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Opinion - Drivers of Namibia’s economic recovery

2021-06-08  Staff Reporter

Opinion - Drivers of Namibia’s economic recovery
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Namibia’s economy, as in the rest of the world, has been severely impacted; the country has been in a lockdown, leading to closed borders and pausing business, further resulting in an economic shutdown. It would take time to recover, as the pandemic is still reeling and the government continuously amending Covid-19 regulations, such as maximum numbers of people allowed for gathering as well as operating hours of businesses. The effects of the pandemic have exacerbated unemployment, resulting from layoffs and retrenchments, especially in tourism segments and the construction industry, which had been already limping before the pandemic, as the government halted various tenders due to economic contractions.

Many nations’ hopes are now focused on the Covid-19 vaccination; widespread rollouts are predicted to bring economies to a better position. Namibia’s vaccination rollouts are slow, probably because of the logistical impediments and the hesitation of people to take the shots, as there have been sceptical information circulating on social media platforms related to the vaccine. 

A turnaround strategy to the country’s economic recovery should be fast-tracked by, among others, three institutions: the Anti-Corruption Commission (ACC), Namibia Revenue Agency (NamRA) and Namibia Investment Promotion and Development Board (NIPDB).

Anti-Corruption Commission

Corruption is now documented as a national phenomenon, which must be addressed coherently and steadily. The Anti-Corruption Commission of Namibia has a role to play, as corruption has derailed economic growth and stability in several countries of Africa. The phenomenon does not only affect economic efficiency and growth but also equal distribution of resources across the population, thereby increasing income disparities, leading to deflation of social welfare effectiveness and development programmes, further resulting in lower levels of humanity. 

The need for concentrated action in Namibia is evident. Namibia must become more integrated into the global economy and attract greater levels of foreign and domestic investment if it wishes to achieve the growth rate necessary to recover from the economic downturn and the impacts of coronavirus. Although these will limit – but not entirely eradicate – corruption, but also reduce the corrosive effects it has on the economy of the country.

Corruption affects investment, revenue systems and effectiveness of public expenditure, and Namibia being in international news in 2020 for the Fishrot dilemma discouraged investment, thereby reducing the profitability of potential investors. 

The ACC needs rigid frameworks and efficient approaches against dishonesty in the utilisation of public resources and strategies. To limit corruption, one has to be realistic, achievable and tailor to the needs of the public/government. The policies/laws intended to address corruption have to be consistently applied across the board. To increase governmental accountability and transparency, which allow and enhance public participation in decision-making, strengthened public sector/civil society institutions will help to counter corruption.

Namibia Revenue Agency 

The establishment of an independent revenue agency to deal with tax collection is a footstep to remove the bottlenecks in the domestic revenue system. The Ministry of Finance now functions as a policymaker and NamRA as a policy administrator (revenue collector). The government of Namibia has now been enabled to collect taxes from its citizens easily through a strategic institution, which is critical to the country’s long-term development goals. There have been tax evasion, poor tax policy, and ineffective enforcement that constrained the government’s ability to mobilise the domestic revenues required to provide basic services to citizens and promote economic growth/social development, and all these inhibitions should now be in the past. The agency should improve the past tax collection system and cultivate accountability among taxpayers by raising awareness of taxation responsibilities, payment methods and the risks of non-compliance.

NamRA has a big role to play in the economic recovery to inflate economic activities through public financial management. As per NamRA’s Act 12 of 2017, some of the powers and functions of the Agency are: to assess and collect taxes and duties on behalf of the State in terms of the laws set out in the Schedule, to receive and record all State revenue on behalf of the State, to enforce the revenue/customs, and to excise laws with respect to the collection of revenue as provided by those laws and many others. 

Indeed, if these functions are properly executed, many of the tailbacks would be minimised although not removed and Namibia’s economy will improve drastically. To foster economic growth and development, Namibia needs sustainable sources of funding for social programs and investments. NamRA must shoulder the effective functions to ensure businesses and individuals adhere to the set taxation rules.

NIPDB

All eyes are on NIPDB as the port of investment, the organisation is mandated with crucial functions to accelerate and boost investment opportunities in the country. There have been blockages for Namibia to create a conducive environment for doing business and attract domestic and foreign investments. The NIPDB has come at the right time when Namibia needs economic rescue and to promote/facilitate investments that contribute to economic development and job creation. 

The focus for NIPDB should oversee the small and medium enterprise (SME) operations with the ambition to create and stimulate new ventures that will meaningfully contribute to Namibia’s economic development. SMEs are the highest employer in Namibia and they receive more attention, strategies and mentorships for this sector to review and propose policy restructurings and measures to support SMEs in Namibia. Improving the productivity and operations of SMEs is, therefore, a worthwhile endeavour. 

Indeed, SMEs can outgrow the country’s economy for two reasons: firstly, integrating proven practices and technologies is faster and safer than testing new ones, and SMEs have a large adoption gap to close. In the same way that emerging markets can grow faster than high-income markets by adopting tested technologies, SMEs can grow faster than large companies by adopting the proven technologies and practices of larger enterprises. 

Secondly, start-up capital, which is a critical hindrance of SMEs, has become an important cause of downtrodden business. There are old legal systems and outdated strategies pertaining to business operations in Namibia, and these need prompt review. The NIPDB and stakeholders should collectively address these challenges. 

NIPDB should focus on promoting the healthy and well-performing SME environment: boosting the business confidence of SMEs through various mentorship programmes, enabling the growth of SMEs and increasing the competitiveness of SMEs in the local market. Establishing some of these characteristics requires a segmented execution approach and lead to fast-track economic recovery. It is, therefore, important that NIPDB designs its menu of services after identifying the subsegments prevalent in the country and the differences in the needs.


2021-06-08  Staff Reporter

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