Islands of Wealth – Persistent inequalities will test Namibia’s development ambitions

The following article has been extracted from a report by HERBERT JAUCH, LUCY EDWARDS and BRAAM CUPIDO on inequality in Namibia and how the government can learn from – among other countries – Venezuela in addressing the needs of its people. They argue that radical policy initiatives are needed to address inequality in Namibia. While the research, published by the Open Society Initiative for Southern Africa, focuses on Namibia, it contains many valuable lessons for the entire SADC region.

Namibia’s land tenure system is a system beset by inequality.
Both the period of German colonial rule as well as the subsequent South African rule resulted in largescale dispossession of the indigenous population, which the post-Independence government was expected to redress.
At Independence, Namibia was confronted with a land tenure system that was dualistic in nature. In 1990, communal farms accounted for 41 percent of the farmland in Namibia, commercial farms for 44 percent while 19 percent was reserved for urban areas and national parks.
The commercial farming sector accounts for 74 percent of the viable arable land in Namibia, where only 34 percent of the total land is considered suitable for agriculture.
In addition the ratio of farms to owners is larger, with 6300 farms owned by 4 200 farmers, meaning that multiple ownership of farms is common.
Furthermore, communal farming areas are increasingly under pressure as wealthier communal farmers erect enclosures, incorporating waterholes, thus adding to the difficulties faced by poorer farmers.
Article 16(1) of the Namibian Constitution states: “All persons shall have the right in any part of Namibia to acquire, own and dispose of all forms of immovable or movable property individually or in association with others and to bequeath their property to their heirs and legatees: provided that Parliament may by legislation bequeath their property to heir or legatees provided.
“Parliament may by legislation prohibit as it deems expedient the right to acquire property by persons who are non-Namibian citizens.”
This article is counterbalanced by the expropriation provision, Article 16 (2), which stipulates that the state may “by law expropriate property in the public interest subject to the payment of just compensation, in accordance with requirements and procedures to be determined by Act of Parliament”.
In effect, the Constitution Land acquisition Since Namibia’s Independence in 1990, the process of acquiring land has been at a snail’s pace.
From 1990 to 1998, only 48 farms had been purchased by the government for the purposes of resettlement. After 1995, the government increased expenditure on resettlement by over 70 percent in an effort to speed up the process.
It can be argued that the passing of the Agricultural (Commercial) Land Reform Act accelerated the process of acquisition, with the government having committed at least R20 million per annum to buy farms. This was increased to R50m by a cabinet decision taken in 2003.
However, at prices of R2-3m per farm, this translated into just over 20 farms per year.
Since 2002, the government has acquired 100 commercial farms of more than 745.9 hectares on a “willing seller, willing buyer” basis at a cost of R144.9m. Government also has set aside R60 million per year for resettlement purposes.
A recent study described the resettlement farms, which are the primary avenue for providing access to land for the most impoverished Namibian farms, imposed a property regime, which had not existed before the colonial era, and by virtue of the compensation provision, made changing the skewed distribution of land in Namibia an expensive and difficult process.
The status quo has thus been entrenched, and land reform has been a slow, ineffective process.
Land is a crucial issue in Namibia, considering that, although the contribution to the GDP of agriculture is only about 9.4 percent (concentrated in the commercial sector), up to 41 percent of all households depend on this sector as their principal source of income.
The two major initiatives by means of which the Government hopes to redress the imbalanced land situation in Namibia are the Resettlement Programme, and the Affirmative Action Loan Scheme

Under the Resettlement Scheme, the categories of people who are eligible are: the San community, ex-combatants, landless and destitute people. These groups are further sub-divided into:
·   people with no land, no income and no cattle;
·   people with no land, no income but who possess cattle; and
·   people with no land, but with income and cattle.

The National Resettlement Policy indicated that government planned to resettle some 243 000 poor and landless people on some nine million hectares of expropriated land. The government also announced plans to acquire 360 farms totaling 4.8 million ha by 2010.
But at the time of writing, only 1526 families had been resettled on 142 farms.
The practical effects of the resettlement farms has also come under fire, with one report characterising these farms as “reproducing poverty” (Harring & Odendaal 2007). It is alleged that the relatively small size of the plots, which are based on a model of sub-dividing commercial farms, sets them up for failure.
Namibia’s arid climate, and the resultant low carrying capacity of the land, require that farms need to be substantially larger to sustain crops or cattle. The study cited above found no evidence of any resettlement farm which has been operating successfully.
It also notes that the resettlement policy in effect reproduced an “old, antiquated model of the colonial era farms”, whose profitability has been over-estimated.
At the time of writing, the Namibian government had redistributed a total of 1 042 436.62ha of land and resettled 1896 families on commercial farms since 1990 through its land resettlement programme. Women made up less than a third (302) of the resettled famers.
 
