Business leaders have expressed concern over Namibia’s economic prospects, with the majority saying they are uncertain of Government’s ability to turn around the country’s economic fortunes in the short term,
a local survey released this week has shown.
According to the annual Simonis Storm (SS) Economic Survey, which specifically targets chief executive officers, chief financial officers, analysts and economists, 57 percent of respondents believe Government’s ability to meet its payment obligations will get worse, with 33.3 percent of those polled expecting the position to remain unchanged and only 9.7 percent expecting the situation to get better.
The survey result comes as Government has been battling to settle its outstanding obligations with various contractors, with the latest being the N$600 million that was owed to Italian contractor, Salini Impregilo, for work done at the Neckartal Dam.
Government was forced to order NamWater to borrow money to settle outstanding invoices for the months of April to August.
Respondents, according to the survey results, said Government was behind the curve with regards to decision making, with only 14.1 percent saying Government policies were forward looking.
“Government is rather reactive than proactive in managing policy changes,” SS noted in the survey.
With Namibia currently facing a technical recession, 51.6 percent of respondents expects the country’s fiscal position to return to normal only from 2020, while 33.3 percent expect normalcy to return in 2019.
About 12.9 percent of respondents do not expect the domestic economy to recover.
“Fiscal discipline should be taken into account,” SS noted, as Government struggles to rein in spending, with public expenditure forecast to increase to N$61,6 billion from N$51,5 billion, doubling budget deficit to 6,3 percent of the GDP from 3,6 percent according to the mid-term budget that was tabled last month.
Despite assertions by President Hage Geingob that Namibia will not seek a bailout from the International Monetary Fund or the World Bank even though the local economy is struggling, 25.8 percent of respondents in the survey say Namibia needs a bailout.
About 43 percent of respondents agreed with the president, while 31.2 percent were undecided.
The country’s economy has seen growth plummet from an average 5 percent over the last five years to a marginal 0.2 percent last year.
Namibia’s economy is forecasted to grow by 1.6 percent this year and double in 2018 as the mining sector emerges from years of contraction and the impact of recent severe drought on farming eases, Finance Minister, Calle Schlettwein, said last month.
The SS survey found 67.7 percent of participants expect unemployment to increase next year, with 20.4 percent forecasting it to remain unchanged and 11.8 percent expecting a decrease.
“Graduates will find it hard to get employed, leading to higher youth unemployment,” SS said.
Unemployment was also identified as the top risk facing the country at the moment, followed by Government policy and regulation, Government fiscal position, Government failure, economic slowdown and regional instability.
Unemployment topped the six challenges expected to face the country in the next 3-5 years, followed by corruption, Government policy, lack of fiscal discipline, lower economic growth and attracting foreign investment.
The majority of respondents, according to the SS survey, expect inflation to be above four percent, but below six percent next year, while 37 percent of respondents expect the Bank of Namibia to hold the Repo rate at 6,75 percent.
Efforts to get a reaction from the ministers of finance and economic planning were unsuccessful by the time of going to print.