National Accounts

Transcription

1 Republic of Namibia National Accounts Sectoral Contribution to GDP, 2006 Primary Sector 22.1% Tertiary Sector 51.6% Secondary Sector 18.4% Central Bureau of Statistics National Planning Commission

2 National Accounts For all technical queries contact Ms N. C. Kali, Deputy Director, Economic Statistics Mr. A. Sindano, Chief Statistician, National Accounts Central Bureau of Statistics Phone: Private Bag Fax: Windhoek Namibia October 2007

3 Preface This is the seventh and last issue of the national accounts publication based on the 1995 base year published by the Central Bureau of Statistics. It contains time series of main national accounts aggregates for the period , both at current and constant prices. Data for 1980 to 1995 are not included but can be made available on request. National accounts have been compiled according to the latest international standards, the 1993 System of National Accounts (SNA 1993). Data from the external sector namely, Balance of Payments has been fully incorporated within a harmonized and consistent framework. However, financial statistics have not yet been included within the system of national accounts in Namibia. The national accounts 2006 have reported on major macro economic indicators during the period under review viz - a- viz GDP growth and annual levels, Sectoral contributions to GDP, Gross National Income (GNI), Gross National Disposable Income (GNDI), Gross Fixed Capital Formation (Investment) and Net lending / borrowing among others. As an endeavor to monitor the performance of the economy more fully and on regular short-term basis, compilation of quarterly GDP estimates have been introduced. Receipts of various inputs from users at home and abroad are gratefully acknowledged, and will be fully incorporated into the next annual publication, the first to be issued after rebasing to 2004 base year. Finally, I would like to take this opportunity to most gratefully thank the various respondents who have assisted the CBS staff in meeting their data collection requirements and made the production of this publication possible. F.S.M Hangula Government Statistician Windhoek, October 2007

4 Table of Contents Introduction 2 A Main aggregates 4 Table A1 Gross domestic product and gross national income.8 Table A2 National disposable income and saving...9 B Gross domestic product by activity 10 Table B1 GDP by activity, current prices, N$ million..15 Table B2 GDP by activity, current prices, percentage contributions to GDP 16 Table B3 GDP by activity, constant 1995 prices, N$ million 17 Table B4 GDP by activity, constant 1995 prices, annual percentage changes 18 C Expenditure on the gross domestic product 19 Table C1 Expenditure on the GDP, current prices, N$ million 23 Table C2 Expenditure on the GDP, current prices, percentage shares of GDP 23 Table C3 Expenditure on the GDP, constant 1995 prices, N$ million 24 Table C4 Expenditure on the GDP, constant 1995 prices, annual percentage changes. 24 D Final consumption expenditure by households 25 Table D1 Private Consumption by Purpose, current prices, N$ million 26 Table D2Private Consumption by Purpose, current prices, percentage shares 26 Table D3Private Consumption by Purpose, constant prices, N$ million 26 E Fixed capital 27 Table E1 Gross fixed capital formation by type of asset, current prices, N$ million 29 Table E2 Gross fixed capital formation by type of asset, constant 1995 prices, N$ million 29 Table E3 Gross fixed capital formation by activity, current prices, N$ million 30 Table E4 Gross fixed capital formation by activity, constant 1995 prices, N$ million 30 Table E5 Gross fixed capital formation by ownership, current prices, N$ million 30 Table E6 Gross fixed capital formation by ownership, constant 1995 prices, N$ million 30 Table E7 Fixed capital stock by activity, current prices, N$ million 31 Table E8 Fixed capital stock by activity, constant 1995 prices, N$ million. 31 F General Government 32 Table F1 Income, expenditure and saving, N$ million 35 Table F2 Final consumption expenditure by components, current prices, N$ million.36 G External transactions 37 Table G1 External transactions 39 Table G2 Exports of goods and services - current prices 40 Table G3 Exports of goods and services - constant prices. 41 Table G4 Imports of goods and services - current prices 29 Table G5 Imports of goods and services - constant prices 43 Table G6 External trade indices 44 Table G7 External trade indices - annual changes 45 Table G8 Foreign Exchange Rates. 45 List of terms and definitions

