By Tio Nakasole
Domestically, the Monetary Policy Committee of the Bank of Namibia held its bi-monthly meeting on the 14th and 15th, maintaining the repo rate at 6.75 percent.
This was decided in order to continue safeguarding the peg between the Namibian dollar and the South African rand amid heightened global policy uncertainty. Globally, the trade outlook and statistics released earlier in April 2025 indicated that global trade will deteriorate sharply due to a surge in tariffs and trade policy uncertainty.
Based on measures in place as of 14 April, including the suspension of “reciprocal tariffs” by the United States, the volume of world merchandised trade is now expected to decline by 0.2 percent in 2025.
If enacted, reciprocal tariffs would reduce world merchandise trade growth by an additional 0.6 percentage points, posing particular risks for least-developed countries, while the spread of trade policy uncertainty would shave off a further 0.8 percentage points.
In aggregate, the reciprocal tariffs and spreading trade policy uncertainty would lead to a 1.5 percent decline in world merchandise trade volume in 2025.
TURBULENCE
Over the past years, there has been a series of uncertainties that have had vast geopolitical and economic ramifications. The vast ramifications have led to a significant increase in tensions placed on government budgets.
Most of the government has responded to this uncertainty on an unprecedented scale, borrowing and spending heavily, significantly compounding their deficits, as a lever mostly funneled to households and businesses to mitigate the immediate consequences of the crises.
Some of the contributing factors to this sluggish growth have been uncertainty, unpredictability, and volatility as a result of external shocks, in the sense that the future has become too flawed to predict.
We have witnessed our counterpart changing their VAT rate, companies developing disruptive technologies, the effect of natural phenomena such as weather, a change in U.S. governmental policy, and a big change in the regional economy.
This is not new; the world has witnessed a pattern of these natures, such as the Great Depression of 1929–1930, the global recession of 2008–2009, and Covid-19 (2020–2022).
All these unforeseen market headwinds or windfalls have conscripted a number of budget targets, making them less and less meaningful. Therefore, this demand policymakers or lawmakers to respond swiftly to changing conditions in an unpredictable time.
BENCHMARK
Currently, we are caged in by the imposition of US trade tariffs, which will not only affect the state enterprises such as Meatco but the entire Namibian-US export landscape in diamonds, building materials, machinery, and charcoal.
As a result, this will put on hold productivity and discourage foreign direct investment in these sectors, which are regarded as the backbone of the Namibian economy. A profusion of new tariff measures announced will have effects on these locally produced products as they will become less competitive in the global market due to a heightened tariff rate.
However, it is not ending there; this has also impacted households, governments, and intergovernmental relations across the globe. Despite these issues, the Namibian government needs to put their money where their mouth is in order to ensure that limited resources are directed to the most sustainable goods and services. In the meantime, government fiscal responses are expected to hedge against any possible future downturns in order to address the implications coming from these shocks.
REPEATABILITY ERROR
During budgeting, do not run the risk of reinventing the wheel “repetition,” but establish a rationale for when, where, and how the government can maximize the minimum on the basis of what are the key issues that need to be addressed.
As much as technology is right at our disposal, we should not fall into the trap of using artificial intelligence to think for us in terms of budgeting, as the world’s challenges are not linear nor repeatable. In spite of that, there are certain signals that can be useful to chart a right course in terms of assisting the policymaker when it comes to budgeting.
BENCHMARKING
To shoot for the mark, the Namibian government needs to factor in productivity in enhancing reforms that stimulate economic growth alongside targeting other priorities such as reducing the budget deficit, which will enable it to calm markets and reduce the debt servicing burden.
Commercially, relative target model: in the commercial sector, the government needs to focus on more aggregate and relative targets that allow for the necessary flexibility. With reference to enterprises that are in production, detailed cost breakdowns should also be preferred, especially for enterprises that have wobbling returns from their investments.
Secondly, domestic enterprise needs to minimize the budgeting scope model; the major focus should be assessing key performance indicators at a time when the business is consistent.
Additionally, prioritizing key performance indicators that focus on liquidity and working capital will also be a sustainable move, rather than sales and growth alone. Shortened budgeting process model: enterprises should discover ways to shorten the budget and planning process so that more time can be spent on company management.
While Namibia remains resolute in its vision 2030 of an industrial state, the progressive National Development Plan (6) should also be anchored toward supporting the diversification of exports, value addition, and building credible alliances in the recent industries of oil and gas.
OPTIMISATION
Another tool that the state needs to capitalize on is optimizing revenue collection. The state fiscal budgets rely on several sources of revenue, such as personal income, corporate income, sales, and other income streams. However, revenue optimization is not synonymous with taxing the poor only but improving the administrative actions to optimize revenues by closing the gap of revenue leakage.
This includes ensuring tax compliance using advanced analytics, expanding correspondence audit capacity, ensuring state-owned enterprises operate optimally by generating the expected revenue and dividends and a well-coordinated leaseback arrangement, and maximizing concessions through public-private partnerships.
In conclusion, uncertainty, in whatever form it takes, reveals a truth: government spending patterns should not just be a recurring process or matter of ticking a box year in and year out, but they should be able to respond to the external forces that are out of our reach. Meanwhile, enterprises must be flexible in their planning, budgeting, and forecasting in order to deal with changing business conditions.
Effectively managing this variability in good days and bad days requires that policymakers have a firm understanding of the unparalleled patterns unfolding and drivers of revenue growth in their state. This should also be a learning curve, that as we hope for the best, it is also equally prudent to prepare for the rainy days of global contraction whenever they may come.
*Tio Nakasole is an analyst at MONASA Advisory and Associates. The views expressed do not represent those of his employer. – theorastus@gmail.com
