Improve competitiveness to reduce poverty
Improve competitiveness to reduce poverty

Improve competitiveness to reduce poverty

High levels of investment are achieved, even in a small market, by good policies, low taxes, consistency, political stability, good governance and low corruption.
Phillepus Uusiku

If Namibia wants to avoid an increase in extreme poverty, competitiveness must improve. Namibia sees itself as victim of external threats and the evils of apartheid four decades ago.

This victim mentally likely influences public officials not to innovate and think about how to engage the future constructively.

This statement was made by the Economic Policy Research Association (EPRA) in a report titled “Analysis of the investment promotion and facilitation bill (IPFB).”

The report was prepared following the IPFB that was tabled before Parliament and withdrawn during November 2021.

Instead of facilitating and easing investment, the bill was viewed to lead to further economic contraction, reduced investment, increased unemployment and increased poverty.

According to the report, there is a negative correlation between competitiveness and poverty. Hence, the decline in competitiveness is linked to an increase in extreme poverty and vice vera.

“Small, open economies with small domestic markets like Namibia, should not fear the so called ‘entrenched global asymmetries’ which ‘perpetuate inequality’, but improve and engage with the rest of the world.”

The ‘bulwark’ mentality has proven that it lends itself towards increased degeneration, stagnation and state capture based on cronyism and other indigenisation policies. North Korea, Venezuela, Cuba, DRC, South Africa and Zimbabwe are prime example, the report pointed out.

In essence, any sensible investment law should not deter investors, rather it should de-risk the already risky business of investing. The de-risking of investment requires regulatory stability, good policies, clarity on the rule of law and an open non-confrontational relationship between business and government, the report added.

Open societies that value progress tend to be forward looking. They spend quality time on achieving favourable investment outcomes which includes having a vision of a better, more sustainable, and inclusive future rather than dwelling on memories of the past which, admittedly, can attract votes in the short term but hardly ever improves lives in the long term.

Meaningful investment

Analysis in the report indicated that there is a clear and direct correlation between good investment policies and meaningful investment.

Namibia and South Africa showed a declining trend, while Rwanda and Botswana showed an increasing trend, even during Covid-19 times in 2020.

High levels of investment (capital investment as % of GDP) are achieved, even in a small market, by good policies, low taxes, consistency, political stability, good governance and low corruption, the report pointed out.

Namibia is blessed with relative political stability, but has high levels of systemic corruption, high taxes, with one of the highest tax-to-GDP ratios in the world, poor economic policies such as the National Equitable Economic Empowerment Bill (NEEEB) and IPFB and generally a lack of urgency and consistency when it comes to attracting investment.

Corruption is the ‘new normal’ in Namibia and the only way of operating in most business areas. Policies and laws are designed to benefit those in power, who become rich from ill-gotten gains, until there is little left to steal.

“Ultimately, an investment law is not a prerequisite to economic growth, but if we do opt to have one then it better be an attractive one or at least one which does not actively chase away investors, “the report reads.

The introduction of the Namibia Investment Promotions Act in 2016, and NEEEB in the same year, had a devastating influence on investor confidence in Namibia and led to investment outflows. It is easy to blame Covid-19, but in neighbouring Botswana investment increased despite the pandemic, the report [email protected]


Namibian Sun 2023-05-29

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