Counting your chickens before they are hatched?August 3, 2012
In the gardenAugust 3, 2012
Namibia has a strong track record of attracting foreign investment and many well-known international companies play an active role in a wide variety of sectors including agriculture, fishing, mining, manufacturing, construction, tourism, telecoms and financial services. The Namibian Constitution promotes foreign investment and protects private property. Every month Flamingo brings you a round-up of the most important business and economics news from Namibia put together by Robin Sherbourne of local economic consulting company Namibian Economics. To receive regular updates on the Namibian economy, email firstname.lastname@example.org
The shortage of electricity supply may become critical by 2015 when it is estimated excess demand for electricity will reach 300MW. To prevent power shortages, state-owned power utility NamPower will have to invest N$14 billion over the next four to five years. Demand for electricity is expected to be driven by the mining and manufacturing sectors. Namibia currently imports some 60% of its electricity.
Discussions between state-owned bulk water supplier NamWater and French nuclear giant AREVA concerning a Namibian interest in the desalination plant at Wlotzkasbaken have reached an advanced stage. During a media conference, the Managing Director of AREVA Resources & Processing Namibia commented that the desalination plant will not be affected by recent developments which leave the future of Trekkopje uncertain. AREVA is currently the sole owner of the investment in Wlotzkasbaken north of Swakopmund.
The Kudu gas-to-power project could become operational in 2016, in time to link the gas pipe to other oil and gas exploration developments taking place in South Africa. Next year will see NamPower inviting bids for a 49% equity stake and for issuing tenders for engineering, procurement and construction contracts for operation and maintenance, according to NamPower’s Managing Director Paulinus Shilamba. Projections are that a final investment decision would be made in mid-2012, with 2016 as the target for commercial operations to start.
The Namibian Cabinet approved N$150 million of emergency spending to repair railway lines. Senior government sources confirmed that Cabinet has ‘in principle’ given approval for the spending, and an official in the Ministry stated they have already approached the Tender Board for exemption to bypass public bidding procedures after at least five trains derailed in two months on the stretch between Usakos and Tsumeb.
Although the escalating euro-zone debt crisis is ‘taking place many geographical miles away from Namibia’, it has the potential to hurt the country’s export earnings and ‘give a gloomy picture to the domestic growth prospects’, the Bank of Namibia has warned. The country’s financial and trade links are the two factors that will determine just how badly Namibia will be hit, the central bank stated.
Namibia’s current-account surplus narrowed to 0.4% of GDP in the third quarter of 2011 as the trade deficit widened, the central bank stated. The surplus fell from 0.9% of GDP in the previous three months. Total exports declined to N$7.62 billion from N$8.44 billion, while imports rose 6.3% to N$9.78 billion. The surplus on the services account of the balance of payments widened by 51%.
Namibia’s commercial and communal farmers, including those north of the Veterinary Cordon Fence, could start exporting meat to China as early as March. John Mutorwa, Minister of Agriculture, Water and Forestry, signed an agreement with his Chinese counterpart, Han Changfu, paving the way for quota-free access to the Asian market for locally produced and processed beef, mutton, fish and even fruit. The agreement on animal health and quarantine came as Namibia faces a European Union trade deadline to sign a long-awaited Economic Partnership Agreement.
The Namibia Diamond Trading Company (NDTC), a joint venture partnership between the Government of Namibia and De Beers, has completed the provisional qualification of 13 sightholders for the new supplier of choice contract period commencing 31 March 2012. This is an increase from the current number of 11 NDTC sightholders.
During the last week in November, Namdeb’s Probe Drill Platform (PDP) walked 335 metres into the sea and drilled 24 holes in 24 hours. The drilling operation is a significant milestone in exploring the marine portions of the company’s mining licences immediately adjacent to its land-based mining activities. The PDP is a walking jack-up platform, weighing 165 tons. It can withstand 144 km/h wind and 5 metres swell.
The Namibian Government has ordered an investigation into allegations of environmental and human poisoning at Namibia Custom Smelters at Tsumeb. Kalumbi Shangula, the Permanent Secretary in the Ministry of Environment and Tourism, stated the UNDP would help the Ministry to conduct the probe.
The IJG Business Climate Index climbed by one point to reach 121.9 in November, thus extending its winning streak to six consecutive months. Only the consumption index failed to increase. The export index was the biggest mover and was able to overcome its poor showing in October and rise by 3.5 points. Metal prices were largely responsible for the upward trend, having risen by 12% in November. Red meat also fared well on the export markets with beef and mutton prices climbing 3.5% and 5% respectively.
The Ministry of Agriculture, Water and Forestry has awarded the tender for the construction of the Neckertal Dam to Italian company Impregilo. In terms of the tender submitted by Impregilo, construction of the dam will cost N$2.8 billion.
NamPower is currently negotiating Power Purchase Agreements (PPAs) with three prospective wind-energy developers, a new one in Lüderitz and two in the Walvis Bay area, according to NamPower Managing Director Paulinus Shilamba. Shilamba stated that the Electricity Control Board has issued all three parties with conditional generation licences. The developers are the UK-based Electrowind, Norway-based Innowind and a Namibian company Diaz.
The DHL Global Connectedness Index has ranked Namibia the 100th most globally connected country in the world. Namibia was one of 125 countries from five continents that were ranked as part of the index, covering the period 2005 to 2010.
Pilchard quotas are to increase to 31 000 tonnes up 24% from 2011 as the Ministry of Fisheries and Marine Resources obtained Cabinet approval to grow the allowable harvest on the back of a 147% jump in ocean biomass, thanks to proper management and conservation.
The Namibian construction sector has registered a double-digit growth of 13.3% on average during the last 10 years, according to data published by the Bank of Namibia. The sector’s share of the GDP has doubled from 2% in 2000 to 4% in 2010.
Namibia and China signed a 20 million Yuan (N$26 million) technical co-operation agreement that will be used for the construction of a secondary school and other projects that may be agreed upon. Foreign Minister Utoni Nujoma stated that the latest agreement is a manifestation of the two countries’ close bond that has developed through trade and economic, political and cultural exchanges.
Fitch Ratings has revised the rating outlook for NamPower, Telecom Namibia and Namport from positive to stable following the revision of the outlook on the Namibian sovereign rating from positive to stable.
Consumer inflation jumped to 7.2% in December compared to 6.0% in November. Inflation is now at its highest level since August 2009.
A number of investors have been approached by the Namibian Government to partner with Namibia’s national water utility NamWater to kick-start the planned second desalination plant just north of Swakopmund. Permanent Secretary Andrew Ndishishi, who with other Government officials is a member of a desalination task team ordered by Government to source funding and expertise for the project, stated that invitations were sent out for a public-private partnership (PPP) with NamWater. Reports suggest the cost of the desalination plant will exceed N$1 billion.
Air Namibia is one of nine members of the African Airlines Association (AFRAA), which launched a joint fuel-purchase programme following the evaluation of tender bids received from a number of fuel companies. The project is aimed at obtaining a better and more stable unit price of fuel for participating airlines, assuring quality of the product and supply reliability while the relevant fuel suppliers will benefit from higher fuel volumes purchased by airlines.
€/N$ exchange rate 10.329 (15 January 2012)
£/N$ exchange rate 12.3593 (15 January 2012)
US$/N$ exchange rate 8.0553 (15 January 2012)
Prime lending rate 9.75% (January 2012)
Inflation rate 7.2% (December 2011)
Gross Domestic Product (GDP) N$81.5 billion (2010)
World Bank classification Upper middle-income country
This article appeared in the Feb’12 edition of FLAMINGO Magazine.