5 Introduction Overview The national accounts in Namibia are compiled in line with the latest international standards, the System of National Accounts, 1993 (the 1993 SNA). These standards have been issued by the United Nations, in cooperation with other international organizations, for example the International Monetary Fund and the World Bank. The national accounts tables in this publication are organized in seven sections: A. Main aggregates E. Fixed capital B. GDP by activity F. General government C. Expenditure on GDP G. External transactions D. Private consumption Each section starts with one or two pages of comments supported by charts. The objective of the comments is two fold: 1) explain the variables in the tables; and 2) highlight certain features of developments in Namibia s economy. At the end of the publication, there is a list of terms and definitions. National Accounts Manual The National Accounts Manual comprises three volumes: Volume I provides an overview of the 1993 SNA, mainly concepts and definitions pertaining to most important areas of the national accounts. Volume II describes the scope of Namibia s national accounts, and the sources and methods used in compiling them. It also contains a section on concepts and definitions applied in Namibia. Volume III is a documentation of the comprehensive computerized system, used in the compilation of Namibia s national accounts; this is referred to as System of National Accounts on a PC (SNAPC). The Manual is available upon request. 3

6 Revisions of national accounts This is always necessary because certain data sources become available only more than a year after the end of the reference year. Beside, it could be considered to revise the back years for certain variables more frequently, e.g. to include major new evidence or to correct pure errors in the estimates. The occurrence of the latter can unfortunately not be excluded. In summary there are three kinds of revisions of annual estimates: a) More or less major revisions of time series backwards at regular intervals. This should be done every five years to coincide with the change of base year. The Central Bureau of Statistics is in the process of rebasing, thus moving from the current base year of 1995 to the new base year of b) Revision of the two latest years once or twice a year. c) Occasional revisions of estimates of certain variables for more than the latest two years. The aim should be to avoid this kind of revisions, but it cannot be excluded. Revisions have been made to the national accounts data for the years 2005 and 2006 as originally published in March The annual changes are shown in the table below at major component level. As published in: March 2007 October Primary Industries Secondary Industries Tertiary Industries GDP at market prices

7 Table A1 A. Main Aggregates This table shows three main national accounting aggregates and the relationship between them: Gross domestic product (GDP) - at factor cost - at market prices Gross national income (GNI) Gross national disposable income (GNDI) GDP is a production concept. It measures total value and volume of production of goods and services (see Sections B and C). GDP can also be decomposed into income earned on factors of production, employed by resident producers; this is referred to as GDP by cost component. The percentage shares of the components have been fairly stable since 1996, varying within a range of percentage points. See Figure A1. 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Comp. of employees Net op. surplus Cons. of fixed capital Taxes less subsidies Figure A1. Elements of GDP by cost component, Contrary to GDP, GNI and GNDI are income concepts, designed to measure various aspects of total incomes receivable by residents. GNI is total income received by residents irrespective of the location of the activity from which the income is derived. GNDI measures residents disposable income, after transfers and taxes. The relationship between these aggregates is clear from Table A1. 5

8 The table also shows the volume of production, GDP at constant prices, and purchasing power of total income earned, real GNI. However, the relationship between these two variables is not made explicit in the table. It is as follows: + Gross domestic product at constant prices +/ Trading gains or losses, resulting from changes in the terms of trade = Real gross domestic income (GDI) + Real primary incomes receivable from abroad Real primary incomes payable abroad = Real gross national income Real GDI measures the purchasing power of income generated by domestic production. This is equivalent to GDP at constant prices, adjusted for changes in the terms of trade; the latter measures the relative change in export prices relative to import prices. For a given level of production, an increase in export prices relative to import prices enhances domestic residents purchasing power. Primary incomes are referred to as income in the balance of payments manual, fifth edition. Income receivable measures revenue due to residents because of: 1) revenue due to ownership of capital located abroad; and 2) wages earned abroad. Income payable is revenue accrued to non-residents because of: 1) revenue due to ownership of capital located domestically; and 2) labor performed in the reporting economy. The deflators for the variables above differ from each other. For example, real primary incomes receivable from and payable to foreign countries are deflated by price indices expressing their purchasing power, the implicit price index for domestic expenditure, whereas GDP at constant prices is deflated by prices of commodities produced. Thus, the difference between, say, GDP at constant and current prices is in most cases different from that between an income aggregate expressed in current and real terms. Table A1 also contains GDP and GNI per capita at current and constant prices. GDP per capita at constant prices and real GNI per capita have recorded a growth of 2.2 and 7.3 per cent in 2006 respectively. 6