Redressing Inequalities

Namibia has remained a fundamentally unequal society.
In the mid-90s, Namibia was regarded as the country with the highest levels of inequality and a Gini coefficient of 0.70, followed by Brazil and South Africa.
These high levels of inequality were confirmed by a government report released in 2008, but based on data obtained in 2004. It still rates Namibia as the most unequal country in the world, although with a slightly reduced Gini co-efficient of 0.63.
The government report points to gender, race, regional, ethnic, educational and class dimensions of inequality.
Other studies, like the United Nations Human Development Report of 2009, calculated a Namibian Gini co-efficient of 0.743, ahead of Comoros (0.643), Botswana (0.61), Haiti 0.595), Angola (0.586), Colombia (0.585), Bolivia (0.582) and South Africa (0.578) (UNDP 2009).
Namibia is amongst the SADC countries with the highest GDP per capita while at the same time being the country with the highest levels of inequality.
This is important as pointed out by UN Advisor Robert Johnson: “Countries (like Namibia) with higher GDP levels have greater public policy flexibility to engage in redistributive justice; if its Gini is also high (like Namibia) then its most likely that its people are not deriving a reasonable share of national wealth.
“The GDP value shows that the national capacity exists; the Gini value shows that public policy is either failing or wilfully inequitable.”
Another striking feature is the structural nature of women’s inequality, which only comes into focus when one considers the lack of possibilities women have to attain independent livelihoods.
Despite the relatively low marriage rate, 43.1 percent of Namibia’s economically inactive population is classified as “homemakers”.
In absolute numbers it amounts to a total of 186 644 people, which is in fact more than the number of unemployed persons in the country (185 258). Out of this 70 percent are women (National Planning Commission 2003).
Given the absence of a social security net, this means that a large group of women are not employed on their own account, but depend on others for their livelihoods.
Female labour market participation rates are lower than that of males and women in formal employment often occupy positions at the bottom of the labour hierarchy in low skill, low income jobs. Although female rural subsistence farmers are classified as own-account workers, their labour mainly ensures household food supply and does not provide them with cash income.
The need for cash becomes more pertinent in an increasingly monetised economy.
In addition, women are more likely to be in casual employment. This implies less job security, fewer benefits and often lower incomes.
Economic progress in Namibia after independence paints a somewhat contradictory picture.
While the country is generally classified as a “Medium-Income Developing Country” with a per capita income of around U$S2 000 (fourth highest in the SADC region), Namibia scores low on other indices of development.
According to the World Bank, Namibia has made significant strides in economic and social progress, especially when it comes to social spending.
It notes that the country is in the top ten globally, in terms of percentage of GDP spent on education, and ranks second only to South Africa on the continent, when it comes to expenditure on health.
Namibia has been experiencing, steady, if unspectacular economic growth, hovering around the three-four percent range. This has barely outstripped population growth. Inflation has remained modest at levels of two-11 percent during the past decade.

The Gender Question

Women are the bulk of caregivers, yet are considerably under-represented in the formal economy, especially the managerial classes.
Female-headed households, which are some 40 percent of the total, have a per capita income of R7 528, in contrast to male-headed households with a per capita income of R12 248. These figures point to a large number of single mothers and to the continued economic marginalisation of women in Namibian society.
Under conditions of poverty, there is a demographic transition towards older and female household heads. This partially explains why there are so many poor, matrifocal families in Namibia.
A review of poverty and inequality in Namibia shows that family size, composition, and age structure are important markers of social class. Matrifocal families headed by females are more likely to be poor (30.4 percent) or severely poor (15.1 percent than those headed by males.
Households headed by persons older than the age of 65 are more likely to be poor. Households that are large (an average size of 6.7 persons) are also more likely to be poor. The review also shows the interrelationship and convergence between gender, age, size and poverty due to high levels of poverty amongst large households headed by elderly females. (National Planning Commmission, 2008)
These elderly female household heads are more likely to carry the HIV and AIDS-related care burden.

