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Home / WEF ranks Namibia as 6th most competitive economy

WEF ranks Namibia as 6th most competitive economy

2018-10-18  Edgar Brandt

WEF ranks Namibia as 6th most competitive economy

Albertina Nakale and Edgar Brandt

WINDHOEK- In order to improve Namibia’s economic competitiveness with regard to the ease of doing business, reforms regarding service procedures need to be instituted. 

This was one of the views of experts from the Ministry of Industrialisation, Trade and SME Development on “Cost of doing business in Namibia” between the Namibian government and European Union (EU) during a dialogue between the two entities yesterday. Meanwhile, another report released yesterday by the World Economic Forum (WEF), the Global Competitiveness Report, showed that Namibia dropped one place to be ranked 100 out of 140 countries, one rank down compared to 2017. 

This means Namibia is now the sixth most competitive economy in Sub-Saharan Africa behind Mauritius (49), South Africa (67), Seychelles (74), Botswana (90) and Kenya (93). 
Interestingly, the Harambee Prosperity Plan aims to make Namibia the most competitive country in Africa by 2020. 

According to briefing notes presented by the trade ministry’s experts, Maria Pogisho and Kapena Tjombonde, in improving and redesigning process, government took a holistic approach by challenging all processes involved in doing business. 

The ministry provided examples of processing employment permits and labour market regulations, rather than just the current pillars measured by the World Bank, which applies a methodology that is subject to change. 

The trade ministry emphasised that major improvements in Namibia’s Cost of Doing Business performance and ranking will only be attainable after full deployment of the integrated client service facility and the national single window projects in 2019. 

Equally, the ministry revealed that Namibia is currently implementing solutions to speed up the business registration process in Namibia.

Before the implementation of these solutions, it took 66 days (in a worst-case scenario) to register a company. This, the ministry says, has already been reduced to 32 days in a worse-case scenario. 
The actual current average days taken in registering a company with Business and Intellectual Property Authority is less than five days. However, the ministry says the status of other registration processes are also reduced drastically.

The GCR 2018 uses a new approach to capture the countries’ readiness for the 4th Industrial Revolution. The new Global Competitiveness Index 4.0 (GCI 4.0) therefore focuses on factors that are relevant for being at the forefront of the new industrial revolution, namely “human capital, innovation, resilience and agility”. The GCI is based on 12 pillars, namely; Institutions, Infrastructure, ICT adoption, Macroeconomic stability, Health, Skills, Product markets, Labour market, Financial system, Market size, Business dynamics and Innovation capacity. These factors are similar to the previous sub-pillars under the three main pillars. 
The GCI 4.0 introduces new scores ranging from 0 to 100. Therefore, the results – the rankings and scores – of the new GCR 2018 cannot be compared to the results of the previous Global Competitiveness Reports. 

The CGI further indicates that Namibia is the ninth most competitive country on the African continent, since three North African countries Tunisia (87), Algeria (92) and Egypt (94) are ranked better. 

Namibia scored 52.7 out of 100 representing a slight improvement of 0.3 compared 2017. Seychelles improved the most in terms of the scores that went up from 55.2 to 58.5 resulting in a much better ranking, while Mauritius improved the score by 0.8 to 63.7. Botswana’s score dropped by 0.5 to 54.5 and South Africa’s by 0.1 to 60.8. Mozambique also lost ground in terms of scores – down by 2.1 to 39.8 – and ranking – down by eight ranks to place 133. Meanwhile, all other African countries improved their scores. 
According to Research Associate at the Economic Association of Namibia, Klaus Schade, the decline in ranking for most of the African countries despite an improvement in the scores indicates that other countries improved faster resulting in the African countries being left behind. 

In addition, Namibia ranked best in the pillar ‘labour market’ (39), followed ‘financial system’ (47) and ‘institutions’ (51). However, the country is lagging behind in terms of ‘business dynamics’ and ‘market size’ (both 121), health (117) and ‘ICT adoption’ (105).

According to Schade, Namibia’s good ranking in the ‘labour market’ pillar is supported by the labour tax rate (rank 8), redundancy costs (rank 29) and workers’ rights (rank 32), while insurance premiums as a percentage of GDP (rank 13) and non-performing loans (rank 19) support the positive ranking of the country’s financial system. Namibia also performed well in the pillar ‘institutions’ regarding the efficiency of the legal framework and press freedom (both rank 24), budget transparency and judicial independence (both rank 27) as well as property rights (rank 31), while the homicide rate (rank 128), e-participation (116) and quality of land administration (110) are dragging the ranking down. However, Namibia ranks low in terms of life expectancy (rank 116), time to start a business (135), quality of research institutions (111), insolvency regulatory framework (110), as well as in indicators related to internet uses (between 101 and 103). 

“Although Namibia improved her scores, while better ranked countries such as South Africa and Botswana lost some ground, and slipped only one place compared to other African countries that ended up much lower, much more efforts are needed to turn around the loss of competitiveness and catch up with other countries on the continent,” said Schade. 

He added that despite the launch of the NamBizOne portal and the establishment of BIPA, business registration remains cumbersome and time consuming. 

“New technologies are hardly applied and business persons have to drop hard copies of application and registration forms still at various institutions instead of emailing soft copies including proof of payment to a one-window institution,” said Schade.  

He continued that more also needs to be done to improve ICT skills and access to fast ICT services in the country that are vital for businesses to compete on a regional and global scale and to attract domestic and foreign direct investment. Schade noted that new technologies, such as renewable energy sources, provide an opportunity to accelerate access to electricity and hence to ICT services, which will open new business opportunities. If this is done, he said, private investment into these sectors would receive much stronger support, which would in turn reduce the reliance on public funds. 

“Some of Namibia’s weaknesses are relatively low hanging fruits that have been discussed since quite some time and could be turned around in a short period of time, including the hiring of foreign labour, while others in the area of health and education in particular need longer-term, implementable strategies. Overall, Namibia needs to introduce and embrace new technologies and the use thereof more aggressively,” Schade concluded. 

2018-10-18  Edgar Brandt

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