Africa-Press – Namibia. IT IS tough being an exporting country, especially Namibia. Let us explore why?!
In the last 10 months of 2021, prices of commodities such as gold, zinc and, to a smaller extent, uranium, have shot up, but the gains to Namibian companies have been low. This is an observation the Bank of Namibia included in its recently released economic review.
The high prices come as a result of recovering global demand for commodities, as the global economy returns to a certain level of normalcy. Factories are still slow and demand is immeasurable – this is what has caused prices to soar.
Gold prices, for example, rose by 2,7% to US$1 789 per fine ounce during the first 10 months of 2021, while long-term uranium prices have increased to around US$43,00 per pound. Zinc also did well, reaching US$1 995 per tonne during the first 10 months of this year.
On the flip side, fuel prices have also soared, and the Namibia dollar has weakened against the importing currency, the US dollar. Oil prices, on the other hand, recovered by 38% year-to-date in 2021 from a slump last year.
Namibia’s oil bill stood at N$9,9 billion during the first 10 months of the year. Though some parts of the economy gained, others lost and the net effect rendered the country almost playing a zero-sum game.
“Namibia’s gain from the recent surge in commodity prices was offset by the strengthening of the exchange rate, which led to low export volumes – particularly for uranium and gold. Moreover, the recent increase in oil prices has led to a rise in the import bill and ultimately a worsening trade deficit,” said the central bank.
Namibia exports billions worth of gold, uranium, zinc, copper and diamonds yearly. These exports are a needed boost for the trade account and they provide reasonable foreign currency too.
But even with these high prices, which could have seen the country rake in even more foreign currency, export numbers were low, said the central bank.
“Despite the rise in most commodity prices, the export values declined during the first 10 months of 2021, chiefly on account of a decline in export volumes followed by the exchange rate appreciation,” reads the bank’s report.
According to the central bank, during the first 10 months of 2021, the exchange rate strengthened to N$14,60 per US dollar, negatively affecting export receipts and the volume of all Namibia’s export commodities.
Uranium export value declined by 33,6% year-to-date. The main challenge experienced by the uranium exporting mines was the unavailability of suitable vessels which impacted the transportation and delivery of the product on time, said the bank.
It is reported that despite this, uranium mines have gained about 2,1% from their contractual agreements during the first ten months of 2021. In terms of gold, despite prices increasing year-to-date with a growth rate of 3,8%, export earnings of gold declined by 12,9% due to exchange rate revaluation losses and lower export volumes.
Export receipts from diamonds rose by 9,2% during the first 10 months of 2021 supported by the increase in both prices and volumes. Similarly, the export volume for zinc rose substantially by 41,8% due to favourable international zinc prices and the lower treatment cost by processors abroad.
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