Despite a stable economy and relatively low inflation rate, Namibia is still battling to overcome huge income inequalities, which NDP 3 aims to address.
By Catherine Sasman
WINDHOEK
The objective of Vision 2030 is to transform Namibia into an industrialised country of equal opportunities, which is globally competitive, realising its maximum growth potential on a sustainable basis, for an improved quality of life for all Namibians.
By all counts, however, it would appear as if Namibia is still a very long way off this ambitious mark.
Namibia ranked 84 out of 125 countries on the overall index in the 2006/07 World Competitive Report.
The ranking of the countries is based on economic performance; government and business efficiency, drawn upon information compiled under nine pillars.
These pillars include the quality and effectiveness of public and private institutions; infrastructure, including roads, ports, air transport, supply of electricity and telecommunications; macro-economic management; health and primary education, including infant mortality, life expectancy and HIV/AIDS, tuberculosis and malaria; higher education and training, including on-the-job training; efficiency of markets for goods; technological readiness to adapt and absorb technologies, foreign direct investment and technology transfer and enabling ICT environment and actual use of telecommunications and the internet; business sophistication of networks and supporting industries, and relative sophistication of operations and strategies of firms; and innovation, including scientific research institutions, government and private spending on research and development, the availability of scientists and engineers, patents and protection of intellectual property rights.
Namibia’s institutional capacity ranks much lower than South Africa and Botswana. Areas to be addressed are the health sector – probably due to the high level of HIV/AIDS infections – and primary education. Moreover, Namibia’s ranking can also be explained for its inadequate higher education and training. Its market efficiency for goods is relatively low and the time to start a business is longer.
The labour market is viewed as relatively inflexible due to stringent labour laws and trade unions and the sophistication of its financial markets is at a nascent level.
Further, as a trade-dependent open economy with the value of exports and imports exceeding the Gross Domestic Product (GDP), it is important for Namibia to improve its competitiveness.
Notwithstanding these challenges, the country’s moderate inflation and the fact that its currency is linked to the South African rand, it enjoys a degree of economic stability.
The economy is also opening up, but it needs to diversify exports away from unprocessed primary products. Some sub-sectors in the economy remain shielded from competition, which stifles innovation and improvement in productivity.
GDP growth has also been healthy in recent years, reported the National Planning Commission, but made the point that this growth has been driven primarily by a few sub-sectors while others stagnated.
The banking and finance sectors are modern and highly profitable, but a lack of competition is regarded as lamentable and access to financial services is still limited.
Furthermore, the structural change in the economy is seen as slow, with urban labour markets unable to absorb excess labour from rural areas with delay of modernisation in the agricultural sector.
The unemployment figure of 37 percent is also worrying in that this human resource base is not utilised to grow the economy, although there has been a slight decrease in poverty and inequality levels.
With Namibia’s transformation into a knowledge-based society still in its infancy, macro-economic growth is hinged on three pre-requisites: equality in income distribution; increased and sustainable economic growth; increased employment and an increase in smart partnerships and private sector development.
Namibia has still the highest income inequalities in the world, which needs to be addressed by providing more opportunities to economically disadvantaged groups and expanding access to income-generating activities.
The goal of achieving equality is closely linked to job provision and more people participating in the economy.
Growth of the private sector and increased public-private partnerships would help expand businesses. In the same vein, partnerships with civic organisations would further facilitate more efficient service delivery and enhanced civil participation in the economy.
The NPC further suggests a sustainable route out of poverty to include the ability to take advantage of income-genera-ting opportunities.
Macro-Economic Performance
During NDP 2
Satisfactory economic performance was re-gistered under the second national deve-lopment plan, with the growth rate averaging 4.5 percent per year and exceeding the target of 4.3 percent by a slight margin.
However, this growth was skewed across different sectors: agriculture and fisheries performed poorly, while mining and the services sector like transport, construction, telecommunications and financial sectors showed more rapid growth.
Also during the NDP 2 period, Namibia experienced a slight reduction in the Gini coefficient [the level of income disparities] to 0.60 from 0.70 in 1993/94, but the level of inequality remains high.
The NDP 2 period saw a “partly satisfactory” performance in the creation of a conducive environment for job creation and incremental reduction in the unemployment rate, as well as attaining a living wage and improved coordination between the labour market and maintenance of industrial peace.
During that period, employment in the private sector actually decreased, with unemployment particularly high among young women.
NDP 3 aims at maintaining macro-economic stability, as well as to empower individuals at the micro-level to participate in the economy. Hence a higher investment in education is required.
Equality in Income Distribution
The NPC pointed out that the average adjusted per capita income of N$10ǟ