WINDHOEK – According to the Institute for Public Policy Research’s (IPPR’s) latest Quarterly Economic Review, covering the third quarter of 2019 (July to September), government is still exhibiting three key characteristics that have marked economic policy-making since independence. IPPR’s comments come despite Namibia having moved up six positions, from 100 to 94, in the Global Competitiveness Report rankings for 2019.
The latest report from the institute says the three problematic characteristics government continues to exhibit are a knee-jerk propensity to blame economic problems on external factors (‘world markets’) and acts of God (‘drought’) and a refusal to take responsibility; an extreme reluctance to take difficult decisions which are clearly in the long-term interests of the economy (for example the bloated public sector and loss-making SOEs which have featured in almost every budget statement since the 1990s); and a tendency to float half-baked policy ideas which then hang over the investment landscape like a cloud of uncertainty (citing the New Equitable Economic Empowerment Bill (NEEEB) and the Namibia Investment Promotion Act (NIPA) as examples).
“These are serious shortcomings which show no sign of changing any time soon, with the path of least resistance invariably being the preferred way forward. Furthermore, it remains unclear exactly who is in overall charge of economic policy and who, if anyone, vets economic initiatives before being made public: the President and his advisors? The Minister of Finance? The Director General of the NPC? The High Level Panel? With elections now on the horizon, the current President and Cabinet must decide what their legacy is going to be: will they reform and reverse the decline of the past five years or go down in history as the people who crashed the Namibian economy?” the IPPR report questioned.
In the conclusion of the Quarterly Economic Review, IPPR states that when President Hage Geingob came into power, they appeared to believe that the economy, which had been growing strongly since the global financial crisis, thanks partly to significant monetary and fiscal stimulus, was set to continue to grow. IPPR pointed out: “Perhaps the underlying weaknesses of the economy had been masked temporarily by the monetary and fiscal stimulus combined with two exceptionally large investments in the mining industry – Husab and Otjikoto mines – and some large public sector projects such as the construction of the Neckartal Dam and the expansion of the Walvis Bay container port. Sight was lost of the fact that non-mining private investment was lacklustre and this was then compounded by significant policy uncertainty caused by the release of the Draft NEEEF Bill and then the passing of the Namibia Investment Promotion Act, two pieces of legislation that had the potential to cause substantial damage to the economy.”
The IPPR report continues that there have undoubtedly been some positive developments, such as government reconsidering enacting damaging new policies and that some new foreign investment had materialised.
“It is to be hoped that the large new investments in public infrastructure will pay off but, in the absence of publicly available cost-benefit studies, it is hard to be optimistic given Government’s past propensity to spend on white elephants,” the report reads.
2019-10-11 08:10:03 | 9 months ago