Namibia, although an upper-middle-income country that relies on mining, agriculture, and fishing amid uncertainty, can be transformed into a country with more certainty and no surprises, with contingency plans in place.
The Covid-19 pandemic and the ongoing Russian invasion of Ukraine, as well as rising tensions between China and the United States have highlighted the importance of economic independence.
The Namibian economy remains integrated with South Africa’s economy, as about 70% of Namibia’s imports originate from there.
This implies that any adverse financial and economic developments in South Africa would have an immediate impact on the Namibian economy.
For truly diversity-led economic development, Namibia would need to enable, understand and solve its unique challenges.
And so, the old saying of not putting all your eggs in one basket has once again proven relevant.
The whole world is talking about cutting single-country dependency, and herein lies an opportunity for Namibia.
We see that countries want to reduce single-country dependence for their own interests.
Conversely, if imports fall sharply but exports increase, this may indicate that the domestic economy is doing better than overseas markets.
This is the level Namibia should strive for.
Therefore, in general, a rising level of imports and a growing trade deficit could have a negative effect on one key economic variable, which is the country’s exchange rate – the level at which the domestic currency is valued versus foreign currencies.
The negative effects of geopolitical uncertainties on South African macroeconomic variables affect the current position of the Namibian economy due to the Namibia dollar being pegged one-to-one to the rand.
In comparison, Botswana has a stronger economy.
Gross domestic product (GDP) grew by an estimated 4,1% in 2022, mainly driven by diamond exports and domestic demand.
In the coming years, the country’s economy should continue to grow, with GDP growth expected to reach 4% in 2023 and 2024.
Investment in the mining sector and the rebound of the prices of hard commodities (diamond, copper, and nickel) should contribute to this performance.
Botswana has always maintained a conservative fiscal policy and low levels of foreign debt, and, although general government debt increased to an estimated 21,3% in 2022 following a large fiscal response to the Covid-19 pandemic, Botswana’s debt is still substantially lower than that of its neighbours.
In 2023, the debt-to-GDP ratio is expected to decrease to 19,6%, with the phasing-out of pandemic measures, and to decline further in 2024 to 17,9%.
Therefore, Namibia should start standing on its own feet.
If Botswana did it, Namibia can do it.
Additionally, we can’t rely on South Africa for almost everything.
We need to ask ourselves why we can’t produce our own necessities.
As a country, we cannot afford to depend on other countries.
The Namibian economy has been experiencing economic uncertainties, such as high inflation, a high unemployment rate, a high exchange rate, depreciation, low investment and negative growth.
Namibia must reduce its commodity dependence, which may expose it to volatile markets.
We need to understand that concentrated trade relationships may create levels of risk beyond the appetite of the country, for instance, if policies restrict flows between countries, it may make sense to spin off or divest such flows while pursuing new domestic markets.
If we have a clear view of concentration, lawmakers can calibrate effective strategies and reimagine, rather than retreat from, global footprints.
This is not only about managing risk.
A transparent and up-to-date understanding of concentration, combined with the right measures to manage interdependencies, could be a source of competitive advantage.
We must demonstrate the thoughtful management of concentrated exposure, and be more resilient in a changing world.
Rising geopolitical and geo-economic tensions are the most urgent risks the world faces in 2023, while worsening international relations are hindering the collective will to tackle these concerns.
The escalating geopolitical tension between superpower countries is threatening security.
It is also increasingly likely that these tensions would escalate from mostly low sophistication and temporarily disruptive to sophisticated and destructive as part of a broader hybrid warfare strategy against the superpowers.
Hence, concentration prompts questions about whether to diversify or decouple.
Moreover, when a country’s economy is not diversified and relies heavily on elementary products, it puts itself at the mercy of international market prices.
When prices go down, employment, exports, and government revenue suffer. In other words, putting too many eggs in one basket renders the country vulnerable.
Addressing the challenges posed by single-country economic concentration is central to meaningful efforts to achieve economic independence civics, from reducing poverty and fostering equality to protecting the country and preserving peace.
To better understand the true impact of single-country economic concentration, monitoring goes a long way towards shedding light and breaking cycles of underdevelopment.
The single-country economic concentration is stubborn, but it is not a sentence to underdevelopment.
Whether natural resources are a blessing or a curse depends on how a country uses and manages them.
The very investment needed to diversify the economy is curtailed, and efforts to break away from single-country economic dependence are thwarted.
This is the vicious cycle many countries are trapped in.
Therefore, depending on what happens, the most significant effects on the global economy may manifest themselves only over the long run.
The crisis is also contributing to a reassessment of the global economy’s structure and concerns about self-sufficiency.
Confronted consciously and strategically, this crisis could become an opportunity to break out from single-country concentration and create the pillars of an economic system focused on a vision of long-term sustainability and shared prosperity for generations to come.
To this end, it has emerged that despite being an open economy, the Namibian economy is largely dependent on a single-country economy – that of South Africa.
Namibia should establish its own turnover ceilings for opening the assessment procedure for single-country economic concentrations, taking into account the objectives of our economic policy.
Therefore, economic independence is a very dynamic procedural adjustment in order to take appropriately into account the economic interests of the country, as well as the evolutions registered at regional and global level.
- Josef Sheehama is a banking industry professional with 20 years’ experience. He writes in his personal capacity.
Stay informed with The Namibian – your source for credible journalism. Get in-depth reporting and opinions for
only N$85 a month. Invest in journalism, invest in democracy –
Subscribe Now!