9 Table A2 The table shows, in the upper part, the use of national disposable income as final consumption expenditure and saving. In the lower part, the table displays the capital formation and changes in net worth of the nation. The latter variable includes only changes in net worth due to saving and capital transfers. For each item, general government is displayed separately. The net lending / borrowing of the nation in reality a net lending for all the years from 1996 is the same as the surplus/ deficit of the balance of payments. As evident from the table, Namibia is a net exporter of capital. That means, there has been a surplus in the current and capital accounts of the balance of payments, which is reflected in positive net lending to foreign countries. This savings gap is depicted in Figure A GDP per capita GNI per capita Figure A3. Savings and net capital formation, Table A3 The most common measure of inflation is the annual percentage increase in the consumer price index (CPI). It can be measured either: 1) as the change between the same month in two consecutive calendar years; or 2) as the annual change in the average consumer price index (CPI). The latter measure is provided in Table A3. The table also includes the yearly change of the GDP-deflator, sometimes used as an alternative measurement of inflation. As evident from the table, there is a considerable difference between the two measures, at least for some years. This is very frequently the case in open economies, like Namibia, where price movements in produced commodities can differ substantially from the development of prices in the consumption basket. This is particularly true for a country where the contribution of raw materials in GDP is considerable, because these commodities are always negligible in the CPI. The difference in the developments of the CPI and GDP deflator in Table A3 and Figure A4 is therefore not surprising, in view of the fact that in Namibia production in the primary sector on average accounts for 20.6 percent of GDP. 7

10 14% 12% 10% 8% 6% 4% 2% 0% % CPI GDP deflator Figure A4. Growth rates, CPI and deflator, Since 1996, the annual increase of the CPI has varied between 2.3 and 11.4 percent. The variation in the annual increase of the GDP-deflator has been slightly larger, ranging between -0.6 and 14.5 percent. The annual percentage change of Consumer Price Index stood at 5.1 percent in 2006 as compared to 2.3 percent in

11 Table A1 Gross Domestic Product and Gross National Income 9

12 Table A2 National Disposable Income and Saving Table A3 Inflation 10

13 B. GDP by activity There are three approaches i.e. production, income and expenditure approach, of calculating GDP estimates of any country. The two former approaches are briefly described in this section, while the latter (expenditure approach) is treated in Section C. In Namibia, as in many other countries, GDP estimated by the production approach is considered the most reliable. GDP is derived as follows: + The sum of the value added of all industries (activities) at basic prices + Taxes minus subsidies on products = GDP at market prices The definition of value added is as follows: + Output at basic prices Intermediate consumption (input of goods and services) at purchases prices = Value added at basic prices Output is valued at basic prices, which is the sales value of output before taxes on products have been levied, but including other taxes on production. Taxes on products include sales taxes, import duties, export taxes on diamonds and fuel levy, while other taxes on production include taxes on assets used in production, like real estate taxes and motor vehicle levies, and business and professional licenses. Output being valued at basic prices implies that value added is at basic prices, even though intermediate consumption is valued at purchasers prices, which is the amount paid by the purchaser, including trade margins and taxes on products. The components of value added at basic prices are: + Taxes on production, other than taxes on products - Subsidies on production + Compensation of employees + Operating surplus/mixed income, gross = Value added at basic prices Compensation of employees includes wages and salaries in cash and in kind as well as employers contributions to social security schemes. The term mixed income implies that the surplus includes an element of remuneration for the labor of the owners of unincorporated enterprises. According to the income approach of calculating GDP, the components above are measured and aggregated at the level of the total economy. The components of GDP from the income side include only primary incomes resulting from domestic production, for example compensation of all non-resident workers is included if they are employed at resident production units, whereas that of residents working at enterprises situated abroad or at non-resident units located within the domestic territory - such as foreign embassies is excluded. 11

14 The classification of activities used in the tables, is the International Standard of Industrial Classification (ISIC), rev 3. However, producers of government services and other producers are not ISIC-categories. These two items comprise non-market production by government and non-profit institutions serving households. See Section F. Banks and other financial intermediaries provide services for which they do not charge explicitly. In this situation, national accounts must use an indirect measure of the value of these services. This is referred to as Financial services indirectly measured (FISIM). They are measured as total interest receivable by financial intermediaries minus their total interest payable. Part of them are allocated as household expenditure and included in household consumption. The rest is used by producers as intermediate consumption, but it has not been possible to allocate this item to industries. Instead it is deducted as an unallocated item at the bottom of the tables. Tables B1 through B4 arrange the industries in three main groups: primary, secondary and tertiary industries. Tables B1 and B2 Tables B1 and B2 show value added by industry at current prices, in N$ millions and as percentages of GDP. Note that taxes less subsidies on products contribute on average 10.0 per cent to GDP. Figure B1 below illustrates the percentage contribution to GDP by the primary, secondary and tertiary industries during the periods. The contributions of the primary industry fluctuated between 18.9 to 23.9 percent. The contribution of secondary industry has varied from 14.0 to 18.4 percent. Finally, the contribution of tertiary industry varied from 51.6 to 56.6 percent. 60% 50% 40% 30% 20% 10% 0% Tertiary Primary Secondary Taxes, etc. Figure B1. Composition of GDP,

