If you ask people in government, or in the ANC why SA’s growth rate has been so miserable over the past decade, they will tend to posit three reasons: the 2008 financial crisis, the cooling commodity boom because of the declining rate of growth in China, and the country’s apartheid legacy. There is a one-word refutation of this construction: Namibia.
Namibia is an extraordinary place, and an increasingly notable African success story. I know it a little because my parents lived there for a few years, and I have travelled the country from top to bottom. But it is interesting from a South African perspective, because of its facility as a point of comparison.
It must be said that the comparison between the two countries is weak in some ways: Namibia is a huge country with a very small population; its geography is different, with most of the country a brutal desert; and population density in Namibia is focused on the country’s fertile and semi-tropical extreme north.
But in other ways, the comparison works. Namibia also had an apartheid system for almost as long as SA. Its colonial history was as brutal, and the country is also culturally and ethnically very mixed.
The ethnic breakdown is slightly different in that a single ethnic group, the Ovambo, is more dominant in Namibia than any one tribe in SA, making up about half the population. Whites and mixed-race Namibians make up about 16 percent of the population, more or less like in SA.
What’s important is that both SA and Namibia became democratic within a short space of time – in 1989 and in 1994 – and, also important, they both had similarly structured public services: big and white-dominated, with an authoritarian bent.
Both countries entered democracy with charismatic leaders schooled in socialist thought and politics, but both were tracking towards the centre by the time they were elected.
Both inherited economies that were in the doldrums and faced enormous transformation issues. Unemployment was and remains high in both countries, and inequality is equally enormous. So what happened then?
Tracking the two countries’ respective performances is very embarrassing for SA. Wealth per capita in Namibia increased from about $3 700 per annum in 1994 to about $6 000 today – an increase of about 60 percent. SA’s wealth per capita started from $6 000, but real per capita GDP has increased here by only a modest 25 percent in 22 years. (These are World Bank numbers).
There are two counter-arguments here; growing from a lower base is, of course, easier. And there is also the theory that it’s easier for small countries to grow faster than it is for large countries, such as SA.
Botswana, the other high growth performer in southern Africa, has also boomed over the same period but, interestingly, not quite as much as Namibia, increasing wealth by 50 percent.
I’m not totally convinced by these counter-arguments. Why, for example, should size make any difference?
Being a smaller country also means you have fewer resources. There are disadvantages to being a small economy too. And it’s not as though SA is so high up the riches ladder that improving wealth should be difficult. Per capital GDP in the US, for example, is about seven times higher than it is in SA.
The changes in these wealth numbers suggest that GDP growth has been faster, on average, in Namibia, and that of course is true. But what’s interesting about the growth profiles is how quickly Namibia bounced back from the 2008 financial crisis and how the downward slide in the commodity cycle seems to have affected growth less.
Like in SA, growth in Namibia dropped to about -4 percent in 2008, but unlike in SA, it bounced back harder and stayed there. Growth in 2009 in Namibia was about five percent, compared to 3.5 percent in SA.
Since then, SA’s growth rate has declined to almost nothing; Namibia’s has been more volatile, but on the whole, it has remained about four percent, and the trend has remained gradually upward (even when taking into account the most recent quarters that have been dismal).
If you take a broad scan of the economic profile of Namibia, it’s hard not to draw the conclusion that the country is just run better.
Debt is a trivial 25 percent of GDP (* It now stands at 34 percent of GDP. – New Era Editor), the key sectors of mining and manufacturing have both almost doubled since its democracy – unlike in SA, where mining has stagnated.
The economic success in Namibia has translated into political success, as it always does. Swapo won 80 percent of the vote in the most recent election and its well-respected and Mandela-esque leader, Hage Geingob, won 87 percent of the presidential vote. – Business Day
* Tim Cohen is the editor of Business Day.