While Government and the private sector have a firm belief that growing the economy by a considerable margin annually would bring in positive results, the African Development Bank says Namibia needs a paradigm shift from economic growth to eco-transformation.
Largely dependent on revenue inflows from a reasonably performing mining sector driven by diamond and uranium and an unreliable Southern African Customs Union (Sacu) pool, the Namibian economy has seen its bad days including escalating unemployment, slow growth in manufacturing and has had to rely heavily on capital importation.
With such a scenario, the president of the African Development Bank, Donald Kaberuka in his half-year report, stated that he believes Namibia and all the other countries in the sub-Saharan Africa need to seriously re-think on their heavy reliance on the primary industries (agriculture and mining) for economic sustenance.
In his report at the recently held AFDB annual meeting in Arusha Tanzania, Kaberuka said, “Sub-Saharan governments have been obsessed with GDP figures while very little is being done on broadening the economic scope and making sure all sectors contribute to their economic performance. Governments need to move their focus from the extractive industries whose deposits can always run dry and start creating robust infrastructure development projects to buffer the manufacturing industry in order to create long-term jobs for the populace.”
He sighted South Africa as a pinnacle example of an economic diversity after it managed to stimulate its telecommunications industry and manufacturing sector to the current level where the country now contributes 20% of the total GDP annually in Africa.
AFDB notes that Namibia will take longer to cut down on runaway unemployment, rising inflation and economic hardships for the poor until Government gives the private sector a growth path backed with firm policies that encourage Foreign Direct Investments (FDIs).
Namibia has, for the past three years, maintained a GDP average of 3.8%, which AFDB believes could be improved further if the tertiary and secondary industries were well oiled.
In essence, the agriculture sector contributes 7.3% to the country’s GDP, with the industry sector catering for a 34.3% contribution of which eight percent comes from mining while the service industry is estimated at 58.3% for the GDP contribution.
AFDB expects economies in sub-Saharan Africa to grow by 6% on average this year while a third of the countries in the region will clock a 7% growth and above – as a few are already seeing double digit growth.
“However, these are not numbers sufficient enough to lump out poverty fast enough, given the low base, population increase and the narrow set of growth drivers but poverty is steadily declining.
“Commodity demand has been a key factor in rising disposable incomes from a growing urban middle-class, supportive role. But it remains the sound economic, investment and business policies that have laid a solid foundation,” Kaberuka said.
Transformation, AFDB says, will entail diversifying the economy to stimulate production from cross sector activities and a slowdown on heavy reliance on the farming and natural resources.
AFDB adds that Namibia is suffering from being a heavy importer of capital instead of being the exporter of the capital; a move that is used by developed nations to strengthen their companies and industries through spreading to other continents.
Namibia, just like all African countries and emerging economies, has pinned its focus on being a resource-based economy, translating into a survival tactic through tax income; a move AFDB argues will not see the country transforming its economy to a multi-sector economy.
According to AFDB, the country needs to stimulate service, manufacturing and tertiary industry through reinvestment of resources earned from the primary industry in investment into education for the poor, health and infrastructure development.
AFDB also calls for the extensive need for the Government to start centralising economic operations on private sector to encourage growth.
“Government should be more concerned with policy formulation and creation in order to give a clear directive to potential investors and curb doubts from industrialists,” he asserted.
Will give additional comment from GVT and analyst by end of day tomorrow