November 01, 2024
Economy

Namibia's economic framework fails to address poverty, inequality, and unemployment

March 22, 2023
Namibia's economic framework fails to address poverty, inequality, and unemployment

Namibia's current economic framework is incapable of meeting the country's challenges, and analysts are concerned about the country's inability to gain traction in addressing issues such as poverty, unemployment, and inequality, among others.

According to Jason Kasuto, Managing Partner of Monasa Advisory & Associates, Namibia inherited a skewed economy when it gained independence in 1990, with low economic growth, income inequality, poverty, and a “predominantly illiterate population”.

Kasuto highlights that the structure of the Namibian economy has not changed over the past 50 years, and it is built around industries that continue to grow in their efficiencies.

“It’s built around industries that continue to grow in their efficiencies and although they draw in significant capital, this does not move the needle at the momentum required to solve the poverty, unemployment and inequality challenges just highlighted," he said.

To address the country's economic challenges, Kasuto argues that Namibia must invest in developing a bankable populace.

"Lean on Clayton Christiansens Paradox of Prosperity thinking that lasting prosperity for many countries will not come from fixing poverty. In fact, sustainable prosperity is not reliably generated through the flood of resources to improve indicators such as low-quality education, subpar healthcare, bad governance, non-existent infrastructure etc," he said.

Adding that investing in innovations that create new markets will yield significant growth.

Similarly, changing sophisticated and expensive products and services into simple and less expensive items, making them available to a whole new part of society known as "non-consumers"/the underserved.”

"For example Celtel, Indomnie, Ford T Model, Kodak, Singer Sewing machine, create jobs, create profits, and change the culture of the entire society. These markets “pull” in other components–infrastructure, education, institutions, and even a change in culture," he explained.

Furthermore, Kasuto notes that there is a need to take a step back, analyse the real problem, and only then can the country appreciate that it has the golden opportunity to solve its own problem with its own solution.

"We need to ask ourselves, are we going against the Parato rule and spending 80% of our time on what brings back 20% of the results, whereas we could be spending 20% of our time in attaining 80% of the target. Is that 80% of time spent focused on regulations, control and outsourcing problem solving? Or should we be spending even 20% of our time on sandboxing, project prep funding, venture capital and channeling funds into productive areas of the economy," he quizzed.

Kasuto's findings are supported by a recently completed study by Monasa on financial sector expansion and inclusive growth in Namibia from 1990 to 2021, which indicated that as the financial sector developed, so did income inequality. The country's unemployment rate is high at 33.4% in 2018, with a youth unemployment rate of 46.1%.

The youth unemployment rate is higher in rural areas than in urban areas, and Namibia is among the SADC countries in the region with the highest youth unemployment rates.

On the other hand, GDP has seen a significant increase from its nominal level of only N$7.2 billion in 1990 at independence to over N$200 billion by 2022. However, the growth rate has been inconsistent, with a peak of 6.1% in 2015 and a decrease in recent years, only seeing recovery out of the negative zone most recently.

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Last modified on Thursday, 23 March 2023 15:23
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