15 Tables B3 and B4 Table B3 presents value added by industry at constant 1995 prices in N$ millions. The variables that define value added, output and intermediate consumption, can both be factored into price and volume components. Measurements at constant prices keep the price component constant and, hence, gauge changes in volume. Table B4 shows the annual percentage volume changes by industry. Figure B2 disaggregates annual growth of the three main groups of industries: primary; secondary; and tertiary against the background of the growth in GDP GDP Primary Secondary Tertiary Figure B2. Growth of main groups of industries, 1995=100 Sectoral Development In 2006 the GDP at market prices grew by 4.1 per cent as compared with a rise of 4.8 per cent in The growth recorded in 2006 is mainly attributed to the primary industry which grew by 7.9 percent. Agriculture and Forestry The real value added by the agriculture and forestry sector increased by 4.0 per cent in 2006 compared to 10.9 per cent in Despite the overall slow growth of the sector, there is an increase in the value added of 9.8 per cent in the subsistence farming. The slow growth in the commercial farming of 1.0 per cent in 2006, compared to an increase of 8.5 per cent in 2005 is attributed to a decline in livestock marketed. This sector is sensitive to climatic conditions, which explains the high degree of volatility in this sector. 13

16 Fishing The real value added by fish and fish processing on board sector has declined by 4.8 per cent in 2006 as compared to a decline of 3.4 per cent recorded in This decline is mainly attributed to a decrease in Total Allowable Catch (TAC) especially in the hake and horse mackerel species and lack of stock in pelagic fisheries. The resource management measure imposed by closing hake fishing for one month during the fourth quarter of 2006 has contributed to the low catches recorded in Mining and Quarrying The real value added by the mining and quarrying sector increased by 15.4 percent in 2006 compared to a decline of 1.4 per cent in This growth in the sector can be attributed to the diamond mining sub-sector, which recorded an increase of 25.2 per cent in 2006 compared to a decline of 3.4 per cent in On the other hand, other mining and quarrying declined by 11.2 per cent in 2006, compared to an increase of 4.5 per cent in Manufacturing The real value added by the manufacturing sector declined by 8.3 percent in 2006 compared to an increase of 2.1 per cent in The decline is due to meat processing, fish processing on shore and other manufacturing recording a decline of 11.2, 38.0 and 15.2 percent respectively. The decline in meat processing is due to a drop recorded in the number of livestock marketed in The decline in fish processing on shore is mainly due to lack of stock in pelagic fisheries. The decline in other manufacturing was mainly due to high input costs in the manufacturing of basic metals noted in Electricity and Water The real value added by the electricity and water sector declined by 4.9 per cent in 2006 compared to an increase of 12.9 per cent in The decline was mainly attributed to the electricity sub sector. Construction The real value added by the construction sector increased by 32.5 per cent in 2006 compared to 4.4 per cent in This was mainly due to activities related to construction works recorded in the mining and quarrying, transport and communication, electricity and water and government industries. Transport and Communication The sector continued to show growth, recording a growth of 10.9 per cent in 2006 compared to a growth of 16.5 per cent recorded in the previous year. Both the transport and storage sub- sector and post and telecommunication sub-sector have performed relatively well registering 11.7 per cent and 10.3 per cent in 2006 as compared to 5.7 per cent and 28.4 per cent recorded in 2005 respectively. Hotel and Restaurant The real value by the hotel and restaurant sector grew by 3.0 per cent in 2006 as compared to an increase of 0.3 per cent recorded in This was mainly due to increases in activities related to accommodation establishments. 14

17 Wholesale and Retail trade, and Repairs The wholesale and retail trade and repairs sector has registered growth of 10.5 percent during 2006 as compared to a growth of 6.4 percent in This was mainly due to the increase in activities recorded in retail trade sub sector. Government services The real value of producer of government services has declined by 1.1 percent in 2006 as compared to an increase of 4.4 percent reported in This decline is brought about by the decrease of the number of positions filled within the public service. Other service sectors Financial intermediation services recorded a growth rate of 2.6 percent during 2006 compared to 18.9 percent in the previous year. The slow growth is attributed to a decline recorded in insurance sub sector and a slow growth recorded in monetary intermediation sub sector. Community, social and personal services, recorded a growth of 3.1 percent, in 2006 compared to 3.7 percent in the previous year. Real estate and business services recorded 4.4 percent growth rate in 2006 compared to 2.6 percent recorded in

