November 01, 2024
Economy

Is GDP an effective measure for Namibia’s economic growth? Part 1

October 14, 2023
Is GDP an effective measure for Namibia’s economic growth? Part 1

The Brief newspaper on 21 September 2023 reported that Namibia’s economy grew by N$7.3 billion to N$58.6 billion in the second quarter of 2023, which translated to a 3.7% economic growth. Although the statistics are admirable, what do they mean for the layperson?

Namibia is rated as an upper-middle-income country, what does that mean? Is the gross domestic product (GDP) measurement effective in measuring sustainable economic growth and standard of living, especially for Namibia?

Before I answer the questions above, let me break down this economic measurement. GDP is a monetary measure that measures the total value of goods and services at market prices, produced by a country’s economy during a specified period. It is calculated by adding up what everyone earned or spent in a year.

Apart from the GDP, the World Bank also uses the Gross National Income (GNI) per capita. This measurement uses U.S. dollars, converted from local currency, to classify countries into four income categories. These groups range from high, upper and lower middle income- and low-income groups.

According to the World Bank, a country that is classified as a low income, has a domestic production of about US$1,136 and less per person per year. For upper middle income-rated countries it is between US$4,466 and US$13,845. For lower-middle-income countries it is between US$1,136 and US$4,465. For high-income countries, it is US$13,846 and higher.

Given the fact that these measurements were introduced a century ago, can they still be deemed effective in measuring a country's economic growth? Over the years, various innovations have emerged, and socioeconomic environments have become complex. Perhaps the measure can still be used for developed countries, but not for developing countries. Developing countries face an array of complex social issues that the GDP does not consider.

Namibia, for example, is rated as an upper-middle-income country, which means people in this country on average make between US$4,466 to US$13,845 per year? Is that what is on the ground in this country? According to the World Economics statistics, Namibia’s Gini Coefficient Index is 64.2% as of 2019 (The Gini Index is a measure of how equal a country's distribution of income is. It is a score between 0 and 100, where 0 represents perfect equality and 100 represents perfect inequality.) If Namibia has a high Gini-coefficient rate, but is classified as an upper-middle-in country, does that data correlate?

Professor Simon Kuznets is known for his views on the ineffectiveness of the usage of GDP to measure the standard of living of people. He believes that the GDP indicators do not factor in the broad elements that impact a society. For example, the GDP does not factor in the literacy level of the people, and how well people conserve the environment and natural resources. Neither does it determine the health and well-being of the people.

Going back to the article that cited that Namibia’s economy grew by 3.7% this quarter. Economists and those responsible for reporting the GDP statistics need to change how they tell the economic growth narrative. Every stakeholder asks this question, what is in it for me? Or says, so what! A layperson will probably ask, “So what?”, if our economy grew by 3.7%? What does that mean for me and my family? The Namibia Statistics Agency, as one of the custodians for national statistics, needs to find a way to bring more meaning and understanding to these numbers. This will help in garnering buy-in from Namibians and develop a better appreciation for such statistics.

Perhaps there will not be challenges such as those faced by the census team, where numerous people, particularly from the informal areas, did not want to be counted, because they felt their participation in previous censuses did not yield any benefits for them and their situations. NBC reported that one of the people said “they have not tasted the fruits of the government’s planning efforts and that is why they don’t want to be counted”.

We need to adopt or find measures that suit our developmental aspirations and context. It is time to assess whether measures such as the GNI or GDP are still relevant for our country. Next week we further unpack the measurements suitable for sustainable economic growth.

*Morna Ikosa is a seasoned communications and stakeholder engagement consultant. With a specific affinity for sustainable development and is a certified workplace violence and sexual harassment expert. Find her on LinkedIn or email her at This email address is being protected from spambots. You need JavaScript enabled to view it.

Rate this item
(0 votes)
Tags
« Namibia surpasses N$7.6bn FDI mark in second quarter Geingob to participate in African Energy Week »

Related items

  • Namport eyes Q3 2024 to start Lüderitz port expansion

    The Namibian Ports Authority (Namport) is targeting to start port expansion at Lüderitz next year to facilitate the implementation of the country's impending oil and gas developments. 

  • NamRA eyes oil, gas and renewable sector taxes

    The Namibia Revenue Agency (NamRA) is structuring an independent auditing department that will only focus on the oil, gas and renewable sectors to curb tax evasion and maximise revenue collection in these sectors, an official has revealed.

  • EIF to conduct N$5m green hydrogen feasibility study

    The Environmental Investment Fund of Namibia (EIF), through the Green Resilient Recovery Rapid Readiness Support in Namibia, will spend N$5 million on a green hydrogen feasibility study.

  • FNB extends N$83m to entrepreneurs

    First National Bank of Namibia, in partnership with the Namibia Special Risk Insurance Association (NASRIA), has extended N$83 million to address credit limitations issues faced by aspiring entrepreneurs. 

back to top
Ad Sidebar Small Size
Ad Sidebar big size

Joomla! Debug Console

Session

Profile Information

Memory Usage

Database Queries