The economic value of our national passport and its impact on our socio-economic development is an issue that has hardly been interrogated and appreciated.
A passport from a country in good global standing is a powerful asset, allowing its holder to move across borders without dealing with the nightmarish bureaucracy of a visa application.
It empowers individuals and families to become global citizens. Similarly, the value of visas, which are non-tariff trade barriers, has not received much attention from our economists. This is despite the difficulties imposed by visas on exports and in view of the fact that Africa has the highest visa requirements.
It might surprise many that the passport of our young democratic republic is the 7th most powerful travel document in Africa and around 57th in the world. The Namibian passport provides visa-free entry to about 70 countries worldwide. Though this is commendable relative to our 26 years of independence, a lot still needs to be done.
Globally, our passport is 32 percent poorer in terms of entry compared to the five highest-ranked passports in the world: citizens of Finland, Sweden, Germany, the UK and the U.S. are able to travel visa-free to 174 destinations around the globe. This means that we need to embark on reaching out to many more countries worldwide for reciprocal lifting of visa restrictions.
Russian President Vladimir Putin has repeatedly complained about the negative impact on trade of visa restrictions by the European Union. Visa restrictions imposed by the USA after the 9/11 attacks negatively impacted on the tourism industry in the USA.
When analysing the adverse effects of visa restrictions on bilateral trade and foreign direct investment (FDI), one finds compelling evidence why bilateral trade and FDI are negatively affected by visa restrictions. Empirical evidence reveals that much of international trade requires personal contact (face to face contact) with trading partners.
Visa restrictions render such physical contact more difficult as they raise the burden for potential foreign trading partners to enter the country.
The setting up of a direct investment abroad is not possible without personal contact between the investment partners from the two trading countries. Visas reduce international trade by hindering or impeding the exports of firms where the owners or managers cannot travel to conduct their business.
One may argue that most trade and FDI will be sufficiently economically profitable to compensate potential trading and investing partners for the costs imposed by visa restrictions.
However, this presupposes that the partners have perfect information and knowledge about the potential gains to be made from trade and investment. The fact is, such potential will often be discovered after personal contact or after having visited the site of potential investment over time.
Therefore, visa restrictions can damage a country’s trade and FDI by rendering the discovery of mutually beneficial economic opportunities more costly.
Economic researchers, such as Eric Neumayer, have found that unilateral visa restrictions imposed by one country without reciprocal visa restrictions in the partner country reduce bilateral trade by up to 19 percent, while such trade is estimated to be reduced by up to 25 percent if both countries have visa restrictions on travelers from respective partner country.
For bilateral FDI, the estimated effects are essentially the same for both unilateral and bilateral visa restrictions at around 25 percent.
On the other hand, tourism remains one of Namibia’s great homegrown industries, providing employment and livelihood to hundreds of families directly or indirectly. While the hospitality and tourism play important roles in providing employment to Namibians, it is equally important that our visa policies are enhanced to ensure that these industries and international trade thrive and expand.
Without a doubt purchases of local goods and services by tourists and foreign investors contribute significantly to job creation and economic growth. This is because we live in a world economy where capital moves freely, but where labour cannot and should not move.
Bearing in mind that international travel is one the fastest growing sectors of the global economy, we need to start asking ourselves hard questions, such as: are we missing valuable potential opportunities for more tourism growth through our visa policies; are we keeping track of tourism growth elsewhere in the world; are we losing valuable market share in the global tourism industry?
Like any other industry, hospitality and tourism are competitive sectors. We need smart policies to stay in the competition and eventually triumph. The need to enhance the global strength of our national passport should be driven by the notion that our travel document is the passport to economic growth through international trade.
* Dr Charles Mubita holds a PhD in International Relations from the University of Southern California.