Four challenges for Namibia’s PM Geingob

Four challenges for Namibia’s PM Geingob

Flush from Prime Minister Hage Geingob’s recent electoral victory, Namibia’s governing SWAPO party must address four major economic and social challenges that will make or break its future.

In November, Namibia hosted Africa’s first electronic ballot elections wherein Prime Minister Hage Geingob, candidate of Namibia’s governing party, SWAPO (South West Africa People’s Organization), reaffirmed its popularity after a 24-year reign. Geinob crushed his opponents, snatching 87 percent of all declared votes; his main opponent, candidate McHenry Venaani of the Democratic Turnhalle Alliance, claimed a meager 5 percent.

SWAPOs continued investment in infrastructure (particularly railways) as well as its extensive effort in providing free primary education is the root of the continued loyalty across age groups. In concurrent parliamentary elections SWAPO also cemented their hold on parliament retaining a two-third majority of the national assembly ballot. SWAPO now has its work cut out. Here are four challenges facing Namibia.

1. Protect and grow the economy

As one of the best performing economies in the world, Namibia’s growth is expected to reach a whopping 5 percent by the end of 2014. Yet, despite a diversified economy, Namibia still relies heavily on its mining sector. The biggest contributor to the economy in terms of revenue, mining accounts for 25 percent of the country’s income and expected to reach US $1.79 bn annually by 2018.

Home to one of the world’s largest sources of offshore diamonds, diamond mining also contributes to an important share of revenue. However, diamonds are not the only game in town. This mineral-rich country is home to massive deposits of uranium, gold, zinc, copper, manganese, lead, silver, tin, vanadium, tantalite, phosphate, and sulfur. Despite depressed international commodity prices, extensive mineral exploration continues in Namibia given its favorable geological location.

Recognizing the need to protect their increasing ties with the Asian economy, Namibia’s Central Bank also plans to retain at least 10 percent of its foreign-currency reserves in Chinese yuan, in an effort to hedge against currency risks. “We import many products from China and our debt is denominated in Chinese currency,” Central Bank Governor Ipumbu Shiimi stated.

2. Boost uranium production

Currently one of the world’s largest producers of uranium, Namibia is working closely with the Chinese in an attempt to further develop this booming industry. As of now, Namibia is already working with China’s largest producer of nuclear energy, China General Nuclear Power Holding Corp, to start construction of a $2 billion Husab mine during the second half of next year. Potentially producing 15 million pounds of uranium, the mine is expected to become fully operational by 2017.

3. Address water shortages

In light of the ever-deteriorating water levels in the country’s major dams, there is growing concern that certain areas may run dry by 2020 if the situation is not drastically remedied.

With Namibia running short of water for the semi-arid Erongo and western coastal regions, the government has already made a formal offer to buy Areva SA’s (AREVA) 20 million-cubic-meter water desalination plant in the country to secure supplies for both uranium-mining operations and population usage.

4. Address social grievances

Namibia has one of the most unequal income distributions in the world and social and economic imbalances remain widespread. According to the recent Namibia Household Income and Expenditure Survey, more than one in four households live in poverty and the wealthiest 10 percent control over half of the total country’s income.

Given that 11 different ethnic groups exist in the diverse country, recent discontent over land and housing is nothing new But with a small white minority still owning just under half of Namibia’s arable land, it appears that little has changed in the last 50 years. The process towards redressing inequality of land distribution has proved to be an expensive and slow one and how the president addresses this issue will set the tone for his administration.

Meanwhile, Namibia’s high unemployment levels continue to run incongruously in comparison to its robust GDP growth rate. Recent data confirmed unemployment has reached a grisly 29.6%, with over 40% of young people out of a job. Ipumbu Shiim, Governor of the Bank of Namibia, blames the high figures on sectors of the economy that do not create employment despite marked growth such as machinery-dependent mining.

A nation of 2.3 million people, Namibia is one of the least densely populated countries in the world, second only to Mongolia, yet HIV plagues the population, with an adult HIV prevalence of over 20% in 2012. This disproportionate level of infection consistently ranks Namibia among the top 10 countries with the highest rates in the world. With little confirmed action plan to address the HIV epidemic, it will continue to greatly strain the nation’s economic and human resources.

Despite Namibia’s lengthy political stability, many choose to ignore the fact that lasting social grievances may yet disrupt the country. Namibia must implement sound structural reforms and policies to overcome its significant obstacles in order to fully tap into its economic potential.

About Author

Itziar Aguirre

Itziar currently works as a Research Consultant at JLL, a commercial real estate capital intermediary. She holds an MBA in Accounting and Finance from the University of St. Thomas and an MSc in Comparative Politics from the London School of Economics.