18 Table B1Gross Domestic Product by Activity Current Prices - N$ Million 16

19 Table B2 Gross Domestic Product by Activity, Percentage Contributions Current Prices 17

20 Table B3 Gross Domestic Product by Activity Constant 1995 Prices - N$ Million 18

21 Table B4 Gross Domestic Product by Activity, Annual Changes Constant 1995 Prices - Percentage 19

22 C. Expenditure on the GDP The third approach to compute GDP is by the expenditure approach, as the sum of the final uses of goods and services, measured at purchasers prices, minus imports of goods and services. The expenditure on GDP includes the following components: + Final consumption expenditure by households by non-profit institutions serving households by general government + Gross fixed capital formation + Changes in inventories = Gross domestic expenditure + Exports of goods and services Imports of goods and services = GDP at market prices Final consumption expenditure by households includes all expenditure, in cash and in kind, by households on goods and services for the purpose of consumption, minus sales of any existing such goods. Section D deals in more detail with household consumption. Final consumption expenditure by non-profit institutions serving households (NPISH). The output of such institutions, defined as the total cost of producing it, is by definition consumed by the NPISH themselves. See Section D for further detail. These two categories above are shown together in Tables C1 through C4 as private consumption. Final consumption expenditure by general government is defined in the same way as for NPISH. More detail is provided in Section F. Gross fixed capital formation includes all expenditure by producers for acquisitions less disposals of produced fixed assets to be used in the production process. It includes tangible assets like vehicles, machinery, equipment, buildings and other construction works. Also some intangible assets are included, for example mineral exploration. See Section E for further detail. Changes in inventories are by definition equal to the total value of all goods that enter the inventories of producers minus all goods that are withdrawn from them. Producers keep inventories of the goods they produce either as finished products or work-in-progress, of materials and supplies for use as intermediate consumption, and of goods purchased for resale. Exports and imports of goods and services consist of sales, barter, grants or gifts of goods and services from/to residents and to/from non-residents. See Section G for more details. 20

23 The expenditure approach should in theory result in exactly the same figure for GDP as the production approach. However, in practice this is not the case in Namibia s national accounts. The reason is imperfections and gaps in the data sources. The production approach is considered the more reliable method and determines GDP both at current and constant prices. As is the case in many other countries, the CBS has chosen to make the discrepancy visible and not try to eliminate it completely. Part of the discrepancy is due to the fact that the estimates of changes in inventories are incomplete; estimates are made only for livestock and ores and minerals. Tables C1 and C2 Tables C1 and C2 show expenditure on GDP at current prices, in N$ millions and as percentage shares to GDP, respectively. Although there is some variation from year to year, the relative importance of the expenditure items has been fairly stable for the period 1996 to Private consumption has varied between 49.4 and 60.7 per cent while government consumption has been varied between 22.5 and 30.3 per cent of GDP. Gross fixed capital formation has fluctuated between 18.8 and 29.2 per cent of GDP. Figure C1 illustrates the percentage share of GDP of the domestic expenditure items except changes in inventories. 70% 60% 50% 40% 30% 20% 10% 0% Private consumption Government consumption Gross fixed capital formation Figure C1. Percentage shares of GDP, The shares of Imports to GDP have fluctuated between 51.0 and 58.6 per cent. Exports have varied between 45.0 and 52.2 per cent. This is shown in figure C2. 21

24 60% 50% 40% 30% 20% 10% 0% Imports Exports Figure C2. Imports and Exports Percentage shares of GDP, Tables C3 and C4 Table C3 shows expenditure on GDP at constant 1995 prices in N$ millions. The expenditure items are flows of goods and services that can be factored into a price and volume component. Measurements at constant prices keep the price component constant and, hence, gauge the changes in volume. Table C4 shows the annual percentage volume changes of the expenditure on GDP. It is not meaningful to show percentage changes from year to year for changes in inventories. This item varies widely and can be both positive and negative. The same is true for the discrepancy. The percentages shown in table C4 for these two items are calculated as the absolute change (in N$ million) as a percentage of GDP the previous year. 22

25 Figure C3 illustrates the growth rates for the expenditure items at constant prices. They have been fairly low and stable for government consumption, varying between 0.0 and 4.5 per cent and on average 2.2 per cent for the years 1996 to Private consumption has shown uneven rate with an annual average of 4.0 per cent. Gross fixed capital formation, has shown a strong growth with a substantial annual average of 8.6 per cent. Exports of goods and services have shown annual average of 3.9 per cent. Imports of goods and services have almost increased all years with a high annual average of 5.2 percent for the years 1996 to A large proportion of both private consumption and gross fixed capital formation consists of imported goods. 30% 25% 20% 15% 10% 5% 0% -5% -10% -15% -20% Gross fixed capital formation Private consumption Government consumption Exports Imports Figure C3. Expenditure on GDP, annual changes per cent 23

