Create Pro-Business Culture, Get Rid of Rent-seeking

If Natangwe Ithete was fired for his anti-business attitude, there is hope that the government’s distrust and outright dislike of genuine enterprise will die for the sake of improving Namibia’s poor economic performance.

But if Ithete was fired for ignoring president Netumbo Nandi-Ndaitwah’s orders not to renew oil licences, let the opportunity not be missed to effect structural changes to a business culture that has created many multimillionaires while poverty has become more rampant since independence.

It is telling that deputy prime minister Ithete, who doubled as minister of industries, mines and energy, was fired a couple of days after the president attended a two-day meeting with business executives at which she called for honest views.

“Don’t please me. Make me angry if that’s the way to bring prosperity,” said the president who goes by the moniker NNN.

Hopefully, the business community didn’t only complain about Ithete’s long established dislike of genuine investors, who he was fond of telling to “pack up and go” if they didn’t want to dance to the government’s tunes.

NNN’s administration has ramped up anti-investor tones with unclear messages that the government demands 51% ownership in mining companies. This builds on misguided so-called black economic empowerment policies designed during the Hage Geingob presidency, which demanded at least 25% ownership by ‘previously disadvantaged’ Namibians in any business.

NNN, her Cabinet and leading politicians in government must start to appreciate that grabbing someone’s business does exactly the opposite of empowerment.

In addition, using government policies to enrich a few carefully selected individuals destroys enterprise rather than boosting economic activity.

By now Namibian leaders should have enough national data and anecdotal evidence that shows that rent-seeking does not and will not work.

“Rent-seeking is a concept in economics that states that an individual or an entity seeks to increase their own wealth without creating any benefits or wealth to the society. Rent-seeking activities aim to obtain financial gains and benefits through the manipulation of the distribution of economic resources.”

The fishing and mining industries have leaked considerable tax revenue that could have boosted government services to the general public – all because of rent-seeking policies.

Example: Just by auctioning a tiny portion of the overall fishing quotas to genuine businesses, the tax coffers raised N$1.5 billion over the past five years. In stark contrast, the government has for decades struggled to collect more than N$150 million a year in fishing levies and licences.

Yet, a few hundred Namibians have become rich by getting licences and quotas for free while the nation’s workers have become fewer and poorer.

Resources have been allocated on the basis of political connections and cronyism rather than free enterprise. Companies like Ohlthaver & List seem to have benefited from major government decisions like fishing quotas while taking on board people close to president Sam Nujoma as shareholders.

For decades, one Knowledge Katti was imbued with petroleum licences for the best oil blocks without any indication of having the resources to exploit them.

The current set-up incentivises politicians and public institution employees (including parastatals) to tailor their decisions towards a rent-seeking approach rather than the best interests of the broader public

NNN needs to reshape the ruling elite’s attitude towards business by genuinely making the government an enabler rather than allowing room for people to double up as referee-player (regulator and business actors).

Set out clear boundaries that allow businesses to thrive and for the bureaucratic machinery to regulate enterprises. The government’s main role is to provide common goods, services and an environment that the private sector and individuals cannot or will not.

Above all, if NNN means business unusual, put in place maximum transparency: decisions being made must be open to scrutiny and consistent. Access to information must be a right for any member of the public.

Whistleblower protections and beneficial ownership instruments must be enhanced if NNN wants the private sector to create meaningful economic activities for broader prosperity.

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