Martin Endjala
Despite the announcement by the Bank of Namibia (BoN) this week that the economy is projected to grow by 3.3 percent in the current financial year and in 2024, individuals working outside the mining sector will continue to feel the economic pinch.
Economist Ruusa Nandago, told Windhoek Observer this week that the forecasts by the Bank of Namibia are in line with those of FNB as they have also forecasted a 3.3 percent growth for 2023.
She is of the view that this growth will be predominantly driven by mining production and exploration activities. She, however, added that the mining industry is unfortunately capital-intensive and not labour-intensive, making up only 1.8 percent of total employment in the country.
As a result, she does not expect this growth to necessarily result in a material improvement in ordinary Namibian lives, especially those outside of the mining sector and outside the labour force.
“We are still of the view that the average Namibian individual will remain under pressure from limited job opportunities, high prices and high-interest rates which will weigh on their disposable income. This, however, does not mean that mining is not an important contributor to the economy, explained Nandago.
Additionally, the mining sector remains a key source of foreign direct investment, foreign exchange earnings, exports and fiscal revenues.
Meanwhile, according to BoN’s economic August outlook for 2023, the estimated growth of 3.3 percent in 2023 represents a slowdown moderation from 4.6 percent recorded in 2022 but also revised upwards from 3.0 percent released during March 2023.
The projected moderation in 2023 growth is largely on account of depressed demand in global and domestic economies as prevailing high inflation and high interest rates are expected to weaken spending.
The lower global demand has already impacted commodity prices negatively, including minerals that Namibia exports. Within the domestic economy, the weakened consumer demand will mainly be felt through lower growth for the wholesale and retail trade sectors.
Another factor contributing to the slowdown in 2023 growth is the high base effects from the diamond mining sector, where production volumes increased by 45.1 percent in 2022.
The uranium mining sector is expected to grow by 14.8 percent in 2023 and 5.2 percent in 2024, respectively, an improvement from a contraction of 2.5 percent in 2022.
The metal ores sub-sector is also projected to expand in the current financial year, but growth is anticipated to decline from 2024 onwards due to the winding down of production from one of the gold mines.
It is expected to grow by 12.1 percent in 2023 and 3.4 percent in 2024, respectively, making a recovery from a meagre growth of 0.5 percent in 2022.
