• May 29th, 2020

Dependency on state tenders has economic growth consequences

Pendapala Hangala

The Namibian government and its established entities have for far too long played a very significant role towards the economic financial stability of the country. This is through its procurement of goods and services from providers but has unfortunately in the process created a deep dependency syndrome, which going forward will be very difficult to cure. 

The country is currently experiencing an economic depression, which as a consequence will over time create a new trading environment, which could have a medium to long-term impact on the nature and structure of an expanded private sector in particular, and on the country’s economic performance in general. The Namibian government has since independence spent billions of Namibia Dollars on the acquisition of goods and services from various businesses, which to a very large extent ensured a significant amount of cash flow in the economy. Although not directly intended for this platform, the Namibian government equally spent billions of Namibia Dollars on foreign firms, who for what it’s worth did not re-invest anything tangible back into the economy, thus repatriating most of their profits out of the country. 

However, and in both instances and whether by design or default, the Namibian government to a large extent created a very strong dependency reliance by businesses on state coffers to the now detrimental effect on the economy. This sad situation now clearly requires going forward that a new economic environment will need to be created by an emerging expanded private sector, which will need to rely less on the Namibian government’s procurement system for its sustainable survival by identifying and creating new stable markets. This economic transition period towards a new expanded private sector-driven economic trading environment, is however not going to be easy as many of the current businesses were very ill-prepared for this situation. 

In the case of Namibia, there is however, in my view, a few challenges or opportunities which I will briefly highlight below, and they are as follows:

1) There are no practical and enforceable legislation to ensure domestic procurement of locally produced goods and services; the lack of such a practical and enforceable legislation will continue to ensure that the status quo of importing most of our basic needs in established supply chain stores remains. This significant oversight will further discourage the growth of the local manufacturing and production sectors, thus eroding our industrialisation ambitions. This type of legislation in this kind of retrogressive economic climate is a necessity as open markets for mass locally produced goods and services do not exist in Namibia and of which penetration thereof is highly restricted.

 2) Lack of mass consumer support for locally produced goods and services; the continued dismal culture of support by the masses towards imported goods and services, is a major contributing factor to the status quo. It is very important, especially in the context of Namibia, that Namibians make a concerted effort to buy locally produced goods and services. This action will in the medium to long-term ensure that significant cash flows are retained in the country, which can contribute to large employment creation in the economy and further towards domestic business expansions. 

 3) Need for Namibians to see SADC as a bigger market for their goods and services; it is paramount that a larger number of Namibians begin to see beyond the borders of the country to export domestically produced goods and services. Business growth is also about population sizes, and certain countries, such as Angola, Zimbabwe and South Africa, have much larger populations of which successful penetration thereof could have a positive effect, and impact on the domestic economy in terms of larger cash inflows into the country. 

4) Lack of a realistic broad-based economic revival programme; the current economic climate is full of uncertainty and for debatable purpose it seems as if the country is simply drifting with the wind hoping to come across unplanned or unintended solutions. This type of environment is not conducive in the medium and long-term needs of going forward towards a clear economic recovery path, which in all likelihood should further decrease the dependency of a significant number of businesses on government coffers. 

In conclusion, Namibia, in this current economic climate and business environment, finds itself at a very critical crossroad on how best its entrepreneurs should likely shape the future marketplace of the country, upon which it can hopefully move towards sustainable economic recovery for the sake and benefit of its citizens. 
In the absence of the above, the nation could find itself in a much worse scenario, which is difficult to expand on at this stage.  

New Era Reporter
2018-11-16 09:57:49 | 1 years ago

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