Africa-Press – Namibia. THE Bank of Namibia (BoN) says the recent low rating of central bank governor Johannes Gawaxab by Global Finance magazine is flawed.
The report cards rating central bank governors in Africa have been published annually by the magazine since 1994. The bank’s deputy communication’s director Kazembire Zemburuka describes the rating as inconsistent.
“These reports and the conclusions thereof appear fundamentally flawed,” he said.
He added that an attempt to correlate the actions of the central bank and the performance of the governor to the overall macroeconomic condition in the country is inaccurate and highly misleading.
“It is common cause that Namibia’s macroeconomic stability has been tested during the preceding two years due to the Covid-19 pandemic. During such difficult economic times confidence tends to be affected negatively,” he notes.
The Central Banker Report Cards 2021 is themed ‘The Art Of Timing’ and includes the European Union, the Eastern Caribbean Central Bank, the Bank of Central African States, and the Central Bank of West African States.
The globally respected magazine receives contributions from financial editors, economists, analysts and other highly acclaimed individuals. The grading looks at various objective factors, inclusive of the implementation of an appropriate monetary policy.
!Gawaxab, who is being graded by the magazine for the first time since he joined the bank in 2020, was graded a D+.
The best score is an A according to the rating, while the worst is an F. Zemburuka asserts that the rating does not invalidate BON’s significant contributions during the past 19 months. SADC PERFORMANCE
Some of the central bank heads in the Southern African Development Community (SADC) performed better than Namibia’s governor. Angola’s José de Lima Massano was rated at B-, and Botswana’s Moses Pelaelo received a score of B+. Meanwhile, Henri Rabarijohn from Madagascar got the same score as !Gawaxab, with a D+, while Harvesh Kumar Seegolam from Mauritius scored a B.
Rogério Zandamela from Mozambique was rated a C, while South Africa’s Lesetja Kganyago was graded A-. Tanzania’s Florens Luoga had a C+, Zambia’s Christopher Mphanza Mvunga’s grading was too early to say and Zimbabwe’s John Mangudya got a C-.
CAUTIOUS APPROACH Global Finance states that more than a year after Gawaxab took over as governor, he continues to adopt a cautious approach in monetary policy.
In August 2020, BoN kept the repo rate unchanged at 3,75% terming it appropriate in supporting the weak domestic economy and safeguarding the one-to-one link between the Namibia dollar and the South African rand.
“For Namibia, Covid-19 has had extensive advance impacts, prompting the central bank to warn against in June when the country experienced a third wave of infections,” the report reads.
Key sectors of the economy like tourism, mining, agriculture, manufacturing and construction have been ravaged. The ripple effects have seen a significant decline in banking industry profits and a surge in non-performing loans (NPLs).
Concerns over the stability of the industry have forced BoN to heighten credit risk monitoring and carry out stress tests. “The weak economy (at the time) forced BoN to revise its economic growth projections to 1,4% from an earlier forecast of 2,7%,” Global Finance adds.
Meanwhile and despite Namibia’s one-to-one link, South Africa’s Reserve Bank has been rated as bold in responding to the shocks of an economy that has been in turmoil in recent years, a situation that has been exacerbated by Covid-19 and civil unrest.
South Africa’s central bank cut its benchmark interest rate to 3,5%, the lowest level in about five decades. The rate has remained unchanged since July last year.
Global Finance says with inflation being within the bank’s range at 4,9% in June, governor Kganyago thinks it is time to adopt an inflation ‘point range’ of 3% as opposed to a 3% to 6% target range used currently.
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