Economic advisor to the President, John Steytler has called for a rebalancing of the economy which is in a crippling tailspin since the collapse of the contraction sector and a consequent recession.
Hopes were high last year that 2018 would see the recessionary pressures simmering down and business opening up but a marginal contraction of 0.1% registered in the very first quarter has spelt gloom.
Nevertheless, confidence is still high that the growth outlook will remains positive, but not by huge proportions while already negative growth has been seen in the fishing sector (-13.6 year on year), health (-6.4% year on year), hotels and restaurants (-5.3% year on year) and manufacturing (-2.1% year on year).
Speaking last week at an Old Mutual celebration of business anchoring in Africa, Steytler, a former statistician general, said in the meantime the net-savings of the country have not increased as well as those of households.
“So we need to go back to the olden days, you know where some of us grew up and we actually had a savings book and we (could) get a stamp and it encourages you to save. We need a savings culture and we need to realise that, especially for young graduates, that before you consume, it’s better to invest,” he said.
On rebalancing, rather than a shift, Steytler is advocating for an equilibrium of consumption and investment led growth.
He cautions that in itself growth driven by investments can also become unsustainable just as the reliance on consumption created challenges in the local economy.
“Typically what comes with investment led growth, as you create more capacity, you can even create bubbles in the economy. So we are saying we need to rebalance and we are also saying as part of this rebalancing the issue of inclusivity is also important,” said the advisor to the President.
As all eyes rivet on when the economy will grow, he also said there is a need to be aware of the quality of growth citing that an obsessive focus on investments that do not create employment will create an imbalance.
Given that experts project the economy to experience its robust moments of turn-around around 2022, Steytler emphasised on savings and easier accessibility of capital as some of the low hanging fruits.
“One thing I also want us to ask is, the return on investment is a function of the risk of investment and we have to ask ourselves, if you look at some of the returns we see in investments, let me speak just of the financial sector, the banking sector.”
“When you have returns, it’s quite high. That tells me it’s high because it’s risky. Is Namibia really that risky? That we should price in premiums of 2, 3, 4 and 5% compared to benchmarks in South Africa? Are we that risky? And can we reduce that risk so that the cost of capital can come down and make it more affordable for young people to grow their businesses,” he said.