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there is no soup in the economy


by Denver Isaacs
Business

 

When President Hifikepunye Pohamba earlier this year announced the creation of a new Government  intervention to tackle rising unemployment in the three-year envisioned Targeted Intervention Program for Employment and Economic Growth (TIPEEG), few Namibians knew exactly what to expect. The promise was that more than 100 000 direct and indirect jobs in agriculture, transport, tourism, housing, and sanitation between this year and 2014 would be created. The total cost to Government was set at N$9.1b excluding public works programmes and State Owned Enterprise investment. All in all, Tipeeg is supposed to cost the country about N$18.7b.

 

National Workers Union of Namibia’s secretary general,  Evilastus Kaaronda and economist Robin Sherbourne have both dismissed the idea, calling the programme unsustainable in the  long-run, while at a public lecture at the University of Namibia (Unam) last week, members of the public said they had no clue how the project was being implemented. “There seems to be this misconception that Government is going to, one day, call people together and say – here, we’re going to give you all jobs,” Tom Alweendo, Director-General of the National Planning Commission (NPC) tells The Villager. “That’s not going to happen. TIPEEG serves as a public works product,” he says, adding that increasing public works was deemed the surest short-term measure available to Government to address a rising unemployment rate currently standing at 51.3%.

 

“How Tipeeg works is that while we would have had a capital budget of perhaps N$5b with which Government  planned to build roads and complete other capital projects, we’ve now increased that amount to N$8b. “The idea being that since you now have more money to build more roads in the same period, you’ll thus need to employ more people. So instead of three tenders going out for road construction, you’ll now have seven tenders for road construction going out. Thus when people ask when we will involve the private sector, the answer is they’re already involved. All the tenders that go out from Government go to private companies anyways,” he says.

One criticism that has come with TIPEEG is an increased public deficit, which this year rose to 7% of the country’s GDP, from 5% last year. Explaining why there is a lax in the fiscal rules, Alweendo said it’s better to plan a higher deficit now than not know  what to do with it when it becomes an eventual result of too conservative planning. “In order to grow, we can either be very strict on expenditure, or we can decide to grow the GDP. Or we can do both. Unfortunately, in our situation it’s going to be very difficult keeping expenditure low because there will always be pressure on education. There will always be pressure on health spending. So our best solution is growing GDP and Government does that through investing in the economy,” he says.

 

“I look at (TIPEEG) as investing in our economy. But in order to make this investment, we need to agree to up our deficit a bit,” he says. “You could say, let’s keep the deficit at 3%, but the danger is if you don’t invest in the economy, that ration won’t stay at 3% anyway because expenditure keeps rising. That’s why we say, let’s rather plan for a higher deficit now and know that we planned it, rather than end up with a high budget deficit anyway and not know what to do with it,” he says. A key consideration then, he says, was deciding on whichsectors to boost through TIPEEG.