Namibia is a victim of an old lesson never learned, a lesson never understood, a lesson very tricky to understand and a lesson still haunting the entire continent of Africa. It is a lesson that contributes to the complete demise of the political landscape, sovereignty compromise, economic crisis of the continent, the primary generator of poverty and unemployment – i. e. the application of orthodox economic theories, to modern economies and the political management of public affairs. 

The application of orthodox economic theories to modern economies validates credence that African politicians can achieve their political freedoms, but they will never effectively manage their economies, to eradicate poverty, reduce unemployment and realise upsurge economic growth, hence making African nations vulnerable to sovereign economic slavery.  

What dictates the effective functioning of modern economies is not the application of orthodox economic theories, but the understanding of how fiscal instruments are designed, the ability to interpret such instruments, the ability to detect the presence of fiscal regimes, how the regimes function, i.e. interposed or internally promulgated, how they are applied in the economy, the structure of the regimes, the primary sources of these regimes, their impact on the economy and the ability to regularly respond to the regimes.      

There are three significant points of fiscal instruments which result in the design of fiscal regimes, with the potential to destroy the economy, compromise state sovereignty, generate poverty,  unemployment and these are; un-interpreted bilateral tax treaties, un-interpreted multilateral tax treaties, and fiscal investment regimes which are linked to external state aid control participation exemption regimes. Namibia is a direct victim of external state aid control participation exemption regime which has transformed her economy.  In my article, titled: ‘The economy is crippled by fiscal structures’, I did highlight that the economy is hosting 26 fiscal structures, consisting of 4 master regimes and 22 sub regimes, which are harming the economy and subjecting the economy to continuous economic downgrades.   

Among the 4 master regimes is the external state aid control participation exemption regime, which has transformed the economy into a target entity economy, functioning with an artificial tax base, making Namibia highly vulnerable and exposed to the inevitable oath of poverty if these regimes are not addressed since the tax base is deeply distorted.     

The political leaders find themselves failing to understand why the economy is in junk status and still on the trend of attracting economic downgrades. The catch here is that modern economic management, growth and recoveries are secretive, based on the following: 

• Understanding the structure of the external state aid control participation exemption regime  

• How the regimes are designed  and structured  

• Capacity to respond to the regimes  

• Structure of a target entity open economy 

• Capacity to respond to the various fiscal structures, which subsist in the economy  

• Design of an effective investment regime  

• Effective Bilateral and Multilateral Tax Treaty interpretation, ratification and administration.   

African political leaders have crafted development visions, for social and economic emancipations of the citizens in their respective nations, but these visions are critically placed under a microscope and on an observation tower, by the developed world to ensure that these visions are not realised. This is done through the design of fiscal instruments and fiscal regimes, which are loaded into the economies without the leaders noticing anything. 

Those that design these regimes know that Africa is still stuck in the archaic application of orthodox economic theories to manage their economies and have no capacity to interpret fiscal instruments to protect and grow their economies, let alone the capacity to detect the presence of economic crippling fiscal structures.   

Regrettably, when there is no capacity to respond to the regimes and the economy finds itself on its knees, the politicians pay the heavy price of accusation, blame and condemnation. Within the SADC region, the first country to be connected to an external state aid control participation exemption regime was Zimbabwe. Namibia is the second country whose economy is transformed to a target entity economy because of the influence of an external state aid control participation exemption regime.   

Namibia’s vision 2030 was carefully observed and the only way to cripple it was to entice Namibia to ratify a fiscal instrument that is asymmetric distributive in scope and have the instrument linked to an external state aid control participation exemption regime, to transform the economy, so that government is no longer able to generate sufficient revenues from its tax base. It is sad that Africa’s economies continue to be a subject of manipulation to justify a notion that African leaders cannot manage their economies.  

The ability to respond to the regimes does not lie purely on the strength of the political bearers and ministers, but technical advice from the taxation policy unit of the line Ministry of Finance, who have the taxation jurisdiction and capacity to compile interpretation reports of the economic harming regimes.  

The inability to understand fiscal regime design, regime presence detection, regime interpretation, regime administration interpretation and fiscal investment regime ratification interpretation, is a sustaining and beneficial enterprise to those who design such regimes, since they keep Africa’s economies on the knees, expose Africa’s economies to budget deficits, infinite borrowing, sovereignty compromise and abject poverty to justify that African leaders are indeed not capable of managing their respective economies. 

Due to the complex nature of interpreting the fiscal regimes, Africa gets trapped in a self-sabotage circle, when she runs to the very same planners of economic crippling fiscal regimes, for economic advice and expect that the outcome is to her benefit. This is equivalent to extending a dignified invitation to the mosquito to facilitate a malaria control strategic workshop.        

That is the danger to political leadership when pure orthodox economic theories are applied to modern economic management.   

*Philips Ndunda is a postgraduate candidate
in International Taxation – (the Banking Option) – Chartered Institute of Taxation – UK and a Member of the Chartered Institute of Public Finance and Accountancy – (CIPFA) – UK.