Windhoek - While the outbreak of Covid-19 (coronavirus) is negatively affecting economies on a global level, smaller economies like Namibia will suffer more compared to wealthier ones, the country’s Finance Minister, Calle Schlettwein, has said.
Information established by the Finance Ministry following Namibia’s consultation with the World Bank and International Monetary Fund (IMF) shows that the pandemic will cause a V-shape globally.
This is where economies will decline sharply and then some will go in recession while others will wither the storm. For economies that go into recession and take time to recover, the V-shape will become a U-shape. Already the pandemic has slowed down the global economies by 0.5% to 1%.
Briefing the media on coronavirus update at, State House of Namibia, Schlettwein expressed great concern over supply chain breakages that are currently being imposed by the coronavirus pandemic saying the challenge will reduce the country’s economic growth.
“The impact of this pandemic are multiple but the most important ones are a reduction in trade of goods and services and this is caused by supply chains that have been broken. In the mining sector for instance, the country imports some equipment or parts of machinery from China that are used to extract minerals and if the equipment is not available, it negatively affects operations. The pandemic is also weakening the export market as demands for main exports such as minerals are also reducing. Due to travel bans, sectors like tourism are compromised,” said Schlettwein.
“On the financial stability side, we have seen that stock exchange markets are under severe pressure and it is on all investments. All investments have shown significant drops and with that we must be aware that pension funds, insurance funds may come under pressure because of much reduced form of these investments. But also, more pressure on the insurance side for pay-outs, for claims that are coming because of the pandemic.”
He said there was a need to really look into the financial stability of the country, adding that there were some issues that the country could handle and others which may be difficult to handle.
However, Schlettwein suggested that if the proper measures against Covid-19 were put in place, Namibia may be on the economies of the V-shape, and not U shape.
“The better we manage it in the beginning, the shorter the impact and the sharper the V, the slower and less intense our initial impact will be is the wider the V-shape which may change to a U-shape. The U-shape can be avoided and we have agreed with the cabinet that the response to this virus needs to be resourced immediate.”
Meanwhile, Namibia’s tourism sector which is well known for making a significant contribution to the country’s GDP is currently compromised as a result of the pandemic.
Ministry of Environment and Tourism, Pohamba Shifeta, said: “Our sector is one of the industries in the economic sectors that is heavily hit by the effects of the outbreak. The hard hit started already in February and many of the bookings were cancelled. Now that there are no tourists coming, including domestic ones, the hospitality industry and restaurants are severely affected negatively. We are facing a dire trend now.”
He said some SMEs in the restaurants who operate on daily income were failing to operate because business was low.
Due to Namibia’s over-reliance on imports from South Africa, the public went into a panic mode and bought goods in bulk, leading to some shortages of goods such as hand sanitizers and disinfectants.
Government has urged the public not to do panic buying as borders between Namibia and South Africa will not be shut because of the trade relations between the two countries.