Niël Terblanché
The Namibian economy is set to feel severe negative effects of geopolitical tensions after the Namibian Dollar lost significant ground against the United States Dollar after rumours surfaced last week that South Africa sold weapons to Russia to aid the country in its special military operation in Ukraine.
The Namibian Dollar which is pegged to the South African Rand weakened to over N$19 against the US Dollar after remarks made by Reuben Brigety, the American Ambassador to South Africa, about the purported weapons sale last week.
Brigety in a widely broadcasted interview said he would bet his life on U.S. intelligence that South African weapons were loaded onto a Russian vessel when it docked at a Cape Town naval base in December 2022.
The South African government responded by saying that Ambassador Brigety’s remarks had undermined the relationship between the two countries.
The South African foreign relations ministry summoned Brigety for a special meeting after his utterances that has left diplomatic relations between the two countries in jeopardy.
The demarche resulted in Ambassador Brigety issuing an unreserved apology to the government and the people of South Africa.
Namibia imports about 80 percent of consumer and other goods from South Africa and if economic sanctions would follow the US Ambassadors’ actions, the Namibian economy would lose all the slow gains it made over the past two years.
Namibia’s narrow industrial and export base will make it difficult for the country to withstand external shocks such as sanctions.
The Namibian Dollar as a weaker currency could increase the cost of imports.
Namibia uses the US Dollars to buy oil and other commodities and negative market sentiments could very well cause investors to withdraw from the country.
