THE realities of the past week in which the outlook for Namibia’s rating was revised by Fitch, from ‘stable’ to ‘negative’ should serve as a warning to the country that it needs to get its act together to restore investor confidence.
As stated in our previous editorials, the country’s precarious financial crisis are the result of decades of corruption, deliberate inflation of public procurement capital projects and ocherstrated attempts to drain the state coffers by certain well-known permanent secrataries and their cohorts.
Having held its own for at least two and a half decades, Namibia has found itself moving towards the edge of an economic precipice. Grave concerns have been raised on declining Government revenue (particularly from SACU pool) and a widening budget deficit from 0.1 percent of GDP in 2012 to 8.5 percent of GDP in 2015/16.
Aggregating these challenges that may well be attributed to poor planning, it is critical to stress that over the years, Government has been outdone by rampant public corruption, the middleman syndrome, self-profiting top Government officials as well out of court settlements by the Attorney General that have never been in the interest of the public coffers nor watchful of the financial gap they created.
Without defying logic, if Government wants to reinvigorate the economy urgently and avoid a looming downgrade it needs to act and act now. Notwithstanding the fact the over the years we have repeatedly seen that exploitation of resources and Government corruption are inextricably linked, the absence of accountability has allowed corruption to flourish. It is under this this assertion that high profile cases in which the matrix of accountability has collapsed such as those involving high profile individuals such as permanent secretaries should never go unresolved and rapid action should be taken to recover tax payer’s money and rescue the deficit situation.
In the same capacity, Government has to get firmer and clamp down on foreign entities particularly the Chinese who have preyed on the system and have used black companies or individuals in tendering who in turn get insignificant returns when the tenders are awarded if they get anything at all and the same time remit profits to their native land leaving Namibia dry. Without doubt, the generally negative outlook for Namibia might hamper the ability of the economy -the state owned enterprises, the public and private sectors- to raise capital abroad for a host of development issues. It is clear that much hinges on economic growth over the medium term: Namibia could indeed be officially downgraded by the ratings agency should GDP growth remain weaker than expected for an extended period of time, which would push the Government’s budget deficit and debt levels higher, discourage investment and worsen unemployment, among other consequences.
Essentially going forward, fiscal credibility will depend on effectively controlling spending and implementing current consolidation plans. Namibia needs bold structural reforms to boost the economy, remove bottlenecks on production capacities (electricity and skill shortages), and increase market competition in network sectors. These reforms are fundamental for growth, job creation and reduction of high unemployment rate, and would allow reform on social safety net policies in a way which stimulates economic activity and labour force participation.
This year the economy will be lucky to squeeze out much more than one percent growth and next year’s outlook is scarcely much better.
Weak commodity prices and a sluggish world economy are all contributors to slow growth but even so, many of the barriers to faster economic growth are within the Government’s gift to change.
In order to ensure that State finances are kept in constant check, we implore on President Hage Geingob to order Ministers, heads of parastatals to present on a weekly basis, without fail, financial reports and bank statements to appraise the Head of State with the real cash flow position of these entities with the view to control their expenditures.
Confidente. Lifting the Lid. Copyright © 2015