In response to the damning report released on Monday by international aid agency, Oxfam International, that global inequality has only been exacerbated by the Covid-19 pandemic, the CEO of the Development Bank of Namibia, Martin Inkumbi, stressed that to reduce inequality, Namibia first needs to create value in the domestic economy. This, he noted, will require an increase in Namibia’s real gross domestic product, which is an increase in GDP, less inflation.
“Only when the economic cake is continuously expanding, will there be a possibility for every Namibian to get a slightly bigger piece or even better, to give vulnerable citizens proportionally larger slices,” said Inkumbi in response to questions by Inside Business.
The Oxfam Wealth Report, released on the first day of the 2021 World Economic Forum in the Swiss mountain town of Davos, warned that it could take more than 10 years for the world’s poorest people to recover from the economic fallout of the ongoing Covid-19 induced pandemic. The report therefore urges governments to act fast and “set concrete, time-bound targets to reduce inequality”.
The report also showed that the recession is over for the world’s richest billionaires who recouped their losses within nine months since the pandemic started spreading across the world.
“The top 1 000 billionaires, mainly white men, had recovered all the wealth they had lost … even while the real economy faces the deepest recession in a century,” the report said.
Commenting on the Oxfam report, Inkumbi explained that generally, individuals will invest and work hard to increase their fortunes in an environment that is open, transparent, fair and encourages meritocracy.
“Growing the economy requires us to create and maintain such an environment. A value creating and expanding economy will present the best opportunities for employment creation and can generate more resources for social infrastructure such as housing, education and health care, which can be provided by both the private and public sectors,” said Inkumbi.
He elaborated that a growing economy allows the State more capacity to support and care for the more vulnerable citizens, as firstly, more tax can be collected and secondly, an expanding economy generally creates more employment opportunities, thus reducing the number of vulnerable citizens.
The DBN CEO proposed that specific action plans will include expanding agriculture to increase the proportion of locally grown food in the country’s consumption basket. This, he noted, requires an overhaul of the entire value chain from production, logistics and market shelf space.
“I also think we should pay more attention to expanding the services sector. For example, international private universities and healthcare centres in beautiful places such as Swakopmund and Henties Bay, with the foreign market as their target markets, can complement the tourism industry. This requires targeting specific international investors in these sectors and bringing in the required skills. An expanding services sector increases consumption demand, which creates opportunities for the primary and secondary sectors,” Inkumbi expounded.
However, he admitted that the main challenge for Namibia, in his view, is skills on both technical and management levels as well as technological capacity rather than financial capital, which can be sourced internationally if one can presents a viable investment proposition.
“I think we need a targeted strategy to attract investment with a strong focus on bringing in the required skills and technology, capitalising on the very attractive quality of life Namibia’s environment is offering. Our development plan must have a strategy to leapfrog some of the challenges we have such as the shortage of skills and technology. The focus should be on game changing investments, as opposed to those that will merely crowd out Namibian entrepreneurs. In time, Namibia can claw back on the skills gap,” Inkumbi concluded.
The Oxfam report encompassed a survey of 295 economists from 79 countries, in which 87% of respondents expected that income inequality in their countries was either going to increase or strongly increase as a result of the pandemic. More than 50% of all respondents said gender inequality would likely or very likely increase; and more than two-thirds thought the same about racial inequality. Two-thirds of respondents also felt their governments did not have a plan in place to combat inequality.
“The deep divide between the rich and poor is proving as deadly as the virus,” said Gabriela Bucher, the executive director of Oxfam International, adding, that “the fight against inequality must be at the heart of economic rescue and recovery efforts”.
The Oxfam report showed how Covid-19 hurt people living in poverty far more than the rich and had particularly severe effects on women, blacks, Afro-descendants, indigenous peoples, and historically marginalised and oppressed communities around the world.
The report further indicated that more than three billion people around the world lacked access to healthcare and that three-quarters of workers had no social protection such as unemployment benefits or sick pay. In low- and lower-middle-income countries more than half of workers were in poverty despite having jobs, the report said.
In contrast, billionaires around the world saw their wealth increase by US$3.9 trillion between 18 March and 31 December 2020. Their total wealth now stands at US$11.95 trillion, which is equivalent to what governments in the largest 20 developed and developing nations, or G20, have thus far spent in response to the pandemic.
- ebrandt@nepc.com.na