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Namibia Namibia at a Glance: 2005-06

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Country Report Namibia Namibia at a glance: 2005-06 OVERVIEW In his first public statements as president, Hifikepunye Pohamba has outlined a challenging agenda for his government: tackling corruption, curbing unnecessary public spending and improving the management of parastatals. The new cabinet includes representatives of most factions in the South West Africa People’s Organisation (SWAPO), and the party appears to be united, at least for the time being. Real GDP growth is forecast at around 5% in 2005, owing largely to higher diamond and zinc production. It will fall back to 4.6% in 2006 as output from the Skorpion zinc mine and refinery levels off and the increase in diamond recoveries slows. Inflation will follow the trend in South Africa, remaining at around 4% in 2005 but rising to 4.6% in 2006. The current- account surplus is forecast to narrow to 7.7% of GDP in 2005 and to 3.9% of GDP in 2006 as the trade deficit widens and the balances on the services, income and current-transfers accounts deteriorate. Key changes from last month Political outlook • Mr Pohamba’s choice of ministers for his first cabinet may help to bring to an end the in-fighting that has affected SWAPO since the contest to be the party’s candidate for president in May 2004. Nahas Angula, who contested Mr Pohamba for the nomination, is the new prime minister, but the former foreign affairs minister, Hidipo Hamutenya, Mr Pohamba’s main rival, was not appointed to the cabinet.. Economic policy outlook • The Economist Intelligence expects an improved fiscal performance in fiscal years 2005/06-2006/07 (April-March), forecasting a deficit of 2% of GDP in 2005/06 and 3% of GDP in 2006/07. The improvement is due to the apparent determination of the new administration to control expenditure and to higher forecast receipts from the Southern African Customs Union than had previously been expected. Economic forecast • There is no change to our economic forecast. April 2005 The Economist Intelligence Unit 15 Regent St, London SW1Y 4LR United Kingdom The Economist Intelligence Unit The Economist Intelligence Unit is a specialist publisher serving companies establishing and managing operations across national borders. For over 50 years it has been a source of information on business developments, economic and political trends, government regulations and corporate practice worldwide. The Economist Intelligence Unit delivers its information in four ways: through its digital portfolio, where the latest analysis is updated daily; through printed subscription products ranging from newsletters to annual reference works; through research reports; and by organising seminars and presentations. The firm is a member of The Economist Group. London New York Hong Kong The Economist Intelligence Unit The Economist Intelligence Unit The Economist Intelligence Unit 15 Regent St The Economist Building 60/F, Central Plaza London 111 West 57th Street 18 Harbour Road SW1Y 4LR New York Wanchai United Kingdom NY 10019, US Hong Kong Tel: (44.20) 7830 1007 Tel: (1.212) 554 0600 Tel: (852) 2585 3888 Fax: (44.20) 7830 1023 Fax: (1.212) 586 0248 Fax: (852) 2802 7638 E-mail: [email protected] E-mail: [email protected] E-mail: [email protected] Website: www.eiu.com Electronic delivery This publication can be viewed by subscribing online at www.store.eiu.com Reports are also available in various other electronic formats, such as CD-ROM, Lotus Notes, online databases and as direct feeds to corporate intranets. For further information, please contact your nearest Economist Intelligence Unit office Copyright © 2005 The Economist Intelligence Unit Limited. All rights reserved. Neither this publication nor any part of it may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, electronic, mechanical, photocopying, recording or otherwise, without the prior permission of The Economist Intelligence Unit Limited. All information in this report is verified to the best of the author's and the publisher's ability. However, the Economist Intelligence Unit does not accept responsibility for any loss arising from reliance on it. ISSN 1356-4218 Symbols for tables “n/a” means not available; “–” means not applicable Printed and distributed by Patersons Dartford, Questor Trade Park, 151 Avery Way, Dartford, Kent DA1 1JS, UK. Namibia 1 Contents Namibia 3 Summary 4 Political structure 5 Economic structure 5 Annual indicators 6 Quarterly indicators 7 Outlook for 2005-06 7 Political outlook 8 Economic policy outlook 9 Economic forecast 13 The political scene 18 Economic policy 20 The domestic economy 20 Economic trends 23 Agriculture 24 Mining 26 Oil and gas 27 Fishing 27 Manufacturing 28 Transport and communications 29 Foreign trade