Namibia’s Economy: Challenges and Proposed Solutions

COME November, Namibians will head to the polls to elect a new head of state.

Our incoming president will face multiple challenges on economic and other fronts.

This offers an opportunity to assess the challenges and to discuss solutions.

KEY ECONOMIC ISSUES

Slow GDP Growth: Namibia’s real GDP growth is projected to slow to 3.6% in 2024, down from 4.5% in 2023, largely because of global macroeconomic challenges and tight monetary conditions.

Unemployment and Poverty: The unemployment rate exceeds 30%, with youth unemployment significantly higher at around 46%. Approximately 27% of the population lives below the national poverty line.

Rising Debt Levels: Namibia’s total debt has surged to 71% of GDP, significantly exceeding the government’s target of 35%. This has raised concerns about fiscal sustainability.

Current Account Deficit: The current account deficit was approximately 9.8% of GDP in 2021, indicating a persistent imbalance between imports and exports.

Monetary Policy: Inflation rates have hovered around 7%, affecting purchasing power and living standards. The Bank of Namibia has maintained a conservative monetary policy, with interest rates rising to combat inflation.

Land Reform and Investment Concerns: Ongoing debates regarding land reform have created uncertainty among investors, with land restitution issues affecting agricultural productivity and investment.

Budget Deficit: The budget deficit is projected to widen from 2.9% of GDP in the 2023/2024 fiscal year to 3.1% in 2024/2025, driven by increased expenditure ahead of elections.

Corruption: Corruption in Namibia is perceived as a significant barrier to economic growth; a 2022 Transparency International report ranked Namibia 53rd out of 180 countries in its Corruption Perceptions Index.

High Interest Rates: Rising interest rates have increased debt servicing costs, with the government spending approximately 10% of its budget on interest payments, limiting funds for development.

Rising Electricity Tariffs: Electricity prices have increased by 30% over the past few years, placing a financial strain on households and businesses, particularly in rural areas.

PROPOSED SOLUTIONS

Economic Diversification: Promote non-mining sectors such as agriculture, tourism, and renewable energy. For instance, Namibia can leverage its solar energy potential, among the highest in the world, to reduce dependency on imported energy.

Fiscal Management: Develop a comprehensive debt management strategy to reduce the national debt. This could involve prioritising essential expenditure and further improving tax collection efficiency, aiming for a 5% increase in tax revenue over the next three years.

Social Equity and Land Reform: Address land reform transparently by establishing a clear framework that balances restitution with the rights of current landowners. This could involve community-based land management initiatives.

Monetary Policy: Collaborate with the Bank of Namibia to implement policies aimed at controlling inflation while considering monetary easing as economic conditions improve.

Investment Climate: Streamline regulations and simplify administrative processes for businesses. For example, Namibia could aim to improve its ranking in the World Bank’s Ease of Doing Business Index, currently at 105.

Collateral Removal for Youth in Business: Advocate for the removal of collateral requirements for youth seeking debt financing, potentially through government-backed loans, which could increase youth entrepreneurship by 20%.

Body Cams for NamPol: Implement a policy requiring police officers to wear body cameras to enhance accountability and public trust, potentially reducing police misconduct by 30%.

Publicise Public Transport for Safety: Launch campaigns to promote the use of public transport, coupled with infrastructure improvements; aim to increase public transport usage by 15% over the next five years.

Build Dual Carriageways on High Accident Rate Roads: Prioritise constructing dual carriageways on roads identified as high risk, which could reduce traffic fatalities by 25%.

Passenger Trains: Develop a national passenger train service to improve connectivity and reduce road congestion, targeting a 10% increase in public transport usage.

Teach General Namibian Law, Taxation, and Politics in High School: Introduce a curriculum that includes education on Namibian law and politics, aiming to reach 100% of high school students by 2025.

Minimise the Length of Court Postponements: Implement judicial reforms to reduce delays in the judicial process, targeting a 50% reduction in average case resolution times.

Invest in More University STEM Subject Courses: Expand STEM programmes in universities, particularly in regions outside Swapo-dominated areas, aiming for a 30% increase in STEM graduates by 2027. This allows for the surplus of nursing and teaching graduates to stabilise regions such as Kavango East and West.

Remove Animals from Public Roads Above the Redline: Launch public awareness campaigns and enforce legislation to prohibit animals from roaming on roads, targeting a 50% reduction in animal-related accidents.

Invest in the Entertainment Industry and Sport: Create programmes that provide exposure and fair compensation for artists, aiming for a 25% increase in local content production and investment in sports infrastructure to promote youth participation.

Increase CCTV Cameras in Public Areas: Places where people love to go hiking or jogging, plus hotspots known for robberies or used as backroad escape routes, should have CCTV cameras installed on nearby light poles.

Cut Back on Deputy Ministers and Councillors: Removing deputies can cut salary and incentive spending by at least 15%. Instead, hire more technical staff in key government departments who actually do the ground work to meet economic and social demands. This also includes placing MPs and ministers in fields for which they studied at university.

Take Advantage of the AfCFTA Agreement: Provide more tenders and investment for railway infrastructure and logistics hubs that will connect Namibia to more neighbouring countries. This can increase revenue from logistical and warehousing operations by at least 30% within the next decade.

By implementing these solutions, the next president of Namibia can effectively help address the country’s economic challenges, promote sustainable growth, and foster a more equitable and prosperous environment for all citizens. Engaging stakeholders across all sectors will be essential for the successful implementation of these type of strategies.

– Frans Koita, MSc international business and law (candidate), BSc international economics and trade, founder of DKL Africa- Business Consultations