Photo Credit: Susan Nel Photography
As February breaks and salaried employees give a collective sigh of relief after a long-awaited January payday, it is worth taking a moment to do a quick recap of 2019 and begin planning for the year ahead. Few would argue that 2019 was a far more tedious year than even 2017 or 2018, at least economically. While some Namibians may have recalibrated to a “new normal”, the extent of the drought combined with a depressed economic climate weighed on most. At least December brought some relief in the form of rain over much of the country, softening the blow of 2019.
The Namibia Statistics Agency’s (NSA) 3rd quarter National Accounts data, released in December, provided some colour to what the average Namibian experienced during the year. The data showed a fourth consecutive quarterly contraction in real GDP, the eighth such contraction in the last four years. On a year-to-date basis real domestic output was 2.4% lower than by the end of the 3rd quarter of 2018. What is more, output lagged all years post 2014. Therefore, on a real GDP basis, the economy performed at levels last seen in 2014. While that may have been a boom time, the fact is that more Namibians have entered the labour force and now rely on similar levels of output, and as a result unemployment and living standards deteriorated. Most Namibians will thus be happy to leave 2019 behind.
Without dwelling on the past for much longer, it is also worth exploring the positives delivered by 2019. Despite the Namibia Dollar fluctuating above 2018’s closing level for most of the year, there were significant periods of strength in between and it ultimately ended the year 2.4% stronger against the US dollar. At the same time inflation moderated, trending down throughout the year, led by a considerable slowdown in food inflation and subdued housing-related cost increases. Currency strength and subdued core inflation in South Africa allowed the Reserve Bank (SARB) to cut interest rates by 25 basis points (0.25%) in an effort to support the economy. This in turn allowed the Bank of Namibia to cut interest rates in August, bringing slight relief to stretched Namibian borrowers. The Namibian economy was also largely spared from significant external shocks which may have resulted in further economic headwinds.
The last quarter of 2019 served up #Fishrot as well as the most hotly contested general elections in Namibia’s short independent history. Both events were mired in controversy but we may view them through a positive lens (one might, however, need to unlock the deepest reserves of the imagination). While there is nothing positive about what took place in the Ministry of Fisheries or the state-owned fishing company for many years, six of the individuals involved are currently behind bars and significantly less comfortable than they have become accustomed to. This is more than can be said for the corrupt officials entangled in various scandalous acts south of Namibia’s borders. The fishing quota scandal has also resulted in an international spotlight falling on Namibia, which may make it all the more difficult for politicians to pursue questionable policies. 2019 was not a very positive year from a policy perspective and the current attention Namibia is attracting may provide civil society with more leverage to positively influence policy going forward.
Namibia’s general elections are easier to view in a positive light. There are few things more effective at generating action from political leaders than a significant drop in support at the election booths. The ruling party lost its two-thirds majority in the National Assembly and support for President Hage Geingob dropped to 56.3% from 86.7% in 2014. Namibian voters clearly voiced their dissatisfaction with the current administration, and this has already started to shake things up with the president announcing a downsizing of cabinet. It remains to be seen how this influences the political landscape, but it is likely to slow the passage of nationalistic policies and hopefully lead to a more consultative process with regard to drafting legislation. This does not mean that the Namibian boat will stop taking on water, but it may delay a more serious economic depression.
With that in mind, what do we expect for 2020? It seems unlikely that Namibia will experience an economic recovery this year. The economy remains fragile and exposed to external shocks as interest rates are already accommodative, government funds are unlikely to improve, and the policy environment may be slow, or possibly unable, to induce growth in the wake of returning investor confidence. Geo-political headwinds remain and so, too, the potential for external shocks to the Namibian economy. A myriad of potential pitfalls loom. But here is the catch: there is little an individual can do to change these external factors that influence our lives.
Recognising this is the first step toward successfully navigating the undulations that 2020 is sure to serve up. During such uncertain times it becomes more critical to ensure that one’s personal financial planning is robust enough to weather any potential storms. Age-old principles such as paying oneself first, through saving, and diversification of investments, including geographic diversification, should be among the components incorporated into such financial planning. While adequate planning cannot guarantee capital preservation, it will promote invaluable peace of mind while providing one the best possible foundations from which to pursue all of life’s non- financial opportunities. Financial planning thus forms the basis for a positive mindset, and positive mindsets are all-important as we start the new year. May it be a good one for you!