• November 21st, 2018
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The year 2017 in review


Edgar Brandt Windhoek-After an extremely tough year the Namibian economy is limping out of recession, even as the global economy continued with firm recovery during the third quarter of 2017. The Namibia Statistics Agency recently confirmed that the domestic economy indeed contracted by 1.9 percent in the third quarter of 2017, compared to a decline of 0.4 percent registered in the corresponding quarter of 2016. The poor performance of the domestic economy is mainly attributed to construction, the wholesale and retail trade, and the electricity, water and fishing sectors that recorded contraction in real value during the third quarter. Activity in the construction sector continued to contract, primarily due to the slowdown in government construction works. Real turnover in the wholesale and retail trade sector continued to decline, displaying weak activity in all subsectors. Third quarter statistics also recorded a trade deficit amounting to N$8.233 billion compared to N$8.185 billion witnessed during the same quarter of the preceding year. This resulted in worsening of the deficit by 0.6 percent, mainly attributable to a decline in exports. On a more positive note, activity in the mining, manufacturing and agricultural sectors increased during the third quarter and the inflation rate decelerated further, mainly driven by the lower prices of food and non-alcoholic beverages, as well as transport inflation. As the New Era newspaper prepares to close down for the festive season, we take a look at some of the top stories we covered on the business and economics front this year: January NWR’s Okaukuejo generates N$100 million In what can be described as a major milestone in the life of the biggest and oldest resort within the Etosha National Park, Namibia Wildlife Resorts (NWR) Okaukuejo generated revenue of N$100 million during the period November 1, 2015 to October 31, 2016, which translated to an overall revenue increase of 16 percent compared to the previous financial year. This milestone can confidently be credited to the popularity of the resort, which has an annual average occupancy of over 80 percent. One of its drawcards is the large, floodlit waterhole, which receives exceedingly regular visits from a wide diversity of wildlife. This includes herds of antelope, family groups of elephant, some black rhinos, as well as the ‘king of the jungle’ himself. Average house prices up 13 percent to N$900K, even as volumes still decline At the end of the third quarter of 2016 the average house price was pegged at N$900,000, 13 percent higher than prices last year. According to the latest FNB Housing Index, covering the third quarter of 2016, the highest median prices recorded emanated from Henties Bay, Swakopmund and Windhoek, which stood at N$1.2 million for the coastal towns and N$1.4 million for Windhoek. However, the 12-month cumulative growth in volumes remains negative at -20 percent, posing downside risks to overall market demand, which continues to soften. Prospective homeowners’ prospects remain daunting as they wrestle with a higher inflationary environment and a rising interest rate cycle, while wage growth remains low, as companies try to contain costs within a constrained economic backdrop. February Schlettwein calls on all finance targets to be met Developing a macro-fiscal budgetary framework, improving revenue management, moving over to a semi-autonomous revenue agency and effectively managing expenditure are some of the targets the finance ministry has set itself for the current financial year. Minister Calle Schlettwein addressed these targets at the first general staff meeting for ministry officials, which was held in Windhoek. “In the area of economic policy, regional and international partnerships, developing a macro-fiscal budgetary framework is indispensable to anchor the budget and the Medium Term Expenditure Framework (MTEF), which I intend tabling in early March this year. I therefore expect the office of my Technical Economic Advisor and the Directorate of EPAS to coordinate the activities of the Macroeconomic Working Group for a credible macro-fiscal framework and accompanying policy packages for the budget,” said Schlettwein. Renewable energy answer to multi-faceted energy needs For a geographically large and low population density country like Namibia it is not practical to connect everyone through the national grid in a time-bound manner. Therefore, the country needs to make serious efforts towards off-grid generation facilities, and renewable energy might offer an excellent solution for off-grid connectivity. Namibia’s imports exceeded exports by close to N$26 billion in 2016, and electricity is one of the country’s major imports. The inability to produce sufficient electricity within the country severely hampers domestic economic activity and value addition, while the energy imports expose Namibia to high electricity prices and currency rate fluctuations. March Calle expected to toe the MTEF line and increase revenue When Finance Minister Calle Schlettwein tables the National Budget for the 2017/18 financial year tomorrow, analysts expect him to remain steadfast in commitments made towards the Medium-Term Expenditure Framework (MTEF) while some anticipate significant changes to tax policies to make up for the shortfall in government revenue. It is also expected that Schlettwein will put in place measures to restore economic confidence amidst reduced government spending. Epangelo to pay back N$2 billion with dividends from Husab stake Epangelo Mining, the state-owned mining