By Salomo Hei
The high inequality, rising unemployment and the high levels of poverty remains Nambian economic problem. There is a need for to consider implementing a series of growth initiatives that promote economic transformation, support labour-intensive growth, and create a globally competitive economy to become the building blocks of the Namibian economy. The identified building blocks should be complimented by reforms. The Namibian economy has not changed since the 1980’s (see graph below) and hence the reforms needed.
The building blocks should be geared towards sustainable long-run growth and should be accompanied by detailed reforms to promote growth. The growth-oriented policy narrative must be accompanied by interventions that change how the benefits of growth are distributed and fundamentally transform the systems and patterns of ownership and control that govern the Namibian economy.
Economic transformation must be implemented in a manner that does not compromise the long-term ability of the Namibian economy to compete in global product and labor markets. The emphasis is on economic transformation that speaks to inclusive growth and competitiveness as this offers the most sensible strategy to address the challenges of unemployment, poverty, and inequality.
In a skills-constrained economy like Namibia, the bias towards skills-intensive employment driven by technological advancement has the unintended consequence of raising wage premiums, which further entrenches inequality and contributes to rising unemployment. The beneficiation of the primary and secondary sector can become conduits for labour-intensive growth.
The benefits of stability-oriented and resilient monetary policy frameworks that Namibia enjoys is an advantage to the local economy. Strong fiscal rules can help prevent fiscal slippages, ensure that revenue windfalls during times of strong growth are prudently managed, and contain and manage risks from contingent liabilities.
Revenue and expenditure policies can be adjusted to expand fiscal resources for priority. Apart from effective public finance management, policies that promote good corporate governance can help ensure that debt is used for productive purposes. There is no generally applicable optimal level of debt and it really depend on country characteristics, financial market conditions, the behavior of governments and private agents, and the multiple functions of debt.
Economic transformation ought to assess the structure of the Namibian economy and address ownership patterns that govern the economy. The primary aim of this change in economic relations must be the creation of opportunities for all Namibians to live productive, prosperous, and dignified lives. There are a range of factors that hinder greater participation by the majority in the economy, such as the regulations and policies that are ineffective in assisting SMEs; competition legislation; and access to finance challenges. There is a sense that more can be done for transformation through public procurement.
The intention is to leverage public procurement to support transformation and industrialization. The government’s status as a big buyer of goods and services through public procurement should leverage the buying power to provide critical demand-side support to industry. This approach is effective if it is informed by evidence in selecting the products and industries that will meaningfully be assisted by this type of support. Given Namibia’s history of skewed economic structure and ownership, it is critical for Government to address the unequal distribution of income and assets. Transformation in Namibia is currently a contestable issue as actors reposition and align themselves with institutions/views that would support or enhance their interests. Transformation can take different forms, ownership is one of other criterion upon which policy intervention can rely on as agent of change.
The others that can be considered include management representation, employment equity, skills development, preferential procurement, enterprise development and corporate social investment. There is data to indicate that for Namibia to be able to achieve high levels of economic growth with sustainable jobs and development there is a need for deliberate intervention by the Government towards the facilitation of transformation in economic activities.
Transformation must form part of a development strategy in response to the observation that unregulated market forces reinforced the existing inequalities. It is against this background that Competition Authorities should operate in a responsive manner to lead the growth and development process. The need for the Government to reshape and direct the course of economic development to suit local conditions is of critical importance. The policy vacuum in the discovery of oil can come to naught.
The United Nations’ Sustainable Development Goals for 2030 focus two pillars on young people. One is to substantially reduce youth unemployment and the second is to ensure that young people who are out of school have productive and meaningful employment options. The policy proposals that can help young people do not require a trade-off between youth and the elders. They benefit everyone and help grow a country’s economy in a strong, sustainable way. If we make the right choices now, the potential benefits could have long lasting solutions.
There is a need to drive youth employment interventions, including training opportunities that remove barriers to entering the labour market and apprenticeships based on close cooperation between technical, vocational, and other training institutions and the private sector to ensure that training needs are demand-driven. Investing in the capabilities and educational and health outcomes of young people is unlikely to yield a dividend unless the youth are absorbed by labour markets or are supported in business through an enabling ecosystem.
To the extent that the fiscal position allows, consideration to employment tax incentives and learnerships can support job creation and ensure that firms are not biased towards capital in their investments in productive capacity. This includes new programmes that facilitate schoolto-work transition through training and internship initiatives in collaboration with the private sector.
Salomo Hei is an Economist and the Managing Director of High Economic Intelligence in Namibia