Future generations to benefit from resources

A portion of the revenue collected from the present exploitation of mineral resources will be put aside for future generations of Namibians. This comes after Namibia officially launched its first Sovereign Wealth Fund (SWF) in Windhoek yesterday.The fund was launched at a time when the country is still reeling from the effects of Covid-19, high inequality, poverty, and unemployment and a tight fiscal position. According to the governor of the Bank of Namibia Johannes !Gawaxab, making wise trade-offs is probably one of the most important and difficult challenges in public policy.“We must remind ourselves why this is necessary, what the overall benefits will be to our country both in the short-run (fiscal stabilisation tool) and long-run (intergenerational wealth transfer), “he said.!Gawaxab said the benefits of the fund far outweigh any short-term considerations. “The fund will have undeniable impact on economic development and demonstrate our resolve to set up a pool of assets for future generations. Indeed, this is a feather in the cap for our collective ambition and today we are operationalising our long-term thinking, to ensure that the management of our wealth will be a success story.”Finance Minister Iipumbu Shiimi pointed out that Namibia is one as one of the driest countries on the continent, if not globally. Hence, it is highly susceptible to climatic shocks, specifically drought events. “We have declared a national state of emergency on several occasions in recent years, due to drought and the resultant job losses, water scarcity, losses of crops and livestock, and food insecurity, among other significant economic implications.”As a result of these developments, the objective of this fund is to have a buffer, which will ensure the resilience of government operations in particular and the Namibian economy broadly, against such severe climatic shocks, Shiimi said.In addition, as a Southern African Customs Union (SACU) member state, one critical challenge of fiscal management in Namibia has been the procyclicality and volatility of receipts from the SACU Customs Revenue Pool. “SACU revenues, which constitutes more than 20% of our total revenues, rises and falls in tandem with economic activities in the sub-region. In bad times when the economy needs support, SACU revenue also tend to decline and thereby worsen an already fragile fiscal position. Such volatility has often times forced government to implement painful fiscal consolidation measures to ensure fiscal sustainability, when SACU receipts decline abruptly.”Meanwhile, Shiimi called on the Bank of Namibia, as the dedicated administrator of the Welwitschia Fund, to do the needful to maintain the operations of the fund.-phillep@nmh.com.na

Future generations to benefit from resources

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