company, says it will pay back over N$2 billion it borrowed to acquire a 10 percent stake in the Husab Uranium Mine, by using the dividends it receives from the Husab mining operation. Husab mine in the Erongo Region produced its first drum of yellowcake (uranium oxide) at the end of December 2016 and is set to reach full production this year. Once in full operation, Husab will be the largest open-pit uranium mine in the world. According to Epangelo Mining’s CEO, Eliphas Hawala, the repayment period depends on the revenue generated, which in turn is a function of the uranium price and quantity of uranium produced at Husab. April There won’t be knee-jerk reaction to RSA downgrade The much talked about downgrading of the South African economy to a rank below investment grade, means a lot to pension fund managers, not least of them the Government Institutions Pension Fund (GIPF), which holds in excess of N$98 billion of pensioners’ funds. However, GIPF chief executive officer David Nuyoma was last week cautiously optimistic, saying in as much as the new developments are a cause for discomfort the Fund would not have a knee-jerk reaction to the downgrade, but would assess the situation as it develops. At present, Nuyoma says, the situation is still fluid. “We are a long-term player [and] we do not react overnight. We have to watch and think long-term, otherwise you move [and] you end up jumping into the fire,” he said. NaCC ends marketing agreement between Sanlam and PPS The Namibian Competition Commission (NaCC) last week refused an application for exemption from the Professional Provident Society (PPS) Insurance Company Ltd, Professional Provident Society (PPS) Insurance Company Namibia Ltd, Sanlam Life Namibia and Sanlam Namibia Ltd (the applicants), in terms of section 27 of the Competition Act. The decision by the NaCC means all brokers and agents that meet the desirable criteria with respect to experience and training should now be allowed to offer PPS products to their clients. The applicants had sought to be exempted in respect of a marketing agreement, dated September 12, 2011 which regulates, inter alia, the development, sale and distribution of a particular suite of life, disability and dread disease products, issued and administered by Sanlam on behalf of PPS Namibia, and white-labelled as a PPS Namibia product. May GIPF’s N$2 billion Capricorn deal approved The Government Institutions Pension Fund (GIPF), the largest institutional investor in Namibia, will fork out over N$2 billion to acquire a 25 percent interest in the issued ordinary shares of Capricorn Investment Group (CIG) Limited. GIPF made a bid during the first quarter of this year for the Capricorn shares and the deal will now go through after it has met with all necessary regulatory approval. In terms of the agreement, GIPF acquires a 15.5 percent interest in Capricorn Group from Capricorn Investment Holdings Limited (CIH) and a further shareholding of 9.5 percent from Namibia Strategic Investments (Pty) Limited, at a negotiated total consideration in excess of N$2 billion. As a result, CIH’s shareholding in Capricorn Group therefore decreases from 56 percent to 40.5 percent. The shareholding of GIPF in Capricorn Group increases to 26 percent, making GIPF the group’s second largest shareholder. Entrepreneurship could curb Namibia’s 60% dependency ratio Over half of Namibia’s population is under the age of 15 or over the age of 65, which implies that the working population is increasingly responsible to cover expenditure for themselves and their dependants. In a new report published by Global Entrepreneurship Monitor (GEM), it was found that the rising number of entrepreneurs aged 50 and above can offer economic, social and environmental benefits for economies wrestling with ageing (dependent) populations. For Namibia to meet its Vision 2030 goal of providing a quality of life commensurate with tenets of a developed world, senior entrepreneurship presents a viable opportunity to do so. GEM is the world’s foremost study of entrepreneurship and its report spans a decade’s worth of research, citing examples from developing economies where citizens over the age of 50 have played a significant role in contributing to their economies. According to a 2015 report by the United Nations, 5.5 percent of Namibian citizens are over the age of 60 and this is projected to increase to 7 percent by 2030 and 11 percent by 2050. The study sample comprises 1,540,397 adults aged 18 to 80 across Sub-Saharan Africa, the Middle East and North Africa, South East Asia, Latin America and the Caribbean, and the European culture countries and was collected between 2009 and 2016. June Nafinu rejects closure of SME Bank The Namibia Financial Institutions Union (Nafinu) has asked the Minister of Finance Calle Schlettwein to reconsider his call for the closure of the SME Bank, saying such an action could have devastating consequences on people affected and exacerbate poverty and unemployment. “This statement (calling for the closure of the bank) has caused concern and confusion amongst our members and also the general public, the customers of the bank. Nafinu cannot simply sit back and allow individuals to destroy the livelihoods of hundreds of workers and their families. In an environment where there are high levels of poverty and escalating unemployment, we believe that every job counts,” said the general secretary at Nafinu, Asnath Zamuee. Overall trade for Q1 2017 declines 16.6% The most recent figures from the Namibia Statistics Agency (NSA) indicate the country’s trade deficit for the first quarter of 2017 was estimated at N$3,185 million. This deficit