Race, Ethnicity and Class

Poverty is particularly widespread amongst households where Khoisan-languages and Rukwangali are spoken.
Between 54 and 60 percent of them are affected by poverty. On the other hand, German and English-speaking households are hardly affected by poverty at all.
In terms of consumption, the poorest 15 percent of Namibians account for only one percent of national expenditure while the richest 5.6 percent account for 53 percent of expenditure.
In concrete figures, this means that the poorest rural households spend an average of about R104 per person per month, compared to R5 744 in rich urban households.
In 2004, the wealthiest fifth of the population accounted for 78.7 percent of income while the poorest fifth of the population lived on a meagre 1.4 percent of the total income. Such inequality would not be out of place in any medieval feudal setting, and is staggering in a 21st century economy.
As observed by Melber in 2007, this means that “the concept of the average Namibian clearly does not exist. The notion of an average income becomes rather meaningless when half the population survives on approximately 10 percent of such fictive average income”.

Government Action

The Namibian government embarked on a domestic spending programme to improve social services, which has had some success in ameliorating some of the disparities inherited at Independence.
Increased budgetary allocations on education and health spending achieved some positive results. For example, primary healthcare expenditure, coupled with countrywide immunisation programmes have seen a reduction in infant mortality rates from 60 to 43 per 1000 in live births.
Access to safe water and sanitation has also improved.
The Namibian government also instituted an Affirmative Action Policy, as well as a Social Security Act, aimed at providing maternity leave, sick leave and medical benefits for everyone in formal employment.
It has also developed legislation to deal with protection of the country’s natural resources, and has increased spending on education as discussed before.
The government has also established a Ministry of War Veterans to look after the interests of former combatants and to integrate them into society, as well as to provide some degree of material support.
The issues of affirmative action and Black Economic Empowerment (BEE) featured prominently after Independence with a particular focus on redressing racial inequalities.
In the absence of a radical programme of redistribution, Namibia was looking at other means of ensuring a more equitable distribution of jobs, wealth and ownership over productive resources. Affirmative action and BEE programmes were among the measures taken to redress some of the apartheid legacies.
Affirmative action was portrayed as the instrument to redress the imbalances of the past.
Article 23(2) of the Namibian Constitution empowered Parliament to enact legislation aimed at redressing “social, economic or educational imbalances in the Namibian society arising out of past discriminatory laws or practices”.

Provision was also made for a balanced restructuring of the civil service. In general, affirmative action was expected to contribute to the following:
1. To make institutions representative of the country’s population;
2. To effect a change in institutional cultures which were shaped by racist practices during colonial rule;
3. To bring about socio-economic redistribution.

During the first few years of Independence, affirmative action in Namibia was successful in bringing about a more representative civil service and by 1996, about 70 percent of the management cadre in the civil service was made up of black Namibians and women.
Quotas for women in elections have contributed to a far better representation of women than is the case in the National Assembly and the National Council.
After the introduction of the Affirmative Action (Employment) Act of 1998, the policy was systematically extended to the private sector. It achieved some success (although uneven) in the quest to make workplaces more representative of the country’s population, with the main beneficiaries being black men.
The other “designated groups”, namely women and people with disabilities, did not benefit to the same extent.
Experiences in Namibia and internationally have shown that affirmative action does not necessarily eradicate socio-economic inequalities. Instead, inequalities may merely be shifted from the basis of race, ethnicity or gender to the basis of class.
Affirmative action may promote the redistribution of opportunities in favour of previously disadvantaged groups, but it is not the principal mechanism to redistribute wealth or to overcome poverty.
Supplementary measures have to be taken to tackle the broader socio-economic inequalities that still characterise Namibia.
Similarly, BEE within the framework of a market-driven economy is likely to benefit a few rather than leading to large-scale redistribution.
There is no doubt that black businesspeople and their organisations have a vested interest in BEE policies that target the creation and expansion of a black middle class and business elite.
The former president of the Namibia Chamber of Commerce and Industry (NCCI) put that bluntly when he stated in 2003 that the task was to create more black millionaires.
From a perspective of reducing inequality, however, the challenge is how to ensure that BEE does not just benefit a new black elite or consolidate a black middle class.
Instead BEE must de-racialise the economy and lead to redress and redistribution on a large-scale. Similarly, women may raise the question of gender inequalities that seem to be replicated and further entrenched when BEE deals are struck.
Designing affirmative action and BEE policies to benefit workers and the poor in general within the current capitalist economic structure is a daunting task.
However, there are some steps that could be taken to broaden the debate on BEE to include issues beyond shareholding such as job creation, rural development, access to basic social services, empowerment of black women etc.
Trade unions, as working-class organisations, should be at the forefront of advocating for such policies but currently don’t seem to be playing that role.
 