26 Table C1 Expenditure on the Gross Domestic Product Current Prices - N$ Million Table C2 Expenditure on the Gross Domestic Product, Percentage Shares Current Prices - Per cent 24

27 Table C3 Expenditure on the Gross Domestic Product Constant 1995 Prices - N$ Million Table C4 Expenditure on the Gross Domestic Product, Annual Changes Constant 1995 Prices - Percent 25

28 D. Private Consumption Private consumption as recorded in tables C1 through C4 comprises two components: final consumption expenditure by households and final consumption expenditure by non-profit institutions serving households (NPISH). Tables D1 and D3 show these two categories as well as a disaggregating of household consumption by purpose. The Classification of Individual Consumption by Purpose (COICOP) is the international standard for classification of household consumption. The Namibian national accounts now include an independent estimate of household consumption. It has not been possible, however, to estimate all the details needed for a classification by COICOP. Only three major categories are presented in table D2: food, beverages and tobacco; clothing and footwear; and housing, water, electricity and fuels. All the other categories of COICOP are lumped together under two categories: other goods; and other services. The sum of the purpose categories is equal to household consumption on the domestic market. Two adjustments are needed to arrive at total final consumption expenditure by households. Direct purchases abroad by households include expenditure by resident households during travels in foreign countries and private expenditure by Namibians working in Namibian embassies abroad. Direct purchases on the domestic market by non-residents include expenditure by non-residents in Namibia: private tourists; business and official visitors; and non-namibians working in foreign embassies in Namibia. The first item must be added to and the second item deducted from household consumption on the domestic market. Both items are adopted from the balance of payments, and it is not possible to break them down into consumption purposes (food, etc.). Table D2 displays the consumption by purposes as percentage shares of household consumption on the domestic market. Consumption of food, beverages and tobacco has increased from 42.7 per cent in 2005 to 44.0 per cent in On the other hand, consumption of housing, water, electricity and fuel has decreased from 15.4 to 15.1 per cent during the same period. The percentage shares of the other three categories have remained stable. Figure D1 illustrates the components of household consumption for Other services 16% Food, beverages and tobacco 45% Other goods 20% Housing, water, electricity and fuels 15% Clothing and footwear 4% Figure D1. Composition of GDP

29 Table D1 Private Consumption by Purpose and Category Current Prices - N$ Million Table D2 Household Consumption by Purpose, Percentage Shares Current Prices Percent Table D3 Private Consumption by Purpose and Category Constant 1995 Prices - N$ Million 27

30 E. Fixed Capital Tables E1 and E2 The estimates of gross fixed capital formation by activity is slightly more aggregated compared to the details of industries in the tables showing GDP by activity (see Section B). The term fixed capital stock refers to the current value of all fixed assets, written down by the accumulated consumption of fixed capital on these assets. Consumption of fixed capital is a cost of production, defined as the decline in the current value of the fixed capital stock during the course of the accounting period. This decline in value is the result of physical deterioration, normal obsolescence or ordinary accidental damage. It is a theoretically calculated value that may differ considerably from depreciation as recorded in business accounting. The value of fixed capital stock and consumption of fixed capital should reflect the cost of resources at the time the production takes place. This value may be very different from the historic costs, i.e. the prices paid for the fixed assets at the time of acquisition. The national accounts of Namibia contain estimates of gross fixed capital formation by industry crossclassified by type of asset. The estimates are also classified by ownership of public and private sectors. The two variables, fixed capital stock and consumption of fixed capital, are calculated by type of asset and industry on the basis of the time series for gross fixed capital formation and assumptions of the life span of the fixed assets. A definition of gross fixed capital formation is provided in Section C. 28

31 Tables E3 and E4 Gross fixed capital formation by type of asset is recorded by five categories: buildings; other construction works; vehicles and transport equipment; machinery and other equipment; and mineral exploration. The first four categories are tangible assets while mineral exploration is intangible. According to the 1993 SNA, the acquisition of computer software should also be recorded as gross fixed capital formation. However, it has not been possible to estimate this item in Namibia s national accounts. In 2006, gross fixed capital formation (investment) registered 26.0 per cent of GDP and 24.5 per cent of GDP in Tables E5 and E6 These tables show gross fixed capital formation by ownership, namely the public and private sector. The public sector comprises, firstly, producers of government services, i.e. all government activities producing services which by definition are recorded as government consumption (see Section F). Secondly, public corporations and enterprises include the state owned enterprises and the self-supporting activities by the municipalities, i.e. distribution of electricity and water, and sewerage and refuse disposal. Gross fixed capital formation by the public sector has recorded 23.9 per cent of the total, while the private sector recorded 76.1 percent of the total in See figure E1. 100% 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Public Private Figure E1. Gross fixed capital formation - Public and Private sectors shares Tables E7 and E8 Fixed capital stock is calculated by industry with the same level of detail as in Tables E3 and E4. In order to derive stock figures, consumption of fixed capital has been calculated by industry. However, they do not appear in this publication; only total consumption of fixed capital is shown (see Table A1). 29

