‘Fiscal crisis’ concerning
Jo-Maré Duddy – Namibia is the only country out of 34 surveyed in Sub-Saharan Africa (SSA) where business leaders named water as posing the biggest thread to the economy.
Sharing the top risk spot with the drought is unemployment.
The Sub-Saharan Africa Risks Landscape Report, released at the World Economic Forum on Africa last week, asked executives in the region to identify the five biggest risks to business in their countries.
Besides water and unemployment, the local business sector cited the “fiscal crisis”, the “failure of critical infrastructure” and the “failure of regional and global governance” as their biggest headaches.
According to the WEF, unemployment in SSA stands at around 6%, compared to Namibia’s official rate of 33.4%.
The WEF points out that most of the work available in the region is unskilled or low-skilled, in part because SSA has the world’s lowest levels of access to higher education. According to the Namibia Statistics Agency’s (NSA) latest Labour Force Survey, the largest proportion of employed persons in the country – 29.1% - were employed in elementary occupations in 2018.
Although many Africans are employed, 70% of SSA’s workforce is vulnerable. The global average for vulnerable occupations is 46%. In Namibia, nearly 32% or 229 144 of the working population last year was vulnerable.
Business executives regard the fiscal crisis in Namibia as their third biggest worry.
Nearly 40% of SSA countries are at risk of slipping into a major debt crisis, the WEF quotes the Brookings Institution. The "number of African countries at high risk [of] or in debt distress has more than doubled from eight in 2013 to 18 in 2018."
The region’s aggregate debt-to-GDP ratio rose to 46% in 2017, up from from 23% in 2008, the WEF says.
In his budget speech in March, finance minister Calle Schlettwein said government’s debt was 46.3% of gross domestic product (GDP). According to the budget he tabled, debt will rise to 48.9% in 2019/20 and exceed the level of 50% for the remainder of the medium-term expenditure (MTEF).
“As debt levels increase, so does the pressure of servicing the debt; money that could be invested in society goes to repaying loans. This could make it less likely that the region can achieve the African Union’s Agenda 2063 development targets,” the WEF says.
Local business sees a failure of critical infrastructure as their fourth biggest risk.
The WEF quotes the African Development Bank (AfDB) saying physical infrastructure across much of the continent is a challenge to productivity.
“A lack of funding for roads, telecommunications, water, electricity and more are impeding the continent’s productivity by around 40%, according to World Bank estimates. This ‘failure of critical infrastructure’ is a major risk to business in the region, respondents to the World Economic Forum’s survey said last year,” the WEF says.