Diversified economy crucial for sustainable growth

Recent strategic efforts undertaken by the Namibian government aimed at diversifying the domestic economy are crucial for sustainable economic growth. According to the Agricultural Bank of Namibia (Agribank), actions taken thus far, include but not limited to, remodelling of the green scheme projects, investment promotion, improving market access, infrastructure development and the development of green hydrogen project.These interventions are of critical importance as the Namibia economy has been vulnerable to shock waves presented by global events such as the pandemics, de-globalization, commodity price volatility and geopolitical tensions. These has been felt through the channels of supply chain disruptions, logistical delays, reduction in commodity prices and the rise in interest rates and inflation.“There is need for the country to diversify its economic activities and promote food and energy security,” Agribank pointed out.The green hydrogen project has been a topical subject in the policy and business dialogues. Although this is a medium to long-term initiative, development of this project comes at a time of rising inflation, plummeting growth and rising repo rate which are taking a toll on businesses and consumers and threatening food security. Therefore, the green hydrogen project could be viewed as a beacon of hope for energy security, employment creation and local skills development and subsequently economic recovery. The potential spill over to the agriculture sector relates to ammonia production which would create opportunity to develop the agro industries such as local fertilizer production which will reduce reliance on imports for agriculture production inputs, Agribank said.InflationAccording to the latest inflation statistics by the Namibia Statistics Agency (NSA), prices of goods and services in Namibia increased by a 6% during June 2022, the highest inflation rate recorded since June 2017 (6.1%).This represents a 1.9 percentage points increase when compared to 4.1% recorded in June 2021. In May 2022, the inflation rate stood at 5.4%.Transport, food and non-alcoholic beverages categories continue to be the main drivers of inflation. Overall transport inflation stood at 18.6%, while food and non-alcoholic beverages recorded 7%.More specifically, operation of personal transport equipment sub category, which captures fuel, was the main driver of inflation in the transport category, recording 32%.In addition, oil and fats and fruits were the main driver of inflation for the food and non-alcoholic beverages category, each registering an inflation rate of 26.2% and 18.1%, respectively.According to Agribank, oils and fats increased to an average of 19.8% for the first 6 months of 2022, compared 11.7% recorded in 2021, spurred by supply shortages. Fruits increased to an average of 14% from 10.2% in 2021.“Global inflation is forecasted to reach 7.9% in 2022 and is expected to remain elevated in 2023. Lingering supply demand imbalances will continue to drive global inflation,” Agribank added.Green ShootsOn a positive note, signs of recovery from the prolonged drought are starting to emerge, the beef market recorded a 20% growth in cattle marketed for the first half of 2022. About 20 000 more cattle were sold by June 2022, adding to year-to-date total number of cattle marketed of 121 555 compared to the 101 016 during the same period of 2021.In addition, progress is noted at abattoirs, North of the Cordon Fence, with a 146% increase to 2 048 cattle marketed in the first half of 2022 compared to 831 in 2021. This is in line with upbeat cattle activities, resulting from the reopening of the Katima Mulilo abattoir and the export of beef to Ghana and Angola.Moreover, the small stock marketing performed relatively well in the first half of 2022, recording a 33% increase to 378 008 heads from 284,778 in 2021. Live sheep export continues to be the major driver of this sector, due to favourable market conditions.Lastly, during the first half of 2022, at least 22 863 were slaughtered by Meatco registered abattoirs a 4% increase from the 21 921. Stable growth in the industry can be attributed to Meat board’s initiatives under the Pork Market Share Promotion Scheme, to assist local producers with market access amidst cheap imports, Agribank said.-phillep@nmh.com.na

Diversified economy crucial for sustainable growth

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