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Other Articles from The Villager

No economy collapses in two years

Fri, 18 August 2017 19:11
by No holds barred
Columns

Social psychologists Gordon W. Allport and Leo Postman once wrote that “rumour is most frenzied when the public is expecting a momentous event to occur”.

This is what we have today in this country as the Swapo Party heads for its elective congress and the economy is being battered from all four corners. This is also what is happening in the face of the recent Moody’s credit rating downgrade. Most people seem to forget and choose to forget the real situation on the ground.

 Throughout history, there has never been an economy that was destroyed overnight just like there has never been an economy built overnight. Whichever way one looks at it, destroying or building an economy takes years. While there is so much circulating regarding the state of Namibia’s economy today, most people miss this simple fact - economies do not die in one day.

Economies are like human bodies that can only show the effect of any abuse after years. Of course, this is different if there is an accident or lightning or earthquake or any other natural hazard.

 Without exonerating the current administration for missing one or two steps on how they should have handled the economy, facts on the ground show that this economy was sick by 2015. When former president Hifikepunye Pohamba implemented the mass housing programme, the government had not budgeted for the massive venture.

As we sit here now, there is no money for the mass housing project that was looted to the hilt. The government had to run around to put together whatever it could get to kick start the programme. Economists will tell you that an unbudgeted for expenditure of the magnitude that came with the mass housing sets back a country’s economy 20 years backwards.

 Then there is the bulk fuel facility that is causing the government massive headaches. The tender was overpriced and one of the people funding a section of the society making a lot of noise about the current regime destroying the economy benefitted.

We should also not forget the N$14 billion Tipeeg that never lived to its billing of creating lots of jobs. The first tell-tale signs of an economy gone west were years back when Namibia sought to raise money through floating bonds.

 The issue of free education was not the current administration’s idea, but it goes to former President Sam Nujoma’s era. In fact, it is even enshrined in the Constitution.

It should, therefore, go without saying that its failure or success should be a collective responsibility. This does not mean that the current administration should not be part of the whole situation, especially that most of them were part to and of the subsequent administrations.

 Prime Minister Saara Kuugongelwa-Amadhila was the finance minister for years when most of these things were happening. This is why history shows that no economy can die within two years like what some people want us to believe today. Namibia’s economy has been eroding for years and what we see today are signs of a weak economy that cannot carry the burden anymore.

It would then be wrong to point fingers today at any one person and accuse them of single-handedly destroying the economy. This was collective and so let those who are trying to use the economy as a reason see sense.

 When we talk about how to build economies, the example of Singapore comes to mind. There are a lot of similarities between what Singapore did and what Namibia is doing. One: Singapore opened up its industries to joint ventures with foreigners.

 Namibia is doing this, but why has anything not changed? This is because those few who are into joint ventures have no will to build businesses and grow the economy. In fact, they sell off their portion of the joint venture and walk away to the nearest car sales to buy N$6 million cars.

 Imagine that one of the biggest beneficiaries of government tenders, Vaino Nghipondoka employs about 250 people! This is the man who told one newspaper that he landed tenders worth between N$12billion and N$15 billion. Much of this does not go back into the economy but is turned into consumption.

Two: The joint ventures brought foreign investment into Singapore. At the time just like Namibia, Singapore had no enough skilled people. After securing foreign investment, Singapore focused on developing skills.

 This was done through establishing technical schools manned by international corporations that trained unskilled people. Namibia’s situation is such that whatever direct foreign investment is brought in, those investing will take out 1 000 times more.

This is because there are no laws to make sure that profits are retained within the country and are ploughed back to develop the economy.

Namibia too allows foreign companies that go into joint ventures with locals to bring in their people, and no law compels them to pass on skills. This did not start in 2015 but has been going on since 1990.

This has exposed the economy to heavy battering and what we see now is some tiredness. The current administration needed to have studied the state of the economy before starting anything new that requires money. For example, new projects were not supposed to have been spoken about before the old ones had been completed.

What has happened now is that the effort of pulling together old unfinished projects and the new ones at the same time has also cost the economy. The government did not give itself enough time to breathe and refocus. They also realised far too late that the pockets were not as full as thought.

By then, the economy could not withstand the battering. The ultimate result is the loss of jobs and a possible reliance on the government that is already struggling. In this age of fake news and the upcoming Swapo elective congress, the issue has been taken up to mean that the economy was destroyed within two years.