Namibia pins hopes on mining

Namibia is confident that its investor-friendly policies, coupled with favorable mineral prices, will result in an upturn in its economy by the mid-1990s.

“Potential investors have been waiting to look at how the new government’s policies would be shaped,” says an official of the Ministry of Trade and Industry.

“That obviously demanded that the government be in for at least two years to disseminate its policies and test how investor-friendly they are,” Ishmael Namaseb told IPS.

The fortunes of mineral-rich Namibia have been falling over the last 10 years following the low prices on the spot market of copper, gold, lead and uranium. Because of the low prices, the production of uranium, for example, fell by about 20 percent of capacity during 1990 and resulted in retrenchments. The number of people employed in the mining sector declined from 20,000 in 1980 to 12,000 last year.

Diamond production is, however, expected to increase significantly due to new mines coming up and the intensification of production in offshore sites, according to forecasts by the Bank of Namibia.

“Mineral prices were also weakened by the east european countries whose normally stockpiled minerals became available on the spot market,” says Namaseb.

In 1989, Namibia’s mining sector contributed about 32% to the gross domestic product (GDP), according to the Central Bank.

Namibia’s economic growth rate this year is expected to be slightly below three per cent, compared with three per cent in 1991 and 2.7% in 1990, says the bank in its latest economic review.

The impetus for growth came largely from fisheries, which recorded a spectacular growth rate of over 300%, while agriculture, dominated by livestock production, is largely undeveloped, the bank explains. Before Namibia’s independence Mar. 21, 1990, the fishing industry played an insignificant role in the southern African nation, with its value added constituting only 2% of GDP in 1989, according to the Bank.

There is renewed interest in mining and oil exploration from Namibian and foreign companies because of favorable labor and tax laws, access to minerals and the country’s fiscal policies.

“The government has accepted a lot of international advice to create an enabling environment and boost confidence,” explains Namaseb. President of the Chamber of Mines, Jonathan Leslie, told IPS that 1991 experienced continued exploration for precious and base metals by its members and other international companies.

Prospecting expenditure by Namibian and international firms is expected to go up this year although it declined by about $10 million in 1991 from $24 million the previous year.

The government has also introduced incentives to investors, in the agriculture, tourism and manufacturing sectors in an effort to contain unemployment now estimated at 60%.

Navin Morar, president of the Chamber of Commerce, is also optimistic that there will be an upturn in the economy, but is concerned about the current control by South African companies.

“We feel that political freedom is worthless without economic freedom,” he told IPS.

Morar thinks that it would be difficult to expand the manufacturing base in Namibia as South Africa virtually dumps all consumables in the country, making it uneconomical to invest in manufacturing sectors.

Bank of Namibia’s director of research, Esko Aurikko, says the economy may take a long time to improve.

According to Aurikko, the current drought — which has severely hit all the southern African nations — is likely to make Namibia a net importer of agricultural products.

— Inter Press Service