The state of economic policy-making in Namibia

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by Mihe Gaomab II

After Namibia’s Independence, the country was driven by the desire to raise living standards across the country and the government adopted a development strategy that relied heavily on an extensive system of government interventions and controls for the purposes of economic management.

These policies sought to achieve rapid industrialisation by curtailing import dependence, establishing public enterprises to control and manage economic activities in strategic sectors, and putting in place wide-ranging regulations to influence prices, restrict imports through licensing and other trade barriers, as well as control the availability and allocation of bank credit and foreign exchange.

The government relied on the taxation of the primary industry commodities and often on exports to raise resources for the financing of its economic development plans. The country was also able to mobilise financial support for its development plans from foreign development partners (including both bilateral and multilateral institutions).
In that vein, the government adopted the country’s long-term strategy Vision 2030 in year 2004, which sets out the framework of Namibia’s development agenda, objectives and economic targets to be achieved by the country by the year 2030.

In tune with this vision, the National Planning Commission (NPC) was tasked as the lead agency in directing and coordinating the course of national planning and development. The National Development Plans (NDPs) were introduced as the five-year interval plans, which served as the main monitoring and evaluation tool for achieving the objectives of the long-term Vision 2030 through short-term goals and intermediate targets.

Namibia is one of the countries in the region faced by high levels of poverty, but the latest evidence shows poverty has declined to about 30 percent of the population, but high inequality of close to 0.60 Gini-coefficient still persists.
The unemployment rate and lack of jobs due to the structure of the economy is also a matter of concern. Namibia has not as yet grown to ensure transformation to ensure more employment and widespread economic growth.

In fact, the Namibian economy registered average economic growth of close to 5 percent over the past 20 years, but this unfortunately did not translate into employment creation, as most of this growth came from capital intensive industries rather than labour intensive sectors.

Through NDP4, government has identified key priority areas that will help achieve the high and sustainable economic growth required for employment creation, poverty reduction and greater income equality.
Government has decided to focus on achieving high and sustained economic growth, employment creation and increased income equality during NDP4 and the four sectors of manufacturing and agriculture, logistics, and tourism were earmarked to be the source of growth.

Other short-term interventions were made by government through the Ministry of Finance, Namibian Competition Commission, Bank of Namibia and the National Planning Commission to influence growth and demand in the domestic economy.

This includes the personal income and corporate tax relief and subsidies in certain industries, zero-rating of staple food products, targeted effective merger regulation, introduction of new tax rates, and the introduction of the Targeted Intervention Programme for Employment and Economic Growth, to mention but a few.
This year, government declared war on poverty, which also saw the restructuring and introduction of new ministries to enhance efficiency in the public service delivery.

This has again resulted in the proposal of new economic plans, such as the establishment of the food bank to feed the destitute, provisions of the basic income grants for low-income earners, the implementations of the basic income grants for Namibia and the recently mooted Solidarity Tax.

These initiatives tie in with one of the developmental pillars of alleviating poverty and increasing equality among citizens, as social grants are one of the most effective means of alleviating poverty.

These initiatives aim to bring about social welfare in the country. Social welfare can be regarded as risk sharing, as it has the potential to prevent a group or class of people from falling behind the mainstream and from being unable to participate in the economy.

Social spending does aid in that no Namibian must be left out and can also enhance productivity and human capital through spending on education, health, nutrition, and safety nets.

Namibia’s economic planning (policy-making) is commendable, as prudent policy planning, the institutional framework, sound government policies and macroeconomic management strategies have moderated the extent of macroeconomic shocks. The country has enjoyed macroeconomic stability and political stability since Independence.
It is crucial that before policies are made and implemented, government leaders are able to understand the mechanisms, workability and the effect of such policies on the economy. This shows the government’s commitment to economic development with wide consultations and coverage achieved through the introduction of the NDP process, as well as evaluation and monitoring control mechanisms for the attainment of national plans and objectives.

Namibia’s planning processes have exhibited features of good policy-making and the NPC is still best suited to direct and coordinate the course of national planning and development. Policy-making in the past had always been forward-looking, clearly defining outcomes that the policy is designed to achieve, and was evidence-based.
Good policy-making should uphold the pillars of inclusivity and should be focussed on effective implementation. Above all, the policy-making process should mature towards targeted and well-focused monitoring and evaluation and should take account of the impact on (and/or meet) the needs of all the people directly or indirectly affected by it.

It must also involve on a wide consultative basis all the key stakeholders, something which the current political and economic administration is applauded for.

* Mihe Gaomab II is the chief executive officer of the Namibian Competition Commission.

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