Report urges Namibia to expedite reforms

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Desie Heita

Windhoek-The African Development Bank for Namibia (AfDB) has asked Namibia to accelerate its transformation to affect entrepreneurship and industrialisation and allow for value addition in various sectors of the economy.

In a report released in India yesterday, the bank says to harness entrepreneurship that promotes value adding economic activities and creates quality jobs while reducing poverty and inequality, Namibia needs to accelerate implementation of its structural reform programme articulated in the Harambee Prosperity Plan and the National Development Plan in accordance with the aspirations of Vision 2030.

“Whereas there is evidence that some diversification is taking place,” noted the AfDB, “it is not in the manner or at the pace that could characterise meaningful transformation.”
Further, Namibia’s business environment is rated as “better than the sub-Saharan African average,” it said, but enormous challenges remain.

“The pace of business regulatory reform needs to be expedited to enable Namibia to catch up with Mauritius, South Africa, Rwanda and Botswana, the four sub- Saharan African countries ranked higher in terms of competitiveness,” say researchers Martha Phiri for AfDB and Alka Bhatia for the UNDP in the report on Namibia.

The AfDB, United Nations Development Programme (UNDP) and the OECD Development Centre released the report on Namibia yesterday, as part of the African Economic Outlook 2017 that they jointly published.

The African Economic Outlook report says African governments need to integrate entrepreneurship more fully into their industrialisation strategies.

It was released yesterday during the 52nd AfDB Annual Meetings that runs until May 26 in Ahmedabad, India.

Phiri and Bhatia note that starting a business and registering property are particularly difficult in Namibia.

“Whereas it takes an average of four days in Rwanda and six days in Mauritius to start a business, it takes more than 60 days in Namibia. When it comes to registering property, in Botswana it takes an average of 12 days, in Mauritius 14, and in South Africa 23, whereas in Namibia it takes 52.”

While the country is praised for effecting “one of the fastest reductions in poverty in the continent,” it is also noted “income inequality remains persistently high”.

“The share of poor and severely poor as at end 2015/16 were estimated at about 18 percent and 11 percent of the population, respectively, representing a 52 percent and 37.3 percent reduction in poverty headcount over the 2002/03 and 2009/10 estimates, respectively,” Phiri and Bhatia found.

Further, inasmuch the concrete policy efforts to reduce gender disparities are bearing fruit, challenges remain particularly in the high rates of gender-based violence and child marriage.
“Food poverty also remains a challenge. While there has been some decline, nearly 5.8 percent of the population remain unable to buy the minimum calorie requirement 1,200 kcal/day (kilocalorie per day),” they further reported.

“Another challenge in fighting poverty is the high level of unemployment, at 28.1 percent as of 2014, highest among youth at 43 percent and women at 31.7 percent, compared to men at 24.3 percent and in rural areas at 30.2 percent, compared to urban areas at 26.2 percent.”

Further, affordable housing is also seen as “a critical component of addressing poverty by improving welfare standards”.

“The government estimates that 74 percent of Namibians, particularly in the low- and middle-income brackets, cannot afford conventional housing. Accordingly, it proposes to accelerate housing delivery through stakeholder involvement and development of alternative housing construction models in its next National Development Plan (NDP5).”

In a thematic analysis of Namibia, Phiri and Bhatia note that value addition in many sectors of the Namibian economy has decreased and currently contribute very little to the country’s overall economy, compared to their contribution in the early 1990s.

“While agriculture value added has fallen from 9.8 percent of GDP (Gross Domestic Product) in 1990 to 6.7 percent in 2015, industry value added has remained largely stagnant at around 30 percent of GDP,” Phiri and Bhatia write.

“Notable within the industry sector is the fall in manufacturing value added, which has decreased from 11.2 percent of GDP in 1990 to 9.1 percent in 2015.

“Only services value added has seen an expansion from 58.7 percent of GDP in 1990 to 62.9 percent in 2015. Mining is dominant; at 9 percent of GDP (2015) it contributes the highest share to export earnings, with diamonds alone accounting for 33 percent of total exports.”

They also take note of the industrialisation policy and ‘Growth at Home’ strategy of government to set the stage for industrialisation and entrepreneurship and that a monitoring system to track results is in place.

“Namibia is ranked first in Africa and 42nd out of 85 countries in the world on the state of entrepreneurship, according to the Ashish J Thakkar Global Entrepreneurship Index, 2016.
The Growth at Home strategy recognises that a vibrant entrepreneurship culture and a conducive business investment climate are key to competitiveness and successful industrialisation.

Therefore, the road map focuses on developing the relevant skills, streamlining business processes, reviewing incentives for investors and undertaking labour market reforms,” noted the two analysts.

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