THE governor of the Bank of Namibia (BON), Johannes !Gawaxab has stated that while the country currently has a stable financial system, with interest rates at an all-time low, the main focus of the central bank would be geared towards economic recovery which can only be achieved mainly through local and foreign investment.
!Gawaxab made these remarks at a press conference focused on his first 100 days in office and his plans for the central bank and how to deal with the current economic environment which is under strain due to COVID-19, recession, and high unemployment.
The governor of the central bank stated that while the repo rate has been cut to an all-time low of 3.75 points basis, the cutting of interest rates will only be immediately felt by individuals with regard to a reduction in the payment of mortgages and vehicle loans.
“With regard to the cutting of interest rates, yes people will feel a bit of relief, however for this economic relief to be felt on the macroeconomic level and by businesses, this will take at least up to 18 to 24 months, we need to be patient,” !Gawaxab said.
He added that currently, household debt is at an all-time high whilst businesses taking out loans remain lacklustre despite relief measures. “Non-performing Loans (NPLs) are on the increase as people are losing their jobs, if you are expecting a normal economic environment right now, you are not living in the world.” !Gawaxab said.
He further added that entry-level businesses have especially taken quite a big hit as far as the current crisis is concerned and added that currently, the bank of Namibia in conjunction with the Ministry of Finance has rolled out a credit guarantee scheme of about a N$100 million of which N$52 million has been already been dispursed.
In addition, the central bank has also rolled out a venture capital fund of N$18 million, while the government has provided a total of N$124 million for the current MTEF period. The governor added that currently there is little the central bank can do with regard to the lost SME millions as the matter is currently in the hands of liquidators and courts.
!Gawaxab further added that the economy is expected to contract by 8.1% this year before making a modest economic recovery on 2.1% in 2021 on the back on the mining and agricultural sectors.
He stated that the priorities of the bank include maintaining and achieving price stability, ensuring a stable and sound financial system, and implementing policies that contribute towards economic growth.
“Frankly I did not have to come to the Bank nor did I come to build a career or a name, I made personal sacrifices, resigning from all the boards that I served on, in Namibia and within the continent. I have sold all my stakes in my business ventures. I have sacrificed all self-interest for national interests,” !Gawaxab said.