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Namibia’s competitiveness falls

01/11/2017
by Kelvin Chiringa
Business

Namibia has fallen back again to rank 90 in the Global Competitive Ranking 2017-18 after steady improvements in the ranking from rank 92 in 2012-13 to place 84, last year.

However, according to the Institute for Public Policy Research (IPPR), Namibia’s loss in competitiveness is not due to a worsening overall performance in the indicators, but is down to other countries' improved performance.

Namibia has consistently scored 4.0 out of 7.0 since 2011-12.

The country’s score remained also fairly stable within the three main pillars, namely basic requirements with a score of 4.3 compared to 4.4 in the previous year, efficiency enhancers with an unchanged score of 3.8, and innovation and sophistication factors with an unchanged score of 3.8.

Basic Requirements account for 40% of the total score, efficiency enhancers for half and innovation and sophistication factors for 10%.

However, IPPR notes that within these three pillars some of Namibia’s previous strengths have eroded over the years.

“The country scored very well in terms of infrastructure in 2009-10 with a score of 4.8 making it the 32nd most competitive country glob- ally. The score dropped to 4.2 this year and consequently Namibia is at rank 67,” says IPPR.

The decline has been even more severe regarding the macro-economic environment, where Namibia ranked 27 with a score of 5.7 in 2008-09.

“After a drop by 33 places since 2016/17, Namibia now holds rank 107 with a score of 4.0. Rising government debts and inflation rates have been the main drivers for the steep drop,” says the institute.

Namibia also slipped places from 79 to 84 in the sub-pillar of goods market efficiency, mainly because of the length it takes to start a business.

The number of procedures required to start a business remained at ten placing Namibia on rank 118 out of 137 countries.

The launch of NamBizOne in May 2017 as a single window for business registration is expected to yield some progress in the coming years if the systems of more institutions are integrated.

“However, there are also areas of notable improvement,” advises IPPR, “One of Namibia’s weaknesses has always been the area of health and primary education”

“The reduction in the business impact of HIV/AIDS as well as the number of tuberculosis cases resulted in a better score (4.8 compared to 4.6) and a better ranking by 11 places to 110. The additional airlines serving the routes to and from Windhoek led to a slight increase in the number of airline seats per week and a gain of three ranks to 102,” says IPPR.

Access to finance tops the list of factors seen as most challenging by business people followed by an inadequately educated workforce and an inefficient government bureaucracy.

Corruption and a poor work ethic in the national labour force follow suit in places five and six.

Corruption is rated as a bigger challenge this year (score of 10.6) than last year (score of 7.2).

Crime and theft also moved up ranks from a score of 3.0 (2016-17) to 4.9 (2017-18). In contrast, de- spite the water crisis experienced last year, infrastructure was regarded as less of a challenge this time (score of 4.1) than a year ago (score of 4.6).

“Increased investment in Vocational Education and Training, as well as the launch of an apprenticeship programme, are expected to yield positive results regarding the skilled workforce over the next years,” says IPPR.

The institute also says the current fiscal challenges should be viewed as an opportunity to do business differently and re- view current government functions and structure with the aim to streamlining bureaucratic processes and implementing e-government, which would strengthen our competitiveness.

“Ongoing fiscal and macro-economic consolidation needs to be balanced in order to increase investment in vital infrastructure, such as water, electricity and transport”

“Independent Power Producers have demonstrated that the private sector could play an important role in the provision of infrastructure. Its role can be expanded within the energy sector, but also beyond in order to reduce the financial burden on government coffers,” says IPPR.

However, achieving the 6th goal of the Harambee Prosperity Plan, namely to become the most competitive economy on the continent, would require more concerted efforts by both the public and private sector to address the main bottlenecks, the institute has advised.