Business Reporter
ACCORDING to economic analyst Rainer Ritter, the trend showing a decline in investment in other sectors of the economy should concern policymakers, as the analyst opines that the mining sector has been the main driver of growth.
“Last Friday, the Bank of Namibia released its March quarterly report, and the estimated real economic growth for 2023 is 4.2%. It is projected that growth will slow to 2.4% in 2024. The 5.3% growth in 2022 and the 4.2% in 2023 were mainly driven by growth in mining. In 2022, the real growth in mining was 24%, and in 2023, it was 18.9%. Namibia’s economic recovery is thus not a broad-based recovery in all sectors but mainly in mining, tourism, and wholesale and retail trade,” Ritter said.
He added that if one were to exclude the growth in mining for 2022 and 2023, the real growth would have been 3% in 2022 and 2.1% in 2023.
“The importance of mining can be shown from an investment perspective,” the analyst said, sharing that private gross fixed capital formation showed a declining trend until 2020.
“Since 2021, investment in mining picked up, and private capital formation reached N$ 40.3 billion in 2023. In which sectors did the rise in investment (private and public) take place? Analyzing gross fixed capital formation according to economic activity, one can conclude that investment mainly took place in the mining sector. In 2023, the gross fixed capital formation in mining was N$ 27.9 billion (at constant 2015 prices), and the rest amounted to N$ 15.5 billion. The decline in the ‘other’ investment/capital formation should be a concern to policymakers,” Ritter said.
The analyst further questioned why the private sector is reluctant to invest in areas other than mining.
“We know that we are now 3 million people, 400,000 more than estimated previously. A bigger population has as a consequence that unemployment numbers will rise, and the latest unemployment survey of 2018 with an unemployment rate of 32% has to be revised upwards. The central economic challenge of Namibia will remain sustainable job creation, and it seems the recipe for this challenge remains elusive since 2016,” Ritter said.
The analyst advised that job creation should be attended to with a more logical approach, a narrative based on pragmatism and slow-thinking. “A logical approach would inform one that NEEEB has no moral basis and adds to an entitlement syndrome… Good institutions, fighting crime and corruption, and the avoidance of tribalism and race-based policies will improve the well-being of society,” Ritter opined.
Touching on transforming Namibia, Ritter pointed to the Bertelmann Transformation Index (BTI), which measures transformation processes in developing countries based on a governance index, political transformation index, and an economic transformation index.
He added that the combined scores of governance, political, and economic transformation give the status index, and in the case of Namibia, that index was 6.26 or a rank of 40 out of 137 countries. “Namibia’s weakness is its governance with a score of 4.88 and a rank of 62 out of 132 countries. Economic transformation has a score of 5.18 and a rank of 73 out of 137 countries. How can Namibia improve its status? Ritter questioned
The analyst concluded that Namibia has 18 shortcomings, of which 8 are economic, 7 are related to governance, and 3 are political. These areas of concern listed in these three spheres range from weak implementation, lack of market-based competition, prosecution of office abuse, and socioeconomic barriers.