32 Table E1 Gross Fixed Capital Formation by Activity Current Prices - N$ Million Table E2 Gross Fixed Capital Formation by Activity Constant 1995 Prices - N$ Million 30

33 Table E3 Gross Fixed Capital Formation by Type of Asset Current Prices - N$ Million Table E4 Gross Fixed Capital Formation by Type of Asset Constant 1995 Prices - N$ Million Table E5 Gross Fixed Capital Formation by Ownership Current Prices - N$ Million Table E6 Gross Fixed Capital Formation by Ownership Constant 1995 Prices - N$ Million 31

34 Table E7 Fixed Capital Stock by Activity Current Prices - N$ Million Table E8 Fixed Capital Stock by Activity Constant 1995 Prices - N$ Million 32

35 F. General Government General government in Namibia comprises two levels: Central government includes all ministries and departments under the State Revenue Fund. Other institutions, e.g. the University of Namibia, are also included, as well as some activities directly funded by foreign donors. Local government includes municipalities and other local authorities Tables F1 and F2 These tables show details on income, expenditure, saving and capital formation for general government and central government respectively. The major source of income for government is taxes on income and wealth, and taxes on production and imports. (See Section B for the definition of taxes on products.) Together these two items account for more than 55 per cent of total income. The income from the Customs Union is not classified as a tax in the national accounts framework although it is considered as such in the budget of central government. The relative importance of that item has increased significantly, recording 34.9 per cent in 2006 as compared to 26.7 per cent in Figure F1 shows the percentage shares for the main income components. 75% 60% 45% 30% 15% 0% Taxes SACU Other Figure F1. Government income by main components The net borrowing of central government is approximately the same as the budget deficit although there are some differences. The item discrepancy at the bottom of the table is due to differences with the balance of payments. The latter records current and capital grants from abroad, routed via the State Revenue Fund, which are higher than what is recorded in the government accounts. 33

36 Final consumption expenditure by general government Government services are available free of charge or at prices that are not economically significant. Examples of the latter are hospital fees, passport fees, and entrance fees. Thus, there are no market prices on government services. Instead, its output is defined as the sum of the costs of production. By definition, this output minus any fees charged by government is recorded as final consumption expenditure by government itself. In summary, the relationships are as follows: + Intermediate consumption + Compensation of employees + Consumption of fixed capital = Output Sales and fees = Final consumption expenditure The value added created in the production of government services is defined as the sum of compensation of employees and consumption of fixed capital. The relative size of government There are several conceivable measurements of the relative size of government in economic terms as shown below: The percentage contribution by producers of government services to GDP. This is equal to government value added as a per cent of the total value added of all industries. See Table B2 above. Final consumption expenditure and gross fixed capital formation by government as per cent of GDP. This measure indicates the share of the domestic resources that are used by government for tax -financed consumption and capital formation. Both these measures are illustrated in figure F2. They have shown a stable trend during the years % 35% 30% 25% 20% 15% 10% 5% 0% Consumption and capital formation Value added Figure F2. Government as percent of GDP,