Alternative Policy Options

In 2004, the Namibian government presented its long-term vision for the country as “Vision 2030” which stated the achievement of the same standards of living as industrialised countries as one of the central aims.
The ambitious goals set out in the document require the achievement of an annual economic growth rate of around 12 percent.

Other objectives mentioned in Vision 2030 are:
·    A decline in unemployment from 35 to percent;
·    A fall in the GINI co-efficient from 0.7 to 0.3;
·    An increase of the contribution of manufacturing and the service sectors to the country’s GDP, reaching more than 80 percentin 2030.

Since INDEPENDENCE the focus of the Namibian Government, along with most of its neighbours in the SADC region, has been on creating favourable investment conditions for private capital accumulation.
Thus Namibia followed the neo-liberal model of development to a significant extent, emphasising the free flow of capital, but not labour, the opening of borders to goods and services, and the elimination of tariffs and barriers to free trade.
A central premise of the neo-liberal model is the idea that competition breeds efficiency, and removing the impediments to unfettered competition will of necessity provide for the development of effective industries, thereby leading to economic growth.
An underlying assumption behind the competition model is that developing countries will be forced to invest substantially in measures which will make their labour force competitive.
Thus investments in education were seen as a strategy to make the workforce more productive and enable the country to move towards a “knowledge-based economy”.
Investments in infrastructure as well as maintaining political and macro-economic stability were other elements of this model.
The neo-liberal model relies on the elimination of trade barriers, the relaxation of labour laws, and the reduction of corporate taxation as key elements to attract investments. Factors such as the ability to repatriate profits, the ability to source inputs from the most economical sources and the removal of government involvement in the economy are promoted.
Protectionism of any kind is frowned upon, especially by international lending institutions such as the IMF and the World Bank. Infant and nascent industries are expected to be left to sink or swim in the turmoil of globalisation.
Supporters of economic liberalisation regard the failure of Namibia to attract investment, and create sufficient jobs as the result of administrative failures, bureaucratic hurdles, but not as shortcomings of the neo-liberal model.
In contrast, we argue that the neo-liberal model of development has neither served Namibia nor the SADC region well.
Where there has been economic growth, as in Namibia, it has been insufficient to create the number of jobs required.
The process of addressing inequalities in Namibia cannot be facilitated by an economic model, which is exclusively profit-driven.
Thus the idea of a “people centred” (as opposed to corporate-driven) development process emerged as an alternative paradigm to address inequality and poverty in Namibia and the SADC region.
Developments in Venezuela during the past few years, have pointed to new creative ways of using national resources and participatory democracy towards achieving grassroots democracy and social justice.
These initiatives are relevant for Namibia when discussing the challenge of inequality.
Various forms of inequality will be perpetuated unless decisive steps are taken to redress them.
This cannot be left to “market forces” but requires a deliberate, strategic intervention by a developmental state. The state is a creation of history and a product of struggles. Its role and orientation depends on the balance of forces in society and thus the task is for people at grassroots level to transform existing states into independent, truly developmental, accountable and ethical states.
This can only happen through daily struggles, as working people (including workers, peasants and the unemployed) are the defenders of their own rights.
Grassroots mobilisation has to include a constant engagement with the state to transform it into an ethical, responsible and developmental state that acts in the interest of working people instead of those that the initiative on “Alternatives to Neo-liberalism in Southern Africa (ANSA) calls “the Empire”.

