Managing climate-induced inflation requires a fine balancing act, especially when coupled with high unemployment and weak economic conditions, Bank of Namibia Governor Johannes !Gawaxab has said.

Speaking at the launch of Namibia’s first broad-based sustainability framework for the financial system in Windhoek on Thursday, !Gawaxab said the climate crisis affects food security and agricultural productivity and causes severe damage to homes and critical infrastructure.

“These disruptions are reminders that sustainability is no longer a choice but a necessity,” the governor said.

He further noted that in Namibia, droughts have driven up food prices, exacerbating inflationary pressures and further affecting the poor and vulnerable members of society.

!Gawaxab stated that climate change has far-reaching implications, not just for the environment but also for economic stability, noting that it is affecting the monetary policy decisions of central banks, influencing the financial stability of the banking and non-banking financial sectors, and threatening economic performance.

According to the governor, in 2023 alone, global damage from natural catastrophes surged to a staggering US$280 billion, a figure that has more than doubled over the past two decades.

“As we face the dual pressures of environmental degradation and associated economic instability, it is imperative that we, as custodians of the financial system, integrate sustainability at every level. It is only through a concerted effort that we can mitigate the economic risks posed by climate change while simultaneously seizing the opportunities for sustainable growth,” said !Gawaxab.

The BoN governor further said global inequality remains challenging. According to a recent report by Oxfam, since 2020, the world’s five richest men have more than doubled their wealth from US$405 billion to US$869 billion at an astonishing rate of US$14 million per hour, while the poorer half of the global population owns just 2 percent of the world’s wealth.

!Gawaxab said if such trends persist, the world will have its first trillionaire within a decade, while poverty will not be eradicated for another 229 years.

“This is clearly unsustainable. Although Namibia has made considerable progress, we still face deep inequalities as a nation, and to navigate these megatrends, we cannot fold our hands and wait for external help. We need to take bold steps to reshape and reimagine the financial system and indeed the broader economy, working to align it to our national goals of sustainability and build the necessary resilience in the face of such threats,” he urged.