THE LOCKDOWN DEAL

IOn June 14th Namibia entered its fourth hard lockdown since the start of the global pandemic last March. Over the preceding 15 months 1,000 Namibians had lost their lives to COVID-19; three months later and the death toll stands at over 3,200. In Africa only Tunisia has lost a larger share of its population to the disease. The latest lockdown may have arrived too late, but without it there is every reason to believe that the toll would be higher still.

Blanket lockdowns are an example of a blunt, but effective disease containment measure. Of course there are more stringent types of lockdowns that reduce the number of deaths. Other varieties of lockdown prioritise the health of the economy. Finding the equilibrium between these opposing goals, maximizing the ratio between the number of additional lives saved per unit of GDP (Gross Domestic Product) lost, yields the most potent lockdown. Yet even this approach is not immune to critique. Ask, to what extent should a society bias the lives of its elderly over the futures of its youth? How many, if any, deaths should be deemed tolerable? These are necessary questions with no easy answers. Balancing moral, political, economic and public health considerations to construct a lockdown that is at once potent, enforceable and moral is a task beyond the capabilities of your author.

As we emerge from the latest lockdown, consider instead the more tractable question of what it is a government is asking of, and dictating to, its citizens when it enforces a hard lockdown. In a lockdown such as Namibia’s where schools close, travel is restricted and businesses suffer, citizens willingly cede their personal agency in service of wider community health. This is the citizen’s part of the deal. For as long as such a lockdown lasts a government’s implicit promise is in turn to provide greater support to its citizens. In the rich world governments plunged themselves further into debt, increased spending to war-time levels and slashed interest rates to stimulate demand in the economy. They ran the gamut of fiscal and monetary policy to protect the lives and livelihoods of their citizens knowing that they possessed the necessary fiscal infrastructure, power and credibility to borrow lavishly and still maintain the ability to service these debts.

The Namibian government’s response was adequate, but as a middle-income country options were limited. During the 2020 lockdowns the government introduced a number of measures to compensate citizens: wage subsidies, easier credit terms for small businesses, relaxed labour laws and others. The latest lockdown saw fewer protective measures of that kind implemented. As obvious as it may sound, Namibia simply does not have the resources of, say, the United States or United Kingdom. There is only so much the Namibian government can do for its citizens because, for all but the most developed nations, a hard lockdown