The case for BoN to adopt a dual mandate of inflation and growth

July 19, 2023

Traditionally, central banks focus primarily on maintaining price stability and controlling inflation. However, in the pursuit of long-term economic prosperity, there is a growing consensus that central banks should perhaps adopt a dual mandate, which includes fostering economic growth alongside price stability.

This article aims to outline the advantages of Bank of Namibia (BON) embracing a dual mandate approach, considering its unique socio-economic context and development aspirations.

The Significance of Price Stability

Maintaining price stability is an essential aspect of economic management that cannot be overlooked. By ensuring purchasing power remains intact through inflation control measures, BON has played a crucial role in fostering predictable economic conditions for Namibians while protecting them from eroding income levels caused by rising prices. 

This commitment to price stability also inspires confidence among investors and facilitates long term planning which ultimately leads towards sustainable growth within the economy as a whole.

The argument for Economic Growth

Inflation and economic growth are two critical macroeconomic variables that have a significant impact on the lives of ordinary Namibians. Inflation can erode savings while growth can create jobs and improve living standards. By incorporating both price stability along with fostering growth into its mandate framework; the central bank could proactively contribute towards achieving these developmental objectives.

Enhanced Policy Flexibility

A dual mandate enables BON to adopt a more versatile approach towards policy making. By prioritizing economic growth, they can leverage various tools and measures that stimulate investment, lending, and consumption activities thereby boosting aggregate demand during recessions while also containing inflationary pressures during periods of excessive expansion.

It’s important to note that BON flexibility is somewhat dependent on the Reserve Bank of South Africa's (SARB) direction; however, in recent times BON has demonstrated its ability to be independent with its policy rate decisions. Therefore, discussing this topic at both regional and Common Monetary Area (CMA) levels may be worthwhile.

Addressing Socio-Economic Challenges

Namibia, like many emerging economies, faces unique socio-economic challenges, such as high unemployment rates, income inequality, and poverty. A dual mandate provides the central bank with a clear mandate to address these challenges directly. By aligning its policies with growth objectives, the central bank can actively contribute to reducing unemployment, fostering inclusive economic opportunities, and promoting social cohesion.

Fiscal Policy Synergy

Though the central bank maintains its policy independence, the dual mandate approach adopted by central banks encourages greater coordination between monetary and fiscal policies. Central bank interventions that support growth objectives can complement fiscal policies aimed at infrastructure development, education, healthcare, and social welfare. This synergy not only promotes sustainable growth but also ensures long term stability in my opinion.

International Best Practices

There is a growing body of evidence that suggests that central banks with a dual mandate are more effective at achieving both inflation and growth objectives. For example, a study by the International Monetary Fund (IMF) found that countries with dual mandate central banks have lower levels of inflation and higher rates of economic growth than countries with single mandate central banks.

Countries such as the United States, Australia, and the United Kingdom have long recognized the benefits of incorporating both inflation and growth objectives into their central banks' mandates.


Namibia stands at a critical juncture, with potentially significant oil and gas discoveries, where recalibrating the role of its central bank can significantly impact its economic trajectory. Embracing a dual mandate that combines price stability with a focus on growth would empower the central bank to actively foster an environment conducive to job creation, poverty reduction, and inclusive prosperity.

With prudent policy implementation and strong institutional frameworks, Namibia's central bank can effectively navigate the challenges and opportunities of the future, advancing the nation towards sustainable and robust economic growth.

*Arinze Okafor CFA, CAIA is a qualified investment professional with expertise in macroeconomics, capital markets, fixed income, equity and investment management. He currently serves as the Chief Investment Officer of Mopane Asset Management.

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Last modified on Wednesday, 19 July 2023 21:31

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