was attributed to exports of N$16,905 million and imports of N$20,089 million. Overall, exports fell by N$5,508 million, from N$21,963 million in the first quarter of 2016 to N$16,905 million in the first quarter of 2017, which is a 23 percent decline. During the same period imports decreased by N$2,321 million or 10.4 percent. The trade deficit witnessed in quarter one of 2017 grew by N$2,737 million, or 611.5 percent, compared to the revised deficit of N$448 million registered in the corresponding quarter a year earlier. In comparison to the previous quarter, the deficit narrowed by N$8,235 million (72.1 percent) from N$11,420 million. The growth in the deficit from N$448 million in the first quarter of 2016 was mainly attributed to a stronger decline observed in exports compared to the decline recorded in imports. July Brandt retires as Capricorn and Bank Windhoek chairman The Capricorn Group have confirmed the retirement of Koos Brandt as chairman of the boards of Bank Windhoek and Capricorn Group on June 30, 2017. “Capricorn Group is fortunate that it will continue to benefit from Mr Brandt’s wise counsel as he has agreed to remain on these boards as non-executive director. He will also continue to be the chairman of Capricorn Investment Holdings (CIH). CIH holds 40.7 percent of the shares in Capricorn Group,” said group managing director Thinus Prinsloo. Johan Swanepoel, the current vice-chairman of Bank Windhoek and Capricorn Group will, in terms of the board succession plan, become the chairman of these boards with effect from July 1. Swanepoel is a qualified chartered accountant (CA) and was the managing partner of Coopers & Lybrand (now PricewaterhouseCoopers) before being appointed as managing director of Bank Windhoek in July 1999. Government pumps N$2.5 billion into economy Treasury yesterday revealed plans to release more than N$2.5 billion into the Namibian economy in the coming months, through payment of outstanding invoices, in the hope of easing the financial squeeze being experienced in the country. By announcing this, the government also reaffirms finance minister Calle Schlettwein’s recent announcement in parliament that the country’s finances remain in the doldrums, hence failure to honour all debt with suppliers of services to government. The money to settle the invoices would come from the N$3 billion loan secured through the African Development Bank (AfDB). The money is already in the government’s bank accounts, Schlettwein told journalists yesterday. A team has been gathered at the finance ministry, with people pooled from other ministries, to pay attention to the outstanding invoices so that they are paid in the next coming weeks. August DBN extends N$118 million finance for Lüderitz wind farm The Development Bank of Namibia (DBN) has announced details of its involvement in financing Ombepo wind farm near Lüderitz. Bank finance of N$118 million was extended to develop the N$180 million wind farm, which is now nearing completion. The facility will be owned by a conglomerate of shareholders under InnoSun (95 percent) and Lüderitz Town Council (5 percent). Empowerment grouping Black Diamond Investments owns a 30 percent share in InnoSun. DBN has previously financed two InnoSun projects – Omburu Sun, which was the first photovoltaic plant to operate as an independent power producer (IPP) under a power purchase agreement (PPA) with NamPower, and Osona Sun. The Bank is providing finance for five photovoltaic plants, with Ombepo wind farm bringing the total number of renewable energy facilities to six. The Bank’s total finance for renewable energy now stands at N$461 million. The facilities will generate an estimated 24 MW of renewable energy when all are operational. Simataa breaks silence on SME Bank Former board chairperson of the SME Bank, which is under an order of liquidation, George Simataa, yesterday said he and fellow directors have been made a sacrificial lamb in the bank’s controversial N$200 million investment, which he says was never sanctioned by his board. The so-called investment, which Simataa says was first brought to his attention by Bank of Namibia Governor Ipumbu Shiimi in September 2016, was made with little-known South African entities and fear is mounting the money would never be retrieved. Simataa said when he got wind of the controversial investment, he immediately followed up the matter by demanding board minutes approving such transactions. Management could not produce such minutes and Simataa then approached his predecessor chairman, Frans Kapofi, for clarity but he too was not aware of the investment. Simataa’s board, together with the bank’s Zimbabwean CEO and two other executives, was removed by the Bank of Namibia, leading to a protracted battle in the High Court. September Ministries accountable for SOE boards – Thieme Ministries should be held fully accountable for the boards of directors they appoint to state-owned enterprises (SOEs), as the boards are ultimately responsible for the performance of these entities. This is according to the executive chairman of Ohlthaver and List Group of Companies Sven Thieme, who serves on numerous boards in the country, most notably as the chairman of parastatals such as the Windhoek Country Club Resort and Casino (WCCR), the Namibia Broadcasting Corporation, as well as Mobipay. He is also the president of the Namibia Chamber of Commerce and Industry. During an exclusive interview with New Era, Thieme, who was instrumental in the turnaround of the financial fortunes of the WCCR, explained how the impressive feat was achieved. Letshego Namibia’s IPO already raising millions amid strong appetite for shares Offers