industry to further contract since more budget cuts will be felt this year. A survey undertaken by the Construction Industries Federation early this year showed that about 34 percent of members will either close down their businesses or will have to declare bankruptcy and a further 40 percent will scale down their businesses drastically or become dormant. This would mean that that capacity of 74 percent of these businesses would no longer be utilised if they were not to benefit from any Government contracts.
Some of the big construction projects at the moment include the Neckartal dam and the Walvis Bay Port extension. Italian firm, Salini Impregilo is constructing the Neckartal dam in southern Namibia at an estimated cost of N$5 billion.
Media reports said this week that the Government wa nt NamWater to borrow N$600 million to settle Salini Impregilo invoices for work done so far at the Neckartal Dam. The company suspended operations at the dam site last week, and sent about 600 workers home until further notice. The project is said to be 90 percent complete.
Namport is embarking on an expansion programme to raise the container throughput capacity from 355,000 Twenty Foot Equivalent Unit to 1 005 000 TEUs.
The project scope comprises the construction of a new container terminal on reclaimed land from the Walvis Bay channel supported by complementary initiatives on logistics and capacity building. The total project cost estimate is just over N$3 billion.
When it comes to the wholesale and retail trade, Schade said the sector has been affected by retrenchments in construction and related industries, but said it has benefited from additional demand from subsistence farmers and households.
“The good rains have increased job prospects in the agriculture and related industries. Sectors such as hotels and restaurants, transport and related services are expected to create more jobs. In contrast, job losses are expected in the construction industries.”
Schade said tourism is expected to perform well despite currency appreciation over the past 18 months and a drop in shopping tourists from Angola. Namibia receives about 1,4 million tourist per year.
Commenting on reforms being carried out by the Government to enhance production, Schade said the Procurement Act could have a positive impact on demand for domestically produced goods and services, and hence support domestic economic growth.
“Private sector could follow with stronger emphasis on local procurement and identification of goods and services that could be produced in Namibia,” he said.
The economist said the impact of Moody’s downgrading of Namibia to junk status impact remains to be seen.
On Friday, August 11, Moody’s lowered Namibia’s long-term foreign and local currency sovereign credit ratings from “Baa3” to “Ba1” and maintained a negative outlook.
“The experience from other countries has shown that upgrades from junk status will take time.”