While making financial services available to rural people and leveraging digital solutions is critical for rural economic transformation, about 27% of our rural population has no access to financial services.
This was said by minister of urban and rural development, Erastus Uutoni who was speaking at Bank of Namibia’s 24th annual symposium on the transformation of the rural economy in Namibia.
Uutoni went on to say that financial inclusion is, therefore, essential to transforming the rural economy by providing financial products for poor households and rural entrepreneurs.
“Therefore, I am encouraging financial institutions to continue exploring more ways of enhancing financial inclusion in rural areas. Existing microfinance institutions only cater for a particular segment of the population, particularly salaried individuals; as I have mentioned earlier, there is a need for more services to cater for the excluded segment of the population, mainly people with meagre incomes and small-scale entrepreneurs,” he said.
Uutoni also emphasised that the rural development is a multi-faceted matter. As such, the transformation of the rural economy requires a comprehensive political, socioeconomic and cultural process to sustainably diversify the livelihood activities of rural communities while ensuring social equity.
“There is a need to reduce heavy reliance on agriculture and increase rural income from other economic streams. Namibia’s rural economy is mainly characterised by agriculture. However, the agricultural sector faces growing domestic competition from the urban areas for labour, land and water. Market access, financing, land ownership and lack of agro-inputs are distinctive challenges amongst rural entrepreneurs.
“The agricultural sector is, therefore, constrained and underperforming, with only a 5% contribution to the GDP. However, it remains a crucial sector to promote economic growth, food security and poverty alleviation,” he said.
It is also important to note that the share of the Namibian population residing in rural areas has dropped from 72% during the first decades of independence (in 1990) to 51% at the present, bringing challenges to rural and urban areas, he also said.
“Our rural population mainly comprises young and older people and women, while the productive, male working-age population has migrated to urban areas. Furthermore, the urban population, on average, has better access to electricity, schools, clinics and mobile communications than the rural people.
“These factors influence the labour productivity in rural areas and the absorption capacity of innovation and new technologies. It is therefore necessary to ensure balanced development, especially investment in basic infrastructure, such as roads to improve rural connectivity, electricity and mobile communication to attract investment and young people to rural areas,” he said.
Uutoni also noted that for the rural economic transformation to happen, the infrastructure in rural areas needs to be further improved to facilitate better market access.
“As I have mentioned earlier, rural electrification is an important enabler for the economic transformation of rural areas. In this regard, the Government continues to roll out the Rural Electrification Programme to expand the electricity supply infrastructure to improve the socio-economic conditions of people residing in rural areas and create the necessary incentives for economic development.
“However, due to sparsely populated rural areas, extending the national grid is too costly and may affect the price of power to the end user. Therefore, decentralised electricity generation solutions based on available renewable energy sources such as solar and biomasses in rural areas are the definite way to go. Technology is advancing, which is an important element of entrepreneurship in rural areas. Therefore, digital connectivity cannot be overemphasised. I wish to caution here that these products and services must be provided at an affordable cost. It might be futile if the price of electricity and data is not affordable for rural people,” explained Uutoni.