to buy shares in Letshego Namibia continue to be received ahead of the close of the offer period on September 22. Millions have already been raised in this historic Initial Product Offering (IPO), with people across Namibia showing incredible appetite to invest in Letshego Namibia shares. Letshego Namibia’s story is about empowerment, via the solutions it provides, and now via Ekwafo Letu, as it offers 20 percent of the company’s shares for sale to the Namibian public. October Infrastructure Fund will be ring-fenced for priority projects Government has engaged the public and private sectors to establish an Infrastructure Fund at the Development Bank of Namibia to be operational by the end of this month. The Fund will be ring-fenced for financing current and future priority economic infrastructure projects. Ring-fencing funds means setting aside money for a specific purpose. GIPF invests N$4bn through unlisted investments since 2010 To date, the Government Institutions Pension Fund (GIPF) has invested over N$4 billion in the local economy through its unlisted investment policy since it appointed the first round of fund managers in 2010. “We believe that our contribution has greatly impacted and developed the local unlisted market, especially in the areas of property, private equity, debt and infrastructure,” said David Nuyoma, GIPF CEO, during the Fund’s annual stakeholder dinner last week Thursday. During his welcoming remarks, Nuyoma noted that one of the notable investments for the Fund was the acquisition of a 25 percent interest in Capricorn Investment Group at a cost of over N$2 billion during March 2017. November Property for sale: from a seller’s to a buyer’s market With houses for sale spending an average 24 weeks on the market (and 27 weeks in the upper income segment alone), the country’s residential property market has shifted from a seller’s market to a buyer’s market and this has caused a notable drop in price growth, except for the coastal market. Leading FNB analyst Josephat Nambashu says “housing demand is faltering” and when the properties on the market eventually do sell, “98 percent sell below the original asking price”. According to the latest FNB Housing Index, mortgage advances have consequently decelerated. Nambashu expects property prices to decelerate even further. “Based on our estimates, property price growth should decelerate to 6 percent in 2017 as a whole and improve to 7.8 percent during the course of 2018 on the back of mild economic recovery.” Stimulus announces N$25 million dividend payout The board of directors of Stimulus Investments Limited have announced that they have approved to pay out N$25.8 million as interim dividend payment to all preference share shareholders. The dividend payout follows the disposal of its shares in Joe’s Beerhouse Properties. Stimulus acquired majority shareholding in Joe’s Beerhouse in March 2007 and subsequently sold the operations in June 2012, while retaining the property. The new owners of the business continued trading as Joe’s Beerhouse, while renting the property from Stimulus. “We retained the property for strategic reasons and we believe that the disposal of the property is perfectly timed to serve the best interests of both parties,” said Josephat Mwatotele, Stimulus director, adding that Stimulus exceeded its returns expectation over the investment-holding period. December African aviation industry expected to make US$100 million loss in 2018 While the global aviation industry’s net profit is expected to rise to over US$38 billion in 2018, up from US$34.5 billion anticipated net profit at the end of 2017, African carriers are projected to continue making losses of up to US$100 million in 2018. According to the International Air Transport Association (IATA), African air carriers already suffered a collective net loss of US$100 million in 2017. Public enterprises minister, Leon Jooste, recently said that while he does not expect Air Namibia to post a profit in the short term, he does expect the national airline to significantly reduce losses, and to gradually move towards break-even, and eventually a profitable balance sheet, within an acceptable time. Speaking at IATA’s Global Media Day here yesterday, Alexandre de Juniac, IATA’s director general and CEO, noted that stronger forecasted economic growth in Africa is expected to support demand growth of eight percent in 2018, slightly outpacing the announced capacity expansion of 7.5 percent. N$150 million tractor assembly plant planned for Brakwater A business delegation from Tabliz in northern Iran yesterday confirmed that an N$150 million tractor assembly plant will be established at Brakwater, on the outskirts of Windhoek. According to Abolfath Ebrahim, general manager of the Iranian Tractor Manufacturing Company, his company is quite flexible as to the exact specifications of the factory, but mentioned that the plant’s production line will be able to produce anywhere between 500 and 5,000 units per annum. Tractors rolling off the assembly line will be branded as a product of Namibia and will likely be exported to interested countries in Sub-Saharan Africa, with a potential market of 400 million people. The tractor assembly plant will be a joint venture between the Iranian Tractor Manufacturing Company, which will own 30 percent, and a local firm called Vispa Investment Holdings, which will control 70 percent of the shareholding. The main shareholders in Vispa are Omusati regional governor Erginus Endjala, local businessman Onesmus Amadhila and Michael Mukwiilongo.
New Era Reporter
2017-12-21 09:46:34 11 months ago

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