'Policy certainty crucial for investment'
The lack of effective and attractive policies to attract foreign direct investment (FDI) in strategic untapped sectors such as tourism and agriculture remains a challenge in Namibia.
Therefore, policy certainty is of critical importance to investors, the head of distribution at Stanlib Namibia, Tjivi Mbuende, said yesterday.
Speaking at a Stanlib Namibia roadshow breakfast yesterday, Mbuende highlighted risks to the domestic economy.
These include the continuation of low or negative and unsustainable economic growth, as well as borrowing at a fast and scary pace. The inability of government to address the fundamental problem of creating sufficient job opportunities, especially for the youth, was also singled out. Sufficient jobs are necessary to boost productivity, consumption and savings.
Mbuende said the overreliance on government as a key economic driver is a challenge, as the private sector is not active.
He said Namibia in 2016 entered a recession experiencing low growth rates and large budget deficits as government failed to collect sufficient revenue relative to expenditure. As a result, government started cutting spending to stabilise the budget. Low commodity prices characterised this period.
Debt is used to fund the budget deficit and has rose to R38.7 billion, with 45% of this due within the next five years.
Capital projects
It is very important to spend on capital projects in order to generate economic activities as it is crucial for sustainable growth, Mbuende said. Spending on non-developmental expenditure such as salaries can be harmful because there will be no long-term growth, he warned.
Private sector credit extension (PSCE) has been a challenging, Mbuende said.
Individuals are highly indebted because they are constrained and seek ways of smoothening their consumption over time by borrowing. Local vehicle sales remains low because consumers are not spending, he said. As a result, business confidence is down, Mbuende said.
Inflation is at its lowest level since 2005, which gives the central bank room to cut interest rates to make borrowing attractive and help stimulate the economy.
The low inflation rate is brought about by a lack of business and government investment, as well as little economic activity, the analyst said.
Also giving a presentation at the roadshow was Stanlib's chief economist, Kevin Lings, who talked about the impact of the coronavirus outbreak and gave an update on the performance of the South African economy.
Phillepus Uusiku –
Therefore, policy certainty is of critical importance to investors, the head of distribution at Stanlib Namibia, Tjivi Mbuende, said yesterday.
Speaking at a Stanlib Namibia roadshow breakfast yesterday, Mbuende highlighted risks to the domestic economy.
These include the continuation of low or negative and unsustainable economic growth, as well as borrowing at a fast and scary pace. The inability of government to address the fundamental problem of creating sufficient job opportunities, especially for the youth, was also singled out. Sufficient jobs are necessary to boost productivity, consumption and savings.
Mbuende said the overreliance on government as a key economic driver is a challenge, as the private sector is not active.
He said Namibia in 2016 entered a recession experiencing low growth rates and large budget deficits as government failed to collect sufficient revenue relative to expenditure. As a result, government started cutting spending to stabilise the budget. Low commodity prices characterised this period.
Debt is used to fund the budget deficit and has rose to R38.7 billion, with 45% of this due within the next five years.
Capital projects
It is very important to spend on capital projects in order to generate economic activities as it is crucial for sustainable growth, Mbuende said. Spending on non-developmental expenditure such as salaries can be harmful because there will be no long-term growth, he warned.
Private sector credit extension (PSCE) has been a challenging, Mbuende said.
Individuals are highly indebted because they are constrained and seek ways of smoothening their consumption over time by borrowing. Local vehicle sales remains low because consumers are not spending, he said. As a result, business confidence is down, Mbuende said.
Inflation is at its lowest level since 2005, which gives the central bank room to cut interest rates to make borrowing attractive and help stimulate the economy.
The low inflation rate is brought about by a lack of business and government investment, as well as little economic activity, the analyst said.
Also giving a presentation at the roadshow was Stanlib's chief economist, Kevin Lings, who talked about the impact of the coronavirus outbreak and gave an update on the performance of the South African economy.
Phillepus Uusiku –
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