Shift in the Economic Power to Blacks (Part 1)

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In the first part of this piece, I describe how the shift in wealth and economic power from whites to blacks is long-term and structural and unlikely to be reversed. I then extend the analysis to focus on the economic value addition of each tribal grouping within the black community and to what extent each tribe is accumulating wealth. The aim is to identify as to which tribal groupings are actively contributing to the growth of the economy through their efforts to generate wealth and which tribal groupings are economic passengers and consumers of wealth. At some point in time, the differences in the economic power of each tribe will lead to economic, political and tribal rifts that will heighten tribal tensions that could end in political crises and lead to the collapse of the very economic foundation we are trying to build. There are two strands of thought that run through this article. First, I move away from a long-held view that the economic problems of all developing countries, including Namibia, can be understood best with reference to the international environment of which they are a part. According to this view, the problems of underdevelopment must first and foremost be seen in a global context. There is much that is valid in this viewpoint, but I wish to emphasize equally fundamental issues that are internal to the structure and dynamics of Namibia’s economy. The main hypothesis of this article is that if all tribal groupings participate actively in creating wealth for themselves and their families, the Namibian economy will move to a higher economic frontier with low unemployment and less poverty. – Black Household Rising Economic Power: There is growing evidence that the average black household’s personal disposable income has been growing much faster than the average wealth of whites. This trend is reflected in the decline in the Gini-coefficient (measure of income inequality) from 0.7 at the time of independence to 0.6 in 2005. The decline in this coefficient is a clear testimony that deliberate government policies are yielding results in generating wealth for the black majority and slowly reducing the income inequality that characterizes the Namibian society. The black population occupying the middle- and high-income group continues to increase at a faster rate. The latest national accounts produced by the Central Bureau of Statistics at the National Planning Commission (NPC) shows that from 1995 to 2005 annual growth in disposable income accruing to Namibians, excluding government, increased from N$9 billion in 1995 to N$25 billion in 2005, representing an annual income increase of 20 percent per year. Compensation for employees along the same period increased from N$5.5 billion to N$15 billion, representing an annual increase of 20%. A large proportion of this income was paid to the black household as compensation for selling their labour, goods and services. The increase in income accruing to black households is also reflected in the high savings levels observed in Namibia since independence, where more than 85 per cent of new insurance policies issued are from black households and almost 90% of pension funds’ membership is from black households. It is estimated that blacks now own approximately 85% or N$45 billion of the total combined savings of pension and insurance which amounts to N$53 billion. Compare this to 15 years ago when blacks owned less than 10% of the total savings of pension funds and insurance companies’ savings. The excess savings in Namibia over the past ten years reflects the significant rise in black household disposable income and their well-disciplined savings culture. In addition to dominating the savings of pension funds and insurance companies, blacks also dominate the savings held by commercial banks. In addition to the black household wealth accumulated through savings in pension funds and insurance companies, blacks have been accumulating property at a faster rate since independence than their white counterparts. Black ownership of assets is reflected in their ownership of housing and small formal business ownership and their monopoly over the ownership of informal businesses. Blacks now own more than 80 percent of residential properties in almost all the 13 regions of Namibia. It should be remembered that during the initial stage of economic development, home ownership and small informal business ownership are signs of economic progress, entrepreneurial spirit and advancement. A growing black middle- and high-income group has manifested in an increase in the percentage of total expenditure on various product types. With personal consumption expenditure accounting for more than 70% of gross domestic product (GDP), black household consumption expenditure is estimated at 60% of GDP, compared to the early 1990s when their contribution to GDP was estimated below 20% due to their weak black aggregate demand. Credit should be given to the prudent government policies that have ensured macroeconomic and political stability, while at the same time creating wealth for all Namibians. The economic gains achieved over the past fifteen years of independence need to be preserved and be sustained and this can only happen if all Namibians stop being spectators and consumers of wealth, and become active in the process of generating wealth by participating in the production process. This then leads me into the discussion of how each tribe in Namibia uses its comparative advantage and natural resource endowment to contribute to the enlargement of the national wealth (Namibia’s GDP). – Ovambos’ Economic Supremacy While the analysis of the Namibian economy from the angle I have taken might be perceived as inciting tribal division, the fact remains that tribes make up the Namibian nation and the performance of the economy is nothing else other than the contribution of each individual and each tribe as represented in Namibia’s 13 regions. If one part of the body is sick or not functioning properly, then the whole body cannot function properly and will eventually die. Ovambos for the sake of this analysis includes all Oshiwambo-speaking Namibians residing in the four northern regions of Omusati, Oshana, Ohangwena and Oshikoto and those Ovambos all over Namibia, including Walvis Bay. At independence in 1990, the Ovambos were perceived to be backward in terms of education, poor with no natural resources, but this has now been reversed with Ovambo schools now ranked in the top five best performing regions from being the last poorest performer during the early days of independence. The Ovambos had the lowest average income per household at independence compared to other population groups, but this has been reversed over the past fifteen years with the average income per household of Ovambos now averaging N$30 000, placing them at number