Fourth Industrial Revolution: A Paradox of Progress and Peril in the Namibian Economy
President Geingob recently participated in the International Labor Organisation (ILO) Report of the Global commission on the Future of Work in Durban, South Africa. In his remarks, and like many other politicians, he alluded to the fourth industrial revolution and how Africa should position herself to reap the benefits of the fourth wave of industrial turn-around.
The fourth industrial revolution is a term coined by the executive chairman of the World Economic Forum, Klaus Schwab, who is also its founder. Generally, an industrial revolution is simply just a transition from old manufacturing processes to new and more advanced processes. It also entails a shift in industrial outputs. According to human’s recorded history, the first industrial revolution started in the 1760s with the invention of a steam engine which made it possible to transition from farming and nomadic societies to new manufacturing process. The main source of energy was coal and the main form of transport were trains.
Textiles and steel were the main industries. The fourth industrial revolution started in the year 2000 with computer-generated product designs and three-dimensional (3D) printing, all the way to mobile phones applications and social media. It is characterized by the interaction of various technologies blurring the lines between physical, digital and biological spheres. Some call it the digital era. The full transition into the fourth industrial revolution is fundamentally economic and has real impacts on real people – both positive and negative. For a small economy like Namibia, it brings unprecedented opportunities mixed with difficulties. Barriers to entry into some markets will disappear for good and any entrepreneur with a brilliant idea can start a business and compete with traditional big players. Volumes of information can easily be spread by a single click of a button, thereby changing the dynamics of advertising, unlike in the past when it was costly for a small business to advertise its products. Cellphone and internet banking has significantly reduced the cost of banking and created more access to services in the financial sector than some years back.
Whilst the country has become more prosperous as a result of technological advancement in terms of GDP, many communities are still marked by uncertainty and unease. The profit motive that has characterisded the conduct of economic activities in the country can be a powerful force for our common good. Pushing businesses to create much-needed consumer goods and services, or encouraging banks to lend to small businesses in order to expand. However, in itself, that very motive has not led to broadly shared prosperity. Hence, so many people are still receptive to the view that the game is rigged.
While Adam Smith’s central insight still lights the world at large and our capitalist economy in particular – that there is no greater creator of wealth than a system of free enterprises that unleashes the full potential of individual men and women – so many economists have also recognised that when markets are allowed to run rampant and left to their own devices, they can successfully fail. In the case of Namibia, rent-seeking (wealth without creating value), monopoly, and corruption have dismally undermined the distribution of wealth, whilst the failure of businesses to take into account the impact of their decisions on the livelihood of workers has threatened our labour market in terms of employment. In February this year, the Namibia Bank Workers Union announced that, in line with their strategic plans of realigning their retail and business banking to the digital banking products, local banks are considering shedding over 1800 jobs in the next few years, with some jobs already lost in 2017. That announcement communicates progress in our banking sector, but also peril. The returns on capital might increase significantly in the banking sector, however, the real impact is felt on the ground as a drastic reduction in the returns on labour will be seen as people start losing their jobs and, ultimately, income to support their families. Profits might increase massively by digitalising banking services because banks are cutting down on a lot costs. But how does that decision sit with the 1800 bankers who might not find jobs elsewhere? Is the profit motive still a powerful force for our common good in this case brought about by the fourth industrial revolution? This is the paradox of progress and peril which the new industrial revolution is brewing.
For an economy like Namibia to reap the full benefits of this new revolution, it would be a fallacy to believe that continuing to be heavily reliant on mining as our biggest contributor to our GDP in the fourth industrial revolution would help us in the long haul. Innovation would be key to success in this era and no country can prosper long by relying on two or three major exports. Much worse if such exports are from the ground. New digital industries should be promoted by helping all those producing new computer generated products and creating high-tech jobs for the new age.
* Petrus Exile Ya Nuuyoma possesses a B. Econonomics (Honours), Unam, MA in Finance and Investment from the London School of Business and Finance (LSBF), UK and an Advanced Certicate in Business Consultancy, North-West University, SA.
2019-08-02 07:48:18 | 5 months ago