Economic growth in Namibia: the uncomfortable truth
1. INTRODUCTION
NAMIBIA has a small open economy with an estimated population of 1 200 000 citizens of which an estimated 700 000 are actively employed in various business undertakings. Moreover, the total surface area of the country is 825 419 square kilometres with an abundance of natural resources but Namibia has been characterised by a significant unequal level income distribution of its population. Unemployment is rampant amongst the majority disadvantaged citizens with poor housing and poor basic amenities such as water, electricity supply and health facilities. The unenthusiastic efforts of the Government and the private sector to redress these socio-economic inequities have rather caused a sense of discontent in some quarters of the majority poor Namibian citizens.
The economy of Namibia is characterised as a country that consumes what it does not produce and produces what it does not consume. The following topics will assist in sketching a brief synopsis of the current economic situation of Namibia. Economic growth, per se, purports the total value of the production of goods and services adjusted to provide for intermediary goods and services and depreciation of capital goods. Thus, can one argue that the efforts of the Government and the private sector to bring about economic growth have been effective to this point?
2. INFLATION
The phenomenon of inflation in the economy has become a far more complex problem (when it became evident that the annual interest or dividend buying power was diminishing). A plethora of definitions of inflation had been developed but due to the complex nature of inflation, focus will be made on a rather accurate definition coined by Turve which states as “a process resulting from competition in attempting to maintain total real income, total real expenditure and/or output as a level which has become physically impossible”. Moreover, specific aspects emerge from the foregoing definition in that inflation is not an occurrence but a process resulting from competition of which the latter strives to maintain real income and expenditure unhindered at the same level.
A definition that tells us more about the nature of inflation is the general rise in the average price index. Deducing from the latter definition this does not necessarily mean that inflation is looming when there is an increase in the price of one or two products. A general rise in prices on a wide spectrum portends inflation, and the increases should be such that the average price index rises.
(Stapelberg, N. H. and Steyn, F. G. 1986. Economics – An Introductory Study, N. H. S. Publisher. Sunnyside, R.S.A. pp. 273-274)
3. MACRO ECONOMY
In this part of the economy, attention is given to those factors that determine the scale of total income flow between households and business undertakings or how this flow of income changes totally over time. Macro-economy therefore studies the characteristics and determinant factors of the whole economic cycle. The area of interest here is the prices and quantities prevailing in the magnitude of individual markets for goods and services. Thus, macro-economy adds together the activities of all the individual markets and investigates the flow of income in the economy or the total average price of all goods and services (the general price level).
If the total value of the production of goods and services is adjusted to provide for intermediary goods and services and depreciation of capital goods, an important measure of production in the economy is obtained, namely the gross domestic product (GDP). The latter is defined as the total value of final goods and services produced within the borders of a country before allowing for depreciation. GDP, therefore, is the most important measure to gauge the economic welfare of a country.
(Stapelberg, N. H. and Steyn, F. G. 1986. Economics – An Introductory Study, N. H. S. Publisher. Sunnyside, R.S.A. pp. 180)
4. ECONOMIC GROWTH IN NAMIBIA
Namibia recorded a national budget of a revenue income of N$2.336 billion concomitant with an outflow expenditure of N$2.259 billion during the 1990/1991 financial year. In the financial year of 2020/2021 a revenue income of N$51.4 billion as opposed to an outflow expenditure of N$72.8 billion was registered. Measured as a percentage of GDP, the consolidated budget deficit is estimated to be 4.5 percent in 2019/20, widening to 12.5 percent in 2020/21. With a revenue shortfall of N$21.4 billion arising in the current year, government borrowing will increase to N$119.1 billion, reflected in the gross debt-to-GDP ratio climbing from 54.8 percent in 2019/20 to 69.6 percent in 2020/21.
The foregoing figures obviously indicate an increase in the level of the national budget, but does this mean that it can be deduced that there had been economic growth during the periods under review?
Note should be taken in cognizance of the fact that Namibia is characterised by a country that consumes what it does not produce and produces what it does not consume. Namibia imports canned food products, clothing items, ICT equipment, building tools and construction materials, in fact, almost everything is imported into Namibia.
It is against the backdrop that a question is therefore asked whether Namibia recorded positive and productive economic growth since 1990 till 2020 or not?
5. CONCLUSION
The foregoing topics indicate a rather uncomfortable reality about the contemporary economic environment of Namibia. Can it thus be concluded that the various role players involved in the economic system of Namibia have reached the ultimate goal of bringing about positive and productive economic growth or not?
Compiled by: Esau Natangwe Kangandjera (MBA, Mancosa, Durban, RSA)