seven (7) out of 13. Oshana with an average income of N$45 708 is ranked number three (3) out of 13, behind Khomas with income of N$91 000 and Erongo with an income of N$53 410. The rise in the wealth and economic power of Ovambos over the past fifteen years is explained by many factors, and among others are the Ovambos’ spirit of entrepreneurship and a culture of risk taking. They are becoming a major economic force in Namibia, posing a threat to the economic dominance by whites who were propelled into this position by the previous apartheid policies. My own unpublished research over the years shows that Ovambos are economic warriors who love making money and accumulating wealth for themselves and for their communities. They understand what money can do to have political power and command respect, and have capitalized on the opportunities created in the country to build wealth for themselves and their families. Of all the black tribes in Namibia, Ovambos have the killer instincts to succeed in acquiring and accumulating wealth, and are prepared to assume any type of risks to become rich and become financially independent. In their quest for wealth accumulation, they have maneuvered many minefields and treacherous routes and have exploited every opportunity available in the country. Anecdotal evidence suggests that Ovambos, despite lack of natural resources, are acquiring relatively more assets and accumulating wealth faster than other population or tribal groups in Namibia. Over the past fifteen years, Ovambos have taken and exploited opportunities and established projects that are generating wealth for themselves and their families. Most successful black businessmen and women whose financial statements are reconciled in millions of dollars are Ovambos and they have generated employment in different sectors of the economy especially in the retail, wholesale, trade and construction sectors. Ovambo businessmen now own a significant share of the fishing industry, the financial sector and the hospitality industry. Their entrepreneurial spirit is also demonstrated in their dominance of the music industry and boxing which is a risk, but well paying sport. I do not subscribe much to the narrow view that attributes Ovambos’ success to their dominance in politics and government. While I acknowledge this factor, I attribute their success to their hard work, preparedness to take and assume risks and their entrepreneurial spirit. In addition Ovambos as represented in the four Os have stronger leadership at all levels be it at schools, local and regional authorities compared to other regions. A friend of mine who now teaches in Omusati schools after having spent part of his teaching career in Caprivi, Kavango and Omaheke testifies that Ovambos’ success in the area of education is a result of strong leadership and the discipline instilled in teachers and students. Ovambos are also hungry for information; they will strive to attend any seminar to seek information and knowledge on how to acquire wealth. On a scale of 1 to 10 (1 being very good and 10 very poor), I rank Ovambos at number two (2) for their active participation in generating wealth through their ownership of business and hard work. Assuming that politics does not divide the peace and stability/unity that prevails among different Ovambo tribes, I am confident that this tribe will carry Namibia on its shoulders and it is just a matter of time that more jobs will be created by Ovambo business persons than white business persons. – The Hereros: My research shows that Hereros are very productive tribal groupings in Namibia contrary to the widely held views that Hereros are lazy. Their contribution to the country’s economy should be measured in terms of their contribution to agriculture through cattle farming and their contribution to the knowledge economy. Omaheke, where most Hereros are concentrated, has an average household income of N$43 820, making it the fourth richest region in Namibia after Khomas, Erongo and Oshana. Although there are a number of white commercial farmers who are included in Omaheke, the Hereros still account for a large part of the average income in that area. Hereros and to a certain extent the Tswanas are the only tribes in Namibia who can claim that they have made inroads and progressed in terms of commercial farming, a trade previously the domain of white Afrikaners. – To be continued In addition to being successful commercial farmers and adding value to the Namibian economy, Hereros are highly educated, probably the most highly academically qualified tribal grouping in Namibia and through their educational superiority they dominate and make valuable contributions to the success and progress of the Namibian economy. Despite the widely held views that Hereros are a divided nation, my research shows that Hereros are very supportive of each other and strive to uplift one another to succeed, providing grazing to fellow farmers and for that reason you could find a Herero in a senior position ending up appointing more Hereros in his/her institution. I don’t see this as tribalism, but a reflection of their strong bond. On a scale of one (1) to ten (10), I rank Hereros at 4 out of 10, making them one of the most productive members of our society, only second to Ovambos. They are behind the Ovambos for being less entrepreneurial by venturing in other business areas, not willing to take risks beyond Omaheke and relatively lazy when compared to the Ovambos. They together with the Ovambos are much focused, are persistent and a valuable resource to the future of our country and are laying a strong foundation for the creation of wealth that will ensure a better future for our future generations. My research shows that Ovambos and Hereros are the only two tribes in Namibia who are making significant contributions to the increase in total GDP, adding value to the economy and the creators of wealth through their ownership of businesses and cattle farming. While other tribes are contributing to the economy as employees, the above two tribes are actively engaged in the production process, producing for Namibia and the rest of the world. Their continued economic dominance will ensure that they continue dominating the political landscape for a long time. Part 2 of this piece will look at other Namibian tribes whom my research shows to be economic passengers and consumer of wealth despite being endowed with natural resources. They will always point a finger at someone or another tribe for their failure to acquire wealth. They will hide their laziness behind the so-called Ovambo domination and government not helping them. Part 2 will also discuss the state of the white economy and why whites are losing their economic power to the blacks, especially Ovambos and Hereros. – Martin Mwinga works for RMB Asset Management Namibia and views expressed in this article are those of the author and not his employer.