By Tio Nakasole
I am of the view that if the government is partially struggling to address some of the fundamental challenges, at least it should be able to empower its people to be able to flourish.
Empowerment can take many forms, such as through education, the ability to provide essential services or providing a conducive environment and policy protection for the private sector to grow and not sequestrate each other.
One example is that Namibia do not have the capacity, expertise and skills to develop a mine or drill for oil. This is already a resource dilemma / curse on its own. We have mines but we don’t trust ourselves in running. We have a lot of retail outlet, we run them but not ours in tandem neglecting Namibian owned ones.
We have more trust on banking foreign banks than establishing ours. We have diamond and gold deposit of mines, but we do not have any jewellery shop that is Namibian owned. We are the fourth uranium producer, but we do not produce vessels, or boats or motor vehicle. When will be the right time to think in private sector terms and start to envisage the possibility of contestation and other way of doing things in Namibia.
Globally, especially in the recent developed countries, the private sector is observed as the engine of long-term economic growth and a vital catalyst for social and economic development. Namibia too can become an investment paradise once there are pragmatic measures that provide sufficient oxygen that pump private sector with the necessary.
When all is placed squarely, the private sector will spark innovation and create a long chain of entrepreneurship, improve access to and the quality of economic opportunities, and support the sustainable use of natural resources. Furthermore, it will enable them to penetrate sophisticated sectors that enable a more efficient and sustainable use of natural resources.
BAROMETER
The World Bank stressed that in order for the most developing economies to end poverty within a decade, such economies need to achieve a gross domestic product per capita growth of about nine percent. At the same time, for these economies to escape the “middle-income trap”, developing countries will need a GDP per capita growth of more than five per cent per year over extended periods.
All in all, the private sector must become more dynamic and resilient to meet the formidable development challenges that most developing countries are confronted with. One of the impediments highlighted is that informal enterprises often operating in less favourable environments with limited infrastructure and a less skilled workforce face significant challenges in achieving sustainable growth.
To narrow it down to Namibia, Namibia is classified as an upper middle-income country. This is not synonymous by saying that the country is performing above its weight economically. The questions are, what are the laws and best practices that the private sector can propel some challenges constraining Namibia, that are far beyond the capacity of the government to tackle alone?
EMPOWERMENT
It was Mahatma Gandhi who once said, “Earth provides enough to satisfy everyone’s need, but not everyone’s greed.” Therefore, this is just a reminder that once you allow your nation to fail to deliver due to megalomania, self-serving or greed, or inability to unlock economic potential, ultimately this hinders prosperity.
Article 16 in the Namibian constitution gave us the key economic provisions, there are still certain degrees of grey area of a unclear policy framework within which economic empowerment can take place.
Certain initiatives that were meant to empower micro and small medium enterprises, such as the Affirmative Action Loan Schemes, the National Resettlement Policy, the Development Capital Portfolio of the GIPF, City Savings and Investment Bank, Namibia Harvest, quota allocation in the fishing industry, Barden International, Ongopolo Mining and Processing and the SME Bank, some of them have been a liability to the national prosperity and to the intended end user.
After thirty-five years of independence, which is about to be celebrated in a few days, these cul-de-sac schemes need proper cleansing in jumpstarting the private sector.
In the end, this will not only help individual or SMEs, banks, tourism, manufacturing, construction and telecommunication but there are benefits attached to the registration of companies for the overall economies. Where formal indentureship is high, job creation, productivity, and economic growth tend to be high too.
The success of formal enterprises translates into higher volumes of gross domestic product and growth rate at the macro level, as more goods and services will be produced year in and year out. It is not only ending there; through tax revenue, but formal businesses also bolster government finances in support of social and economic policy goals. As formality expands in the business sector, the government will have a larger tax base that ultimately catapult the provision of essential public services such as infrastructure, education, and health care.
LESSONS
To draw good examples, in the 1950s, history has it that South Korea and Singapore were poor countries. An average person from these two countries lived below the poverty line. By the 1990s, these two countries had huge industries, and the average person had enough money to raise their living standards.
In South Korea, the government encouraged the development of major conglomerates such as Hyundai, LG and SK by providing them with financial support, favourable policies and access to capital. In the end, these conglomerates were instrumental in scaling up production, driving technological innovation and contributing to South Korea’s global competitiveness.
These chaebols not only helped create a strong industrial base but also made a paradigm shift from agriculture to manufacturing. In a nutshell, they invested in advanced technology and research and development, improving the quality and competitiveness of South Korean goods.
This has also catalysed the government’s export-orientated growth mechanism, which encourages the domestic firms to increase exports, helping the country become noticeable in the global economy. These paved the way for the private sector in becoming a crucial player in generating foreign exchange and creating jobs, raising the standard of living for the population.
Whereas with Singapore, the government encourages the growth of small and medium-sized enterprises by offering financial support, particularly in industries like manufacturing, retail, and services. The banking and finance industries, on the other hand, were booming due to favourable policies, and the private sector capitalised on the country’s stable legal and political environment to establish a vibrant financial services industry that accommodates everyone.
Regarding the best practices with our private sector regulatory framework, the government must assist SMEs that do not overreact. There is a need to develop a legal market culture that is not detrimental to the start up that do not have means to production or collateral. Institution such as AgriBank and Development Bank of Namibia, need to scrutinise and reform requirements that keep the majority at the periphery in terms of access to capital.
At the same time, they need to learn from some of the successful countries as per the aforementioned given that are not slaves to concepts that are western in character. Choosing the finest practices should not be equivalent to rejectionism or destroying all the current ones, but to be able to enact those that correlate with our country’s nature and needs.
After all of these, having regulatory frameworks is not enough; effective government-provided services that facilitate compliance with regulations and provide institutional support to the private sector also play a preponderant role to nurture a thriving business environment.
The key question is why Namibia is unable to do what these two Asian countries did.
Tio Nakasole is an Economics Honors degree holder, MBA final student, and a Research Analyst at MONASA Advisory and Associates. The views expressed do not represent those of his employer. – theoerastus@gmail.com
