tom k alweendo : accelerated economic growth and job creation – the need for a paradigm shift annual address of mr tom k alweendo, governor of bank of namibia, windhoek, 5 november 2009. * * * ladies and gentlemen, thank you for attending our regular annual address. i know that we are competing for your time with many other events. the theme of my annual address this year is on the need for a paradigm shift, in order to accelerate economic growth and job creation. before doing that, i would like to give you a brief update on the state of the economy and the banking system. as we all know the global economy went through a period of extraordinary financial instability in 2008 and 2009. this was accompanied by the worst global economic down turn and a collapse in trade. no country escaped the reach of this economic storm, and we were no exception. our export oriented sectors, notably minerals and tourism, have been especially hard hit. consequently, the economy is expected to contract by about 1. 1 percent in 2009, while a moderate recovery is envisaged for 2010. in part, due to depressed international demand conditions, inflationary pressures have been largely under control. the annual rate of inflation has declined to 7. 1 percent in september. declining levels of inflation has allowed the bank of namibia to ease monetary conditions, but domestic demand is yet to show a sustained recovery. in line with the global economic recovery, there are encouraging signs of a recovery in the namibian economy, but it will take a while for economic activities to reach pre - crisis levels and become more sustainable. with respect to the financial system, our banks remain profitable. banks are adequately capitalized, sufficiently liquid, and non - performing loans as a ratio to total loans remain well below internationally acceptable standards. i am also certain that most of you have been following the recent debate on the appropriateness of the difference between the bank of namibia ’ s official interest rate and the commercial banks ’ average lending rates. at the heart of the debate is whether the interest rate differential is a correct reflection of the risk commercial banks undertake to intermediate between the savers and borrowers. we do agree that commercial banks, just like any other business, need to be rewarded for the risk they take in conducting banking business. we also believe that the reward must be commensurate with the risk being taken. as we all know, the banking system is the main transmission channel for our monetary policy actions. that means therefore that

economic backdrop that makes such a venture that we are celebrating today extremely encouraging. we certainly need more investment such as this. i recall discussing this investment with colonial in 2005 and i was pleased that in september that year, colonial went ahead and invested considerably to re - establish the business of padarath poultry enterprises limited ( ppel ). colonial has gained full control of rooster poultry. reflecting its confidence in the business, between september 2006 and today, colonial has invested additional funds in the project. one of the major parts of this investment has been the re - establishment of breeder and rearing farms to produce local fertile eggs rather than importing such eggs. these farms are now on stream and the business is experiencing a progressive reduction in the volume of imported eggs. this would certainly help our balance of payments. i found the partnership with grower program very interesting. i understand that the growing of broiler chickens combines well with cane farming and virtually all of the growers contracted are also cane growers. i have been informed that already 12 contract growers have taken up the opportunity to join poultry rooster ’ s developments and more are in the process of building sheds. at least 6 more are planned for placement prior to end of december 2007. this is an excellent model in small and micro finance that works. the resurrection and further capacity building has resulted in the direct employment of over 180 people in the ba area, and that does not include the additional employment available through contract growers. i found the details of this investment very interesting. the rearing farm in tavarau is where the new facilities are capable of producing 4 flocks per annum in 4 sheds. after 18 weeks, the birds are transferred to the breeding farm at qalitu where they lay fertile eggs that are transferred to the hatchery in lautoka. the ba farm has 18 sheds and the general processing plant. one of the largest projects undertaken was the building of a large 250 ton holding freezer, and a six months road and drainage upgrade. a new rendering plant has been commissioned as well as an environmentally appropriate water waste system. at the suva depot in vatuwaqa, a new holding freezer to facilitate daily delivery to poultry rooster ’ s customers in suva and surrounding areas. i am told that the sales team now enjoy the use of updated freezer trucks. this investment has come with new it infrastructure, capacity building, development of ohs requirement and commencement of international accreditation. the outcome of this investment program