37 Table F1 General Government: Income, Expenditure, Saving and Capital Formation Current Prices - N$ Million 35

38 Table F2 Central Government: Income, Expenditure, Saving and Capital Formation Current Prices - N$ Million 36

39 G. External Transactions Table G1 The source of this table is the balance of payments, compiled by the Bank of Namibia. The two compilation methodologies, as expounded in the 1993 SNA and the Balance of Payments Manual, fifth edition, are completely harmonized. The surplus/ deficit in the current account of the balance of payments Manual are by definition the same as lending/borrowing in the SNA. However, the classification and presentation of transactions are somewhat different in the national accounts. For most years since 1996, Namibia has had a surplus in its external current account, implying it has been exporting more capital and financial resources abroad than it has imported. The main forms for capital and financial resources are capital transfers, loans, deposits and investments. The surplus was about 13.6 per cent of GDP for There are three main components of the balance on the current account: Balance of goods and services. For all years this has been in deficit, implying that imports of goods and services has exceeded exports. Balance of primary incomes. Primary incomes include compensation of employees and property income, for example interest and dividends. This balance has been in surplus except for 1999, 2001, 2005 and Balance of current transfers. This item includes all unrequited current transactions between residents and non-residents. On the credit side, foreign aid to Namibia figures prominently. This balance has shown a substantial surplus for all years since Tables G2 and G3 The sources of export data are varied. Data on the main export products of Namibia (see below) are available from the Meat Board, the Ministry of Fisheries and the Ministry of Mines and Energy. Exports of goods are valued free on board (f.o.b.), which is the value at the border of the exporting country: Namibia. The classification by products in the tables is made in accordance with ISIC, i.e. the products are classified as originating in the industries that normally produce them. Direct purchases by non-residents in Namibia are included in exports of services in the tables although it comprises all direct purchases, of goods as well as services. Namibia s exports of goods are dominated by a few product groups originating from the primary industries. Figure G1 shows the three major export product groups, aggregated somewhat differently compared to Table G3, as per cent of exports of goods: Live animals, meat, etc. comprises exports of animals as well as manufactured products; Fish and fish products include both unprocessed fish and fish that have been processed either on the vessels or on shore; and Ores and minerals and copper from the copper smelter. Together, these three groups have made up 87.0 per cent of exports of goods in

40 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% Live animals and animal products Fish and other fishing products Ores and minerals, copper, zinc Figure G1. Major export products, percentage of total exports of goods and services The relative importance of ores, copper and other minerals has increased from 43 percent in 2005 to 50 per cent in 2006 of total exports of goods and services. Exports of fish and fish products recorded a 20 per cent in 2005 and a 16 percent in The percentage change of life animals, meat and other animal products has reflected a percentage share of 2.0 per cent in Tables G4 and G5 The source for the estimate of imports of goods is customs data processed by the Central Bureau of Statistics. As for exports, the classification by products in the tables is made in accordance with ISIC. Direct purchases by Namibian residents abroad are included in imports of services although it comprises all direct purchases of goods as well as services in foreign countries by residents of Namibia in a similar way as for exports. Tables G6 and G7 These tables trace price movements in the export and import sectors, as well as the development in terms of trade, i.e. the relative price of exported vis-à-vis imported commodities. It turns out that prices of exports have increased more rapidly than those of imports, i.e. the evolution of the terms of trade has been favorable to Namibia. This has positively affected its real gross domestic income as well as its real gross national income. (See Section A). 38

41 Table G1 External Transactions Current Prices - N$ Million 39

42 Table G2 Exports of Goods and Services Current Prices - N$ Million 40

43 Table G3 Exports of Goods and Services Constant 1995 Prices - N$ Million 41

44 Table G4 Imports of Goods and Services Current Prices - N$ Million 43

45 Table G5 Imports of Goods and Services Constant 1995 Prices - N$ Million 44

46 Table G6 External Trade Indices, 1995 = 100 Table G7 External Trade Indices, Annual Percentage Change Table G8 Foreign Exchange Rates N$ per Foreign currency 45

47 List of Terms and Definition Gross domestic product (GDP): The measure of the total value added (total value of the goods and services produced within the country less raw materials, and other goods and services consumed during the production process) in all resident producing units. Gross national income (GNI): A measure of the income earned, whether domestically or abroad, by the factors of production owned by residents. Gross fixed capital formation (GFCF): The total value of a producer s acquisitions, less disposals, of fixed assets during the accounting period plus certain additions to the value of non - produced assets realized by the productive activity of institutional units. Consumption of fixed capital: Represents the reduction in the value of the fixed assets used in production during the accounting period resulting from physical deterioration, normal obsolescence or normal accidental damage. Primary incomes: Incomes that accrue to institutional units as a consequence of their involvement in processes of production or ownership of assets that may be needed for purposes of production. Subsidies: They are current unrequited payments that government units, including non-resident government units, make to enterprises on the basis of the levels of their production activities or the quantities or values of the goods or services, which they produce, sell or import. Exports of goods are valued FOB (free on board): This is the value in the market at the frontier of the country, including the costs of transport and export duties. Financial Services indirectly measured (FISIM): The total property income received by financial intermediaries minus their total interest payable, excluding the value of any property income receivable from the investment of their own funds. Gross national disposable income (GNDI): Measures the income available to the nation for final consumption and gross saving. Household consumption: The expenses which households make on goods, durable as well as nondurable, and services. Imports of goods CIF (cost, insurance, freight): this is the value in the market at the frontier of the country, including all charges for transport and insurance from the country of export, but excluding customs duties. Compensation of employees: Consist of all payments in cash and in kind, by producers to employees. (International Standard Industrial Classification of all Economic Activities): A classification standard that is used to classify various activities. SACU (Southern African Customs Union): A union with Botswana, Lesotho, Namibia, South Africa and Swaziland as member countries. 46