More investments flowing to the mining sector
GFCF stood at N$25.9 billion in 2021
Total net investment only accounted for 14.3% of gross domestic product in 2021.
The mining and financial services are the top two sectors that attracted investment in Namibia during 2021. According to Simonis Storm, net investment was focused on the mining (32.3%), financial services (17.6%), manufacturing (15.9%), service providers of government (14.4%) and agriculture (7.9%) sectors of the economy. In addition, most of the net investments in 2021 were spent on machinery and equipment (34.7%), buildings (24.5%) and construction works (18.0%).
Gross fixed capital formation (GFCF), which captures investment, stood at N$25.9 billion in 2021, according to the Namibia Statistics Agency (NSA). The domestic economy recorded positive growth of 2.7% in 2021.
Net investment in the economy – has been trending above annual GDP growth since 2012. However, total net investment only accounted for 14.3% of GDP in 2021, analysis by Simonis Storm indicated.
“Excess GFCF growth above gross domestic product (GDP) growth could potentially indicate that an inefficient allocation of resources has largely been taking place. This is due to net investment not translating into higher economic growth rates over the last 10 years. Indeed, GFCF averaged annual growth of 20.4% but GDP only averaged 7.4% between 2011 and 2021,”Simonis Storm said.
According to the Bank of Namibia’s quarterly bulletin, Namibia’s direct investment inflow was lower during the first quarter of 2022, when compared to the corresponding quarter of 2021 due to a lower uptake of intercompany loans. Direct investment into Namibia was N$1.2 billion compared to an inflow of N$2.1 billion registered a year ago and N$3.7 billion and in the final quarter of 2021.
The annual fall in foreign direct investment (FDI) inflows was due to lower intercompany loans granted to domestic subsidiaries in the mining sector worth N$381 million during the review period, compared to N$1.6 billion reported a year ago. Nonetheless, some corporates in the mining sector retained higher profits on the back of a rise in export proceeds during the review period. Direct investment inflows declined when compared to the previous quarter, mainly due to a fall in intercompany debt, retained earnings and the financing of exploration expenditure by entities in the mining sector, Bank of Namibia said. –[email protected]
Gross fixed capital formation (GFCF), which captures investment, stood at N$25.9 billion in 2021, according to the Namibia Statistics Agency (NSA). The domestic economy recorded positive growth of 2.7% in 2021.
Net investment in the economy – has been trending above annual GDP growth since 2012. However, total net investment only accounted for 14.3% of GDP in 2021, analysis by Simonis Storm indicated.
“Excess GFCF growth above gross domestic product (GDP) growth could potentially indicate that an inefficient allocation of resources has largely been taking place. This is due to net investment not translating into higher economic growth rates over the last 10 years. Indeed, GFCF averaged annual growth of 20.4% but GDP only averaged 7.4% between 2011 and 2021,”Simonis Storm said.
According to the Bank of Namibia’s quarterly bulletin, Namibia’s direct investment inflow was lower during the first quarter of 2022, when compared to the corresponding quarter of 2021 due to a lower uptake of intercompany loans. Direct investment into Namibia was N$1.2 billion compared to an inflow of N$2.1 billion registered a year ago and N$3.7 billion and in the final quarter of 2021.
The annual fall in foreign direct investment (FDI) inflows was due to lower intercompany loans granted to domestic subsidiaries in the mining sector worth N$381 million during the review period, compared to N$1.6 billion reported a year ago. Nonetheless, some corporates in the mining sector retained higher profits on the back of a rise in export proceeds during the review period. Direct investment inflows declined when compared to the previous quarter, mainly due to a fall in intercompany debt, retained earnings and the financing of exploration expenditure by entities in the mining sector, Bank of Namibia said. –[email protected]
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