Government should not pin all hopes of an economic reform and recovery on the agriculture as this sector is more exposed to numerous challenges. This sentiment was expressed by local economist, Mally Likukela.
“Domestically, the drought is containing the sector while outside, international price fluctuation is another thing. If we are to invest in agriculture it must not be to fight the current adverse impact of Covid-19, because the investment in agriculture takes long to reap the rewards,” said Likukela last week during a panel discussion on Namibia’s economic growth.
During the discussion, Likukela also addressed the attempt by government to auction off fishing quotas as an instrument to accumulate as much money as possible, especially during this time when capital is most needed. He noted that if the auction was successful, then the minister of finance anticipated about N$600 million which would have gone a long way in the fight against Covid-19.
“If you look at the timing of the fish auction, then you see it was fast-tracked with one of the consequences being that it did not yield what was anticipated because certain considerations were not taken,” Likukela added.
He continued that if the auction was successfully executed, the country would have seen the preservation of many fishing industry jobs that were lost due to the pandemic. Further, Namibia could have seen a significant amount of foreign exchange generated as a result of export earnings.
According to him, the fishing sector can positively play a huge role in the domestic economy but “unfortunately what unfolded left a lot to be desired”. Furthermore, Likukela said in efforts to revive the economy, government needs to build a conducive environment to attract foreign investors.
“Investors come to the country if they see an opportunity for better rewards. These rewards are guaranteed if the government provides a conducive environment, if the ease of doing business is maintained and political stability overtakes the impact of tax rates on attracting investors,” explained Likukela.
During the same discussion last week, Deputy Director of Macro Models and Financial Stability at the Bank of Namibia, Postrick Mushendami, stated that the Southern African Customs Union (SACU) revenue shortfall has resulted in a significant widening in member states fiscal deficits.
Mushendami said the central bank has estimated that there will be a decrease in the revenue from the pool that Namibia will be receiving next year and reiterated that Namibia must start to diversify its revenue sources. “Going forward, the government needs to stick to fiscal consolidation despite its negative implication on growth to reduce government expenditure,” said Mushendami.
Governments around the world are taking extraordinary measures to respond to the Covid-19 crisis. While maintaining the focus on addressing the health emergency and providing lifelines for households and businesses, governments need to prepare economies for the transition to the post-Covid-19.
According to the International Monetary Fund, public investment has a central role to play to help struggling economies. The fund last week stated that increasing public investment in advanced and emerging market economies could help revive economic activity from the sharpest and deepest global economic collapse in contemporary history. “It could also create millions of jobs directly in the short-term and millions more indirectly over a longer period. Increasing public investment by 1% of GDP could strengthen confidence in the recovery and boost GDP by 2.7%, private investment by 10%, and employment by 1.2% if investments are of high quality and if existing public and private debt burdens do not weaken the response of the private sector to the stimulus,” stated the IMF report.