By Emma Kakololo
WINDHOEK
Namibia’s economy is expected grow by four percent this year, says Bank of Namibia Governor Tom Alweendo.
However, despite acknowledging this positive outlook, Alweendo, speaking at the Governor’s Annual Address in Windhoek yesterday expressed concern over the country’s global competitiveness ranking that has been steadily declining.
“While Namibia still scores relatively well in most of the macro-economic indicators, its global ranking has been steadily falling.”
This, he said, was a clear indication that macro-economic stability alone is not sufficient to ensure high economic growth and therefore the need to look at a number of micro-level issues that affect the country’s competitiveness negatively.
Namibia’s ranking has been dropping by five points ever since its inclusion in the Global Competitiveness Index in 2001.
The country’s decline in 2004/05 was particularly pronounced, when its ranking fell by 11 points primarily due to significant deterioration in the sub-indices of public institutions and technology.
In absolute terms, the country’s overall competitiveness score dropped from a high of 4.0 in 2003 to a low of 3.7 in 2005.
The Governor said despite the fact that Namibia has a functional legal system and an independent judiciary, the country lacks sufficient legal personnel, which often resulted in the unnecessary postponement of cases.
“If this trend were to become a permanent feature of our judiciary, we run the risk of damaging our competitiveness,” he warned.
In order for the economy to be competitive, Alweendo said, amongst others, staffing of personnel in all institutions should be based on a meritocracy recruitment process; need to reduce bureaucratic red-tape and regulations that cause long delays in the public sector; work towards a skilled labour force that is able to compete globally; and a stable macro-economic environment which will help businesses to respond accordingly to the changes in market conditions.
“For example, our corporate tax of 35 percent is relatively high when compared to those in neighbouring countries.”
Such high taxes, he warned, have negative impacts on investments and therefore contribute to low growth.
“It will be necessary to gradually bring our tax regime in line with the region in order to become competitive in terms of attracting foreign direct investment.”