Inspiration from Venezuela

One of the most inspiring examples of redistribution and participatory democracy in recent years is provided by Venezuela.
The changes that occurred since President Hugo Chavez’s “Bolivarian” party (recently reconstituted as the United Socialist Party of Venezuela) won the country’s national elections at the end of 1998 bears testimony to the possibilities that exist even when confronted with a hostile global environment.
Chavez’ party promised to change the political, economic and social landscape through a programme of redistribution and social justice.
Until that time, Venezuela had followed the typical free-market policies as promoted by the US administration, the IMF and the World Bank.
As a result, Venezuela was characterised by severe apartheid-style social divisions between the affluent elite on the one hand and the working class on the other.
One of the first steps taken by the Chavez government was to embark on a series of radical reforms regarding social service provision, for example, access to housing, education and healthcare.
The resources needed for these social programmes were derived from the country’s sought-after national resource, oil.
The national oil company, several large manufacturing companies and much of Venezuela’s farmland already belonged to the state by the time the Chavez government was elected.
What changed was how these resources were utilised to benefit the poor. The royalty fees payable by private oil companies were increased from one percent to 16 percent and an extraction tax was introduced, earning the country around US$ 10 billion between 2004 and 2007.
These resources were used for extensive, health, housing and education programmes, locally known as “missions”.
Quality healthcare and education are now free across the country, supported by Cuban medical staff.
Venezuela’s achievements are reflected in impressive statistics showing, for example, how access to university education was broadened for students from poor families, how health services were made accessible, how government tries to redress regional imbalances within the country etc.
Since 1999, access to potable water increased from 70 percent to 95 percent of the population; minimum wages were raised to the highest level in Latin America (about US$286 per month) and poverty levels dropped significantly.
Venezuela’s GDP grew on average by 11.8 percent between 2007 and 2011 and unemployment was reduced to its lowest level in decades – 6.3 percent.
According to the UNDP, Venezuela’s Human Development Index increased from 0.69 in 1998 to 0.88 in 2007 while the rate of poverty fell from 50.4 percent to 33 percent during that period.
Even more dramatic were the achievements between 2003 and 2008: the percentage of households in poverty declined from 54 percent to 26 percent and the number of households affected by extreme poverty fell from 25 percent to seven percent. The Gini index dropped from 46.96 to 40.99 during that period.
These are just some of the figures that show how Venezuela managed to significantly improve standards of living within the last 10 years.

New Economic Policies

The initially moderate economic programme of the Chavez government started changing in 2005 due to pressure “from below”.
Former workers at a paper mill that had been declared bankrupt and closed by its owners decided to occupy the mill and re-opened it with the support of the local community.
Venezuela’s MPs then passed a law allowing for the expropriation of the mill and to let it operate under democratic workers management.
Since then, workers started seizing other companies that had closed down. A worker and community-led movement for the “recovery” of companies was born and today over 800 companies are run by workers themselves, producing for local needs.
In addition, some private companies in strategic economic sectors like oil and cement production were nationalised.
Chavez and his government seemed to take lessons from history seriously by trying to avoid a bloated bureaucracy that will run the country “on behalf of the people”.
Instead, far more direct and participatory structures of democracy are being set up to enable poor Venezuelans to take control over their own lives.
This includes a conscious building of community structures: Community councils and community banks not only receive funding from the state but have autonomy over how this money is spent in their neighbourhood.
Food kitchens, run in the community centres, ensure that each person receives at least a healthy meal each day.
These grassroots initiatives are perhaps the most important and revolutionary aspect of the changes that occurred during the past 10 years.

 A New Regional Bloc

Venezuela has recognised the importance of international linkages as reflected in Venezuela’s contributions towards preventing the US-sponsored Free Trade Area for the Americas (FTAA).
Instead Venezuela and its allies in Latin America are now establishing the Bank of the South as well as the “Bolivarian Alternative for the Peoples of our America” (ALBA). ALBA is an example of “fair trade” (as opposed to “free trade”) where each country provides what it is best placed to produce and receives what it needs most – independent of global market prices.
Thus Bolivia provides gas at discounted prices to its neighbours; Venezuela offers subsidised oil to poorer countries and shares its expertise in developing oil reserves; Cuba sends healthcare professionals and trains students from other countries at its medical schools.
The applicable lessons for Namibia seem obvious when the social progress made by Venezuela during the past decade is compared to Namibia’s achievements since Independence.
Using natural resources to provide social services for all instead of leaving such resources under the control of transnational corporations, seems to be one immediate area of intervention for Namibia. Likewise, the establishment of participatory democratic structures to deepen democracy and to effect greater direct participation of working people, seems to be another desirable intervention.
Likewise, the bitter experiences with Ramatex and other investors point to the need for workers to play a more active and direct role in the economy, not just as employees but also as owners of worker-run factories.
Finally, ALBA provides an interesting example of building a regional block not on the basis of the rules of the free market and capitalist competition but rather on the basis of mutual benefits and co-operation.
This is certainly lacking in the current African groupings such as SADC and the AU.

April 2013
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