REDUCING inequality and poverty, and promoting equity, are important macro-economic objectives. The widening income gap between the rich and poor has highlighted the need to understand the causes of relative inequality and poverty, and to construct suitable policies to reduce poverty and narrow the income gap.
In an environment of accelerating but still modest growth, government policies that stimulate competition and create the fiscal space needed to build a skilled labour force from the poor population of Namibia, would create jobs and help reduce inequality.
Essentially, the number of Namibia’s poor could be reduced by more than half by 2030 through various combined policy interventions that reduce inequality by creating skilled jobs for the poor and ignite growth by increasing competition, policy certainty and promote skilled migration.
This outlook calls for fundamental policy action to turn the economy around through policies that can foster inclusive growth and reduce inequality while creating labour demand and fiscal space to finance improved education as well as reinforcing spatial integration to enhance the ability of the poor people of Namibia to participate meaningfully in the economy
The evolution and nature of Namibia’s inequality – among the highest in the world –has increasingly been driven by labour market developments that demand skills the country’s poor currently lack.
With this in mind, raising Namibia’s economic potential will require breaking away from the equilibrium of low growth and high inequality in which the country has been trapped for decades, discouraging the investment needed to create jobs.
Further, reducing Namibia’s high inequality will require improving education and spatial integration to provide the poor with skills that are required to meaningfully participate in a capital and skills intensive economy such as Namibia.
This would need to be complemented by policy intervention that spur additional growth and provide the fiscal space to finance these reforms.
In the short term, policy interventions would include, getting the implementation of the NEEEF right, continuing to address corruption, improving the competitiveness of strategic state-owned enterprises, restoring policy certainty in mining, further exposing Namibia’s large conglomerates to foreign competition and facilitating skilled immigration.
In the longer term, improving the quality of basic education delivered to students from poor backgrounds and reinforcing the spatial integration between economic hubs, where jobs are located, and underserviced informal settlements, would reduce poverty and inequality and support job creation.
Without the policy interventions Namibia would on current trajectory not be able to attain its development targets outlined in the country’s Fifth National Development Plan (NDP5) and the Harambee Prosperity Plan (HPP) of creating sufficient jobs, eradicating poverty and reduce inequality.
Lastly, accelerated skilled migration would help relax the skills constraint in the short term and help create more semi-skilled and unskilled jobs. Each additional skilled migrant conservatively could create 0.5 semi-skilled or unskilled job and 150 thousand additional skilled migrants would further increase GDP in 2030.
Confidente. Lifting the Lid. Copyright © 2015