GDP per capita as measurement of growth not practical: Geingob

Jun 05, 2017

By Magreth Nunuhe

WINDHOEK – Namibia will be on track to eventually become a high income country, perhaps even before the year 2030, as per Gross Domestic Product (GDP) per capita calculations,  President Hage Geingob said during the launch of the fifth National Development Plan (NDP5) on Wednesday.

But he said this would not be an achievement if by 2030, “we reached high income status, but the majority of our people continued to be structurally excluded from meaningful participation in the economy and wealth creation.”

International bodies have continued to classify Namibia as an upper middle income country based on averages despite its skewed income distribution, which places the country among those with the highest disparity in wealth distribution in the world with a gini co-efficient of 0.57.

“That is why we speak about inclusive development where individuals’ needs have meaning.  That is why we say, inclusivity builds capability and spells harmony, while exclusivity spells conflict,” said Geingob, adding that poverty continued to be a challenge that needs a durable solution.

The President stressed the need to conduct an audit of the fourth National Development Plan (NDP4).

Some of the challenges that were highlighted in the NDP4 report were slow economic growth, in particular in the year 2016, which saw the economy growth decline from 5.1 percent in 2015 to a low 0.2 percent.

The slowdown was attributed to contraction in the primary and secondary sectors, while the ravaging drought between 2013 and 2016 led to low production and contraction of the agricultural sector by 13 percent.

According to the report, economic growth could have been higher than 5 percent, had it not been for the year 2016, that saw public debt stock averaging around 40.1 percent of GDP during the 2015/2016 financial year, from 28 percent between 2013/2014 financial years.

The country has also had an unfavourable trade balance with an average trade deficit of N$25,6 billion over the past few years.

On the positive side, the NDP4 period saw an increase of GDP per capita increase to 3.7 percent from an average of 2 percent during NDP3.

The Namibia Household Income and Expenditure Survey of 2015/2016 also indicated that poverty in Namibia fell from 28.7 percent in 2009/2010 to 18 percent in 2015/2016.

The NDP5’s goals over the next five years are to achieve an inclusive, sustainable and equitable economic growth; build capable and healthy human resources; ensure sustainable environment and enhance resilience; and promote good governance through effective institutions.

Among the highlights is government’s ambitious resolute to build 200,000 jobs over the entire NDP5 period with the secondary sector expected to contribute about a third of the total employment, while 12 percent of that is projected to come from the construction sector.

The primary industries are estimated to contribute the biggest chunk of employment of 56 percent with agriculture as the largest employer.

The unemployment rate is projected to remain high until 2021/2022 and thereafter drops below 20 percent as the NDP5 initiatives take full effect, according to the National Planning Commission, the implementing agency of the National Development Plans.

In addition, balance of payments are expected to improve, imports are projected to decrease as local procurement initiatives mature, while a balanced budget is expected towards the end of NDP5.

Tom Alweendo, the Minister of Economic Planning and Director General of the National Planning Commission, said that they consulted many stakeholders from the start of planning NDP5, consulting all the 14 regions of the country for citizens to provide their input.

“I strongly believe that, nearly three decades after Namibia gained independence, NDP5 will bring us much closer to our destination of concretising our vision, Vision 2030.  I have great hope that NDP5 would go a long way towards propelling our country towards an advanced development stage with the capacity to design and produce sophisticated technologies,” said Alweendo.

In reaction to the launch of the NDP5, Klaus Schade, an economic analyst, said Namibia had made progress in transport infrastructure (road, sea ports and airports) and in establishing itself as a logistics hub and the country has also seen progress in areas of tourism and vocational education and training.

“On the other hand, the railway sector is falling further behind and critical issues such as the move from the narrow Cape gauge to the Standard gauge are not even being discussed.  These fundamentals need to be addressed first before we invest large amounts of money in upgrading the current railway lines and rolling stocks,” he pointed out.

Schade added that NDP5 needs to emphasise implementation, monitoring and evaluation and if need be, adaption of strategies much more than previous NDPs have done, while the National Planning Commission must ensure that offices, ministries and agencies provide regular, meaningful feedback on progress made or the lack thereof.

“We need to improve our business climate much more and avoid policies that would make Namibia less attractive for local and foreign direct investment. We need to attract more labour intensive industries in the manufacturing and services sectors in order to significantly reduce unemployment,” Schade emphasised.

One Response

  1. Well spotted Sir.Its an outdated way to measure well being of a country. Even I knew that.

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