Strengthening the Namibian House

In association with Nedbank.

The Namibia Economic Growth Summit, an initiative to draw investment and introduce some policy reforms, surpassed its target of raising US$1 billion (about N$15 billion) in investments. In fact, investments to the tune of N$20 billion were announced with an additional N$30 billion worth of projects pledged – far surpassing the initial target. The various committed and pledged projects span an array of sectors, such as information technology, petroleum, biomass, agriculture, logistics, and manufacturing. Several local entities announced their projects, such as Olthaver & List, however the list of investors is dominated by various parastatal entities – both domestic and foreign.

Both the Development Bank of Namibia and the Development Bank of Southern Africa (state-owned development finance institutions) have pledged a combined N$8 billion towards infrastructure projects for Namibia. N$3 billion has been set aside for NamWater – to develop water projects – an urgent task considering the extent of the drought across the country. It is therefore imperative to invest in sufficient water infrastructure to mitigate such events in the future – particularly for places like Windhoek which continue to balloon in size but have very limited water resources.

Source: NamPower

A total of N$2.5 billion is available to NamPower for generation and transmission infrastructure. Given Namibia’s reliance on Eskom for electricity supply (making up 41% of total usage in 2018), there is a need to increase domestic generation capacity. The energy utility’s recently launched strategic plan shows that four new power plants are lined up to be built over the next 5 years. These are a 20MW solar PV plant, a 40MW biomass power plant, a 40MW wind farm, and the 50MW Firm Power/Anixas 2 plant (essentially a standby plant, likely to run on HFO or LFO). Only the 40MW biomass plant will be baseload, arguably the most important type of plant needed to reduce reliance on imports (and intermittent renewables). These four plants come with a price tag of approximately N$4.7 billion in total, with the biomass plant being the most expensive at an estimated N$1.9 billion. TransNamib has also been availed N$2.5 billion, for the purpose of increasing its rolling stock, upgrading existing railways and to operationalize its new business plan – which has seen the parastatal abandon road freight to focus entirely on rail.

GIPF and AIM-Old Mutual also announced contributions of N$4 billion towards renewable energy initiatives and N$250 million to housing development. This comes alongside the N$4.3 billion being invested into the economy through the Ongos Valley affordable housing project, situated 13km from the Windhoek CBD. The Olthaver & List Group announced investments totaling N$300 million in fishing, property and business ventures, as well as an additional N$900 million joint venture to expand internet connectivity in Namibia.

Source: Namibia Statistics Agency

The investments announced and their target areas are undoubtedly vital, addressing many of Namibia’s core problem areas such as general infrastructure (water, electricity), as well as housing. In addition to this, some policy issues were clarified (such as NIPA, NEEEF) and reforms announced (addressing the sheep marketing scheme, visa regulations). However, as illustrious as the achievements of the summit are, there is still an important demographic that has yet to be addressed.

The summit could have done more to address the issues faced by the everyday investor – not the large corporates, but entrepreneurs in Namibia who are going out on a limb, taking a risk and starting their own business (the 2019 Doing Business reports indicates that it now takes 69.79 days to start a business in Namibia). While large infrastructure projects are beneficial as a whole, and are undeniably necessary, Namibia needs to create an environment that is conducive and supportive of start-ups. This goes beyond policy certainty and a stable jurisdiction, such as introducing substantive efforts to reduce the regulatory burden (make it easier & quicker to start a business), provide assistance through affordable or subsidized finance, provide some financial relief such as lower tax brackets or exemptions, and make it easier to employ the necessary skills, to name a few examples.

The role of SMEs often goes unnoticed, but they play an important part in employment creation, value addition, and spotting opportunities to fill gaps in the market. Namibians should be encouraged to grow their entrepreneurial spirit, thereby not only becoming self-reliant and adding job opportunities for others, but playing a vital function in spurring growth in the Namibian economy.