and payments List of tables 9 International assumptions summary 12 Forecast summary 19 Central government debt 20 Central government loan guarantees 21 Gross domestic product, 2004 22 Consumer prices 23 Cereal production 25 Uranium output and earnings 29 Exports 30 Current account, Jan-Dec 31 Capital account 32 Central government external debt Country Report April 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 2 Namibia List of figures 12 Gross domestic product 12 Consumer price inflation Country Report April 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 Namibia 3 Namibia April 2005 Summary Outlook for 2005-06 The new president, Hifikepunye Pohamba, has outlined a challenging agenda of tackling corruption and curbing unnecessary public spending. The new cabinet includes representatives of most factions in the South West Africa People’s Organisation (SWAPO), and the party appears to be united, at least for the time being. Real GDP is forecast to grow by 5% in 2005 as diamond and zinc output rise. It will fall back to 4.6% in 2006 as output from the Skorpion zinc mine and refinery levels off and the increase in diamond recoveries slows. Inflation will follow the trend in South Africa, remaining at around 4% in 2005 but rising to 4.6% in 2006. The current-account surplus is forecast to narrow to 7.7% of GDP in 2005 and to 3.9% of GDP in 2006 as the trade deficit widens and the balances on the services, income and current-transfers accounts deteriorate. The political scene Mr Pohamba announced his new government after formally taking over from Sam Nujoma as head of state at the end of March. The former higher education minister, Nahas Angula, was appointed prime minister, and the former health minister, Libertina Amathila, deputy prime minister, although the former foreign affairs minister, Hidipo Hamutenya, was passed over. Mr Pohamba has pledged to tackle corruption, reduce unnecessary ministerial spending and improve the management of parastatals. A recount of the ballots cast in the legislative election produced no change in the results. Mr Pohamba has warned of revolution if commercial farmers remain unwilling to sell their land. Economic policy The 2005/06 budget has been delayed, apparently so that the new president can review its spending proposals. In its Article IV consultation with the government, the IMF has again urged the implementation of structural reforms, including the privatisation of parastatals. The domestic economy Real GDP growth increased to an estimated 5.7% in 2004, owing mainly to a 37% increase in mining output. Inflation fell in January-February 2005. Coarse grain output in 2005 is estimated at one-fifth higher than in 2004, although maize production is expected to be lower. Production of diamonds by Namdeb rose by 28% in 2004; output of uranium rose by almost 50%. A Chinese oil company has acquired a majority interest in the Etosha onshore concession. One of the Ramatex company’s textile plants is closing. Air Namibia is to resume direct flights to London. Foreign trade and payments Exports increased by almost one-half in US dollar terms in 2004, as diamond exports rose by 61% owing to higher production and prices. The current-account surplus rose substantially, owing mainly to a reduced foreign trade deficit and an increase in Southern African Customs Union receipts. Editors: Roger Boulanger (editor); Christopher Eads (consulting editor) Editorial closing date: April 15th 2005 All queries: Tel: (44.20) 7830 1007 E-mail: [email protected] Next report: Full schedule on www.eiu.com/schedule Country Report April 2005 www.eiu.com © The Economist Intelligence Unit Limited 2005 4 Namibia Political structure Official name Republic of Namibia Form of state Unitary republic Legal system Based on the constitution of 1990 and Roman-Dutch law National legislature Bicameral; National Assembly, with 72 members elected by universal suffrage and serving a five-year term, and up to six non-voting members appointed by the president; National Council, with limited powers of review and 26 members, two of whom are nominated by each of the country’s 13 regional councils, serving a six-year term National elections November 2004 (legislative and presidential); next elections due in November 2009 Head of state Hifikepunye Pohamba, elected president by universal suffrage in November 2004, took up his post in March 2005 National government President and his appointed cabinet; last reshuffle in March 2005 Main political parties South West Africa People’s Organisation (SWAPO), the ruling party; Congress of Democrats (CoD); Democratic Turnhalle Alliance (DTA); United Democratic Front (UDF); National Unity Democratic Organisation (NUDO); Republican Party (RP) Prime minister Nahas Angula Deputy prime minister Libertina Amathila
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