Boost domestic investment to boost growth

PHILLEPUS UUSIKUEspecially now that Namibia has exhausted 75% of its growth drivers, the private sector has a significant role to play in enhancing economic growth. Namibia has run out of options to stimulate economic growth as consumption spending by households is constrained as a result of unemployment caused by the Covid-19 pandemic, while government spending is equally constrained due to limited fiscal space.Furthermore, net exports are affected by global demand and low commodity prices. According to The Namibia Statistics Agency (NSA) trade statistics, Namibia lost about N$ 927 million in export earnings in December 2020 when compared to the previous month.Hence, both local and foreign direct investment (FDI) are crucial in pushing the domestic economy out of this depressing state.The Bank of Namibia (BoN) hosted an economic discussion last week Thursday with Chairpersons of Board of Directors and CEOs of private sector companies that mobilize investments and savings in the country.They discussed relevant policies to support the economic recovery with key institutions and entities, in order to find practical means of rallying support towards securing a sustainable economic recovery.Such coordinated approach is expected to yield a robust response to the weak economic growth experienced since 2016, and which has been exacerbated by the Covid-19 pandemic.The central bank supervises all commercial banks in the country which play a significant role in transforming the economy by channelling funds from economic agents that have surpluses to those that have deficits.Those that have deficits can borrow for investment purposes, crucial at this point in time to boost output and create sustainable employment opportunities to enable consumers to stimulate the economy through spending.OutlookAccording to Johannes !Gawaxab the governor of the Bank of Namibia , the Namibian economy shall recover gradually by 2.6 percent during 2021. This is predicated by the opening up of the global economy, after the lockdowns and restrictions on travel experienced in 2020 due to the Covid-19 pandemic.In this regard, demand for Namibia’s exports especially minerals are expected to start picking up gradually in 2021 as major economies are projected to make full recoveries, which bodes well for the recovery of the domestic economy, he said.While growth is expected to pick-up, the forecasted levels fall far short of the boom observed in years prior to 2016 and will therefore not be adequate to fulfil developmental aspirations and make a dent on unemployment, poverty and inequality, !Gawaxab added.Therefore, enhancing domestic investments in the country and adapting to the policy environment so that businesses are able to invest more or explore new opportunities within the economy is crucial.The central bank is set hold its first monetary policy announcement tomorrow. The governor is expected to announce the new repo rate which will influence investors decisions to borrow in order to stimulate the economy. Currently the repo rate stands at a historic low of 3.75%, while the prime lending rate for consumers stands at 7.50%. -phillep@nmh.com.na

Boost domestic investment to boost growth

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Republikein 2025-12-22

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Boost domestic investment to boost growth

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Republikein 2025-12-22

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