NDP5 aims to eradicate poverty and inequality Economic Progression: Part 1

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Staff Reporter

Windhoek-The Fifth National Development Plan (NDP5), which was launched by President Hage Geingob last week is geared towards achieving the objectives and aspirations of Namibia’s long term plan for industrialisation, Vision 2030. In sequence, NDP5 will be the third five-year implementation vehicle towards Vision 2030 and will be implemented from the financial year 2017/18 up until 2021/22.

The NDP5 framework is organised around the four interconnected pillars that are founded on the principle of sustainable development namely: economic progression; social transformation; environmental sustainability; and good governance.

These pillars are aligned with Namibia’s commitment to eradicate poverty and inequality as outlined in Vision 2030, the Harambee Prosperity Plan (2016), and the Swapo Party Manifesto (2014). Additionally, the pillars support the global and continental development frameworks to which Namibia is committed.

These include Agenda 2030, Sustainable Development Goals (SDGs), The Paris Agreement (CoP21), African Union (AU) Agenda 2063 and SADC Regional Indicative Strategic Development Plan (RISDP).

Within this context, Namibia committed itself to enhancing growth and economic diversification, while addressing challenges that include a high degree of regulation and a mismatch between the skill levels in Namibia’s work force and the skills demanded by the labor market.

NDP5 identifies five game-changers that will move Namibia from a reactive, input-based economy towards a proactive, high performing economy. These are: increase investment in infrastructure development; increase productivity in agriculture, especially for smallholder farmers; invest in quality technical skills development; improve value addition in natural resources; achieve industrial development through local procurement.

Economic Progression: Structural transformation through value-added industrialisation
During the NDP5 period, the Namibian economy is projected to move from an input-dependent economy to a knowledge-based economy. Investments will be made in research and development, skills development, diversification of economic activities and greater value addition.

To accelerate inclusive and equitable growth, four mutually supportive initiatives will be pursued: structural transformation through industrialisation; expansion and modernisation of physical infrastructure; strengthened export capacity and greater regional integration; supportive financial infrastructure for greater inclusion

The aims is to achieve an average annual real GDP growth of 5 percent during NDP5. Macroeconomic stability is a precondition for economic progression. To achieve this, NDP5 will maintain a prudent monetary policy, greater efficiency in tax collection and develop a broader revenue base through value-added manufacturing.

A number of inefficiencies in revenue collection have been noted, especially a low collection rate from personal income tax and corporate taxes. Implementation of tax administration reforms and recovery of tax arrears will enhance revenue collection.

In 2016, the services industry accounted for about 59 percent of the GDP while the primary and secondary industries each represent about 17 percent of GDP respectively. This structure is mainly similar to the one during NDP1 when the service industry accounted for 60.1 percent while the primary and secondary industry accounted for 17.6 percent and 14 percent, respectively.

During NDP4, only tourism and transport of the four priority sectors performed as expected. Growth in agriculture and manufacturing contracted due to climate-related factors and external shocks.

Throughout the NDP4 period, the majority of new jobs created were in semi-skilled occupations, which contributed relatively low labour productivity gains. Structural transformation has been impeded by the underdevelopment of the manufacturing sector, slow pace of industrialisation, and large informal economy.

In order to achieve structural transformation and ultimately inclusive, sustainable and equitable growth, NDP5 thus proposes interventions in several focus areas.

Challenges
The majority of SMEs are not creative and innovative due to a lack of entrepreneurship culture and a fear of taking risks. SMEs are unable to access much-needed business development services due to lack of financing and information. Despite the establishment of various financial institutions, such as the SME Bank, DBN, and various commercial banks, access to financing remains a challenge due to high interest rates, total lack of or insufficient collateral, as well as a lack of information on the availability of financial services and products.

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