Economic transformation through agri investment

Economic transformation through agri investment PHILLEPUS UUSIKU

The agriculture sector contributed an average of 8.5% to the country's Gross domestic Product (GDP) over the period 1990 to 2019, with the highest growth of 25% registered in 1994.

The sector is also the largest employer with a share of 23% of the overall labour force.

According to the Agricultural Bank of Namibia (Agribank), the impressive growth rates over the years could be attributed to favourable climatic and economic conditions prevailing at the time as the sector did not experienced a double-digit increase in the last decade.

Agribank notes that the government has made significant strides in supporting the agriculture sector through its development capital budget.

Between the 1994/95 and 1998/99 financial years (FY), the government committed about N$407 million in development expenditure, while between 2014/2015 and 2018/2019 (FY), the sector attracted a development expenditure of N$1.3 billion.

The highest overall development budget allocation the sector ever received was in the 2016/17 (FY), reaching a peak of 22%.

Agriculture development budget expenditures have been largely marked by investment in infrastructure for water supply, irrigation, animal health & disease control as well as market infrastructure, Agribank said.

Private sector

Despite the inconsistent trend in development budget allocations, fiscal commitment to the sector reflects that government spending continues to shape Namibia's agriculture policy programs to support development of the sector and economic growth at large, Agribank added.

Although government spending is necessary for growth, escalating debt has become a concern due to emerging and existing socio-economic challenges. “This suggests that development budget allocations to economic sectors such as agriculture are likely to witness a decline. Therefore, there is a need to encourage and incentivise private sector investment to ensure sustainable sector growth,” Agribank pointed out.

Despite decades of public and private investment in the sector, growth in agriculture continues to dwindle and remains below expectations. Harsh climatic conditions remain a major threat to the sector.

Additional investments in the agriculture sector remain necessary to increase agricultural production and productivity, specifically focusing on technological change and climate resilient production techniques, Agribank said.