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Inequality gap widens, GDP continues to grow

Mon, 24 March 2014 03:39
by Honorine Kaze
Business

The income gap between the rich and the poor in Namibia has widened over the past 24 years despite growth in the country’s gross domestic product (GDP).
Minister of Trade and Industry, Calle Schlettwein, says upgrading Namibians’ standard of living can only be achieved through industrialisation.
“For the past 24 years, the economy has been led by the export of our raw materials. This needs to change and we need to improve on the processing of our raw materials locally, which would eventually create jobs,” notes Schlettwein.
Namibia Statistics Agency (NSA) statistician-general, John Steytler said last week during a public lecture on ‘Llows of GDP’ that the country’s GDP in 2008 stood at around N$72.9b before rising to N$107.3b in 2012.
“However, the GDP growth does not correlate with the social standards of the people, as Namibia is ranked high on the lists amongst countries with the highest social inequality,” he said.
 According to labour researcher, Herbert Jauch, Namibia’s gab between the rich and the poor is still far too big and the various development efforts have not yet resulted in decent standards of living for the majority.
“Far too many Namibians are still either unemployed or are in very low-paying jobs, unable to meet their basic needs. Workers’ wages are generally low compared to the costs of living,” Jauch said, adding, over the past 24 years, Namibia has left its economic development largely to ‘market forces’ and Government has since tried to achieve economic development by attracting mostly foreign investment; a strategy that has failed to yield the desired results. As such, more direct developmental interventions will be needed in the years to come.
“The employment policy, which was launched last year, identifies some areas of intervention but it remains to be seen if this will happen in practice. Redistributive measures and deliberate interventions to create a large number of jobs and meet the housing needs of the poor are urgently needed,” Jauch noted.
Namibia Chamber of Commerce and Industry (NCCI) chief executive officer (CEO), Tarah Shaanika, said after 24 years of independence, an increase in economic growth should be celebrated.
Furthermore, he noted, new sectors that did not exist before independence now do well, such as fish processing, diamond cutting and polishing, as well as grape production, amongst others.
The stable political situation in the country, Shaanika said, is another positive sign as it encourages an unwavering business climate. However, there are still a number of challenges the country needs to address going forward.
“We have failed to address the issue of income inequality in this country since independence. Therefore, we have a growing number of unemployed youth and poverty is widespread. We have failed to strengthen the position of the blacks within the middle-class. And unless a restructuring of ownership in the economy is done, we will not be able to reduce the existing inequality. Housing is also an important issue that needs to be addressed. All Namibians have the right to good housing with proper sanitation, not only in urban areas but also in the villages,” he said.
Shaanika highlighted growing businesses as a strong element that could help alleviate poverty, albeit acknowledging there are still challenges holding back the equilibrium of a good business climate.
Some of the challenges, he pointed out were the fact that business owners have problems accessing land to establish their businesses be it in towns or villages and this delays investment and job-creation.
“The skills deficiencies are still massive, therefore, there is need to expand the trainings and programmes offered at Vocational Training Centres (VTCs) and deepen the existing programmes”.
To grow local businesses, every Namibian needs to make an effort to support their countrymen, Shaanika urged.
An associate professor of political science at the University of Pretoria, Lorenzo Fioramonti, said although GDP is a measure of economic output, measuring all of a nation’s consumption, private investment and government exports, it, however, excludes the important element of economic performance.
“It does not measure the overall capital input in the economic process, which means it neglects, for instance, the depletion of natural resources used for economic growth, as these are provided free of charge by nature. It also does not consider the costs associated with economic growth, which include social risks and environmental degradation, amongst other facts,” explained Fioramonti.
Therefore, he added, this leads to the exclusion of important elements of economic performance, such as the core economy, which includes services rendered within the household, the informal economy, the odd jobs and all types of voluntary activities that reinforce social cohesion and make economic growth possible.