Economy needs reboot

Recovering from the economic downturn requires a serious look at how the economy is run, experts agree.

16 September 2019 | Economics

Historically Namibia has had huge amounts of surplus cash and a fast-growing economy; now for the first time it is experiencing the “uneasy feeling of finite cash reserves”, which should compel it to use the now scarce resource in the best way possible.

This is the view of Roland Brown, chairperson of the Economic Association of Namibia (EAN) and founder of Cirrus Capital, at a recent discussion on how the Namibian economy can be recharged.

Using the precarious position Air Namibia finds itself in as an example, Brown disagreed with the argument that the flailing airline should be kept afloat to prevent job losses.

“If you calculate the cost per job or the bailouts that were so far given, you can basically ask all Air Namibia staff to go home, give them N$2 million per year, and you'll still be sitting with change.

“We need to ask ourselves if this is the most efficient way to produce jobs and we need to ask more serious questions when it comes to the allocation of resources,” Brown suggested.

Jason Kasuto, managing partner of MONASA Advisory & Associates and member of the High-Level Panel on the Economy (HLPE), concurred; saying inclusive growth is required to impact lives.

Kasuto said greater acknowledgement should to be given to the informal sector that employs 55% of the Namibian labour force, as well as the SME sector that employs about 33% and contributes 12% to the economy.



Bottlenecks

Unam economics professor Roman Grynberg commented that the Namibian state firmly keeps its “jackboot on the throat of the poor” and fails to provide a conducive environment for small businesses to grow.

“I have lived in many developing countries where governments help small businesses. Here, it does everything to stop the poor from going into business,” Grynberg commented.

Referring to the SME Bank fiasco, one participant observed that it does not help to create institutions to purportedly assist local businesses if these are led by unethical, immoral, and depraved characters.

Participants also felt small companies are overburdened with high costs of doing business in a heavily regulated tax environment.

Small businesses often have to compete with big, established players – internally or from outside – that have created monopolies in many sectors of the economy over decades.

Brown suggested the Namibian Competition Commission (Nacc) could do more in this regard.

Another barrier to business growth is an increasingly antagonistic policy environment – like the introduction of NEEEF, the new Exchange Control Bill, and the Namibian Investment Promotion Act (NIPA).

Brown acknowledged that these policy directions would adversely impact economic growth, but was quick to add that doing away with these would not necessarily result in high-quality economic growth.

He suggested that other deregulations that particularly impact small businesses would probably be the silver bullet to high-quality growth.



Human dignity = economic growth

A study by the University of Stellenbosch has found that economic growth is not what uplifts people. Instead, uplifting people achieves economic growth.

Eben de Klerk of ISG Risk Services observed that such human development requires three pillars: education, a good healthcare system and personal security, which includes housing. These are things the Namibian government often fails to deliver on. For example, he commented that the City of Windhoek, which has an annual wage bill of over N$1 billion, has failed to deliver serviced land.

“These are the structural problems we need to address to get our economy going, instead of populist policies that only make things worse,” De Klerk proposed.

CATHERINE SASMAN

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