Eradication of poverty, reduction of income inequality and employment creation based on the Sustainable Development Goals (SDGs) should be the utmost aims of development efforts in Vision 2030 in Namibia.
Traditional approaches to economic development treated the reduction of poverty and income inequality, and employment creation, as separate development goals, which is not entirely correct because an in-depth analysis of the above goals would indicate that they are interrelated and can be integrated with respect to the government commitment to poverty eradication under the concept of inclusive growth.
With respect to participatory poverty eradication, the concept of inclusive growth should be the foundation as it includes not only poverty eradication, but also reduction of unemployment and income inequality at the same time. In fact, inclusive growth is an integrated concept of the above-mentioned three elements because inclusive growth refers to (a) the pace of economic growth, (b) the pattern of economic growth, and (c) enlarging the size of the economy in order to achieve the objectives of Vision 2030. As Namibia is about to implement measures and programmes to eradicate poverty, a comprehensive discussion and understanding of the abovementioned three elements with respect to inclusive growth are essential to generate the expected outcomes.
The pace of growth refers to the speed at which growth is experienced and a rapid pace of growth (of, for example 7 percent). This is unquestionably necessary for a substantial reduction of poverty, income inequality, and unemployment. With respect to the pattern of growth – growth should be sustainable in the long run; it should be broad-based across sectors, and inclusive of the large part of a country’s labour force or the poor, creating employment by producing goods and services that the majority of the people demand and consume. No country has a silver bullet for stable economic growth, employment creation, and poverty eradication, but it is a possible scenario. Progress is needed on every possible front. This indicates a direct link among macro and micro determinants of economic growth and employment creation, leading to an increase in the size of an economy which is an indicator of increasing per capita income growth towards Vision 2030. In fact, the aforementioned definition of inclusive growth embraces the desired reality on the ground, in other words: the desired economy towards Vision 2030 of which poverty eradication is at the centre.
As per the above, inclusive growth would mean that the poor or unemployed (the larger part of the workforce) will start to contribute towards economic growth (whether they be wage employees or self-employed) in a sustainable manner, and hence the poor and unemployed will benefit from economic growth. In other words, in a broader sense, inclusive growth refers to the fact that no economy can grow by excluding any part of its people, and an economy that is not growing cannot integrate all citizens in a meaningful way.
Inclusive growth does not per se amount to the desired pro-poor growth in which the presumption is that when growth takes place, the majority of the poor or unemployed will benefit (trickle-down effect/impact of economic growth or welfare aspect of economic growth). Pro-poor growth is not much of a rational presumption according to the empirical literature on reduction and eradication of poverty, employment creation, and the reduction of income inequality because countries like Namibia need strategies or ways and means in which the poor and the unemployed are engaged directly and inclusively in economic activities. As a result, they will be able to contribute to the Gross Domestic Product (GDP), and will hence benefit directly from the GDP in an inclusive manner rather than waiting for benefits to trickle down to the poor and unemployed.
Generally, inclusive growth encompasses equity, equality of opportunity, protection in the market and employment transitions (i.e. sectoral composition), which are essential ingredients of any successful growth strategy and poverty eradication. This means that the idea of equality of opportunity in terms of access to resources, including finance, markets and an unbiased regulatory environment for individuals (poor/unemployed) and businesses should be applied.
In other words, inclusive growth is opposite to pro-poor growth because inclusive growth is at the heart of equity with growth, reduction and eradication of poverty and reduction of income inequality in a systematic, consistent and comprehensive manner. When inclusive growth is adopted and implemented as a growth and development strategy, we hardly need to talk about the strategies focused on reduction and eradication of poverty and reduction of income inequality because it is a strategy in which poverty and income inequality will be reduced gradually to the desirable limits together with employment creation. However, this does not deny the necessity to formulate and implement “social benefits schemes” by the government when it is necessary to formulate and establish such schemes, complementary to the government efforts to formulate and implement inclusive growth strategies. In fact, well-articulated inclusive growth strategies can be sustained to generate the expected outcomes more successfully than “social benefits schemes” which are involved with budgetary resources. In short, social benefits are for those individuals who cannot survive with such benefits or who cannot contribute to GDP in a meaningful and constructive manner.
In light of the above, a summary of inclusive growth can be presented as follows: Inclusive growth focuses on sustained economic growth, long term employment creation and addressing the reduction and eradication of poverty and the reduction of inequality in an integrated manner, rather than treating them as three separate issues. Inclusive growth focuses on both the pace and pattern of growth.
How growth is generated is critical for the reduction and eradication of poverty and reduction of income inequality. Therefore, inclusive growth strategies must be tailored to a country’s specific circumstances (i.e. about 65 percent of unemployed are unskilled and they live in the rural areas in Namibia. Also importation of about 80 percent foods denies employment creation through import substitution).
Inclusive growth should include the large part of the country’s labour force, where inclusiveness refers to equality in terms of access to resources, markets and an unbiased regulatory environment for business (firms) and individuals.
Inclusive growth does not accompany inequality. In this respect, as the poor contribute to growth, inequality will reduce gradually. Inclusive growth focuses on productive employment rather than measures of income re-distribution. Hence the focus is not only on employment growth, but also on productivity growth. Inclusive growth not only affects individuals, but also firms (i.e. the private sector). Inclusive growth should be fuelled by market-driven sources of growth (i.e. exploiting market opportunities through value additions and value change) with the government playing a facilitation role, rather than directly involving itself in economic activities and employment creation. Inclusive growth should be sustained in the long run, and should be broad-based across sectors. Issues related to structural transformation for economic diversification, therefore, take a front stage. This is particularly relevant for a small country like Namibia (i.e. 2.2 million people).
Finally, in view of the widespread poverty and high degree of income inequality, economic growth leading to industrialization should be inclusive of the poor, the unemployed, and the regions and their stakeholders. In other words, Namibia needs inclusive growth or predominantly employment sensitive growth leading to poverty eradication and industrialization towards Vision 2030. (To be continued…)
• Dr Asoka Seneviratne is the Director: Programmes and Institutional Development at the International University of Management (IUM), Windhoek. He was the Special Advisor, Office of the President, National Planning Commission (2006-2011), appointed by the President of Namibia.