Chamwe Kaira
Uranium is exempt from new US tariffs because of its strategic importance to the United States, Bank of Namibia (BoN) governor Johannes !Gawaxab has said.
Speaking during a monetary policy dialogue in Windhoek, he explained that minimal impact is expected on uranium due to existing contractual obligations.
He added that uranium will also benefit from the weaker exchange rate, which will improve revenue and profitability.
He noted that no tariffs were previously applied to diamonds, which helped natural diamonds remain competitive against cheaper lab-grown diamonds.
“The introduction of a 15% tariff will potentially negatively affect export volumes and global demand for diamonds,” !Gawaxab said.
On marble slabs, he explained that the general duty rate of 2.5% ad valorem is expected to severely impact businesses.
He added that the US accounts for 88.7% of Namibia’s sales of certain products, and the 15% tariff will hit businesses hard. The US market represents about 1.4% of Namibia’s salt exports.
“The imposed tariffs are likely to make Namibia’s salt exports uncompetitive in the US market and impact the exports to the US,” he said.
Namibia’s exports to the US remain relatively small, with marble, uranium and polished diamonds making up the bulk.
!Gawaxab warned that tariffs could further hurt earnings from polished diamonds, a key export and government revenue source already under strain.
“The indirect impact may be hard to quantify but may manifest through the exchange rate depreciation and the exposure to the South African economy,” he said.
He also noted that the South African Reserve Bank (SARB) has indicated a preference to reduce South Africa’s inflation target to 3%. As part of the Common Monetary Area, Namibia would be affected.
“The Bank of Namibia has carried out internal analyses to quantify the impact of such a change on Namibian variables. A lower inflation target is usually associated with long-term gains and short-term costs. Costs are usually in the form of output losses linked to the need to keep interest rates higher in order to reduce inflation. We, however, did not find evidence that interest rates need to be kept higher,” he said.
According to him, the benefits of a lower inflation target include long-term price stability, which is positive for investment and economic growth.
Namibia has maintained a 3.75% spread between the repo and prime rate since 2010, while other CMA countries keep a 3.50% spread.
A study has recommended alignment with the CMA countries.
He said reforms are justified because a wide interest rate spread leads to high borrowing costs.
Other reasons include balancing financial stability with economic development, providing relief to consumers and aligning Namibia with CMA members.
The central bank has therefore mandated commercial banks to reduce the spread between the repo rate and all lending rates by 25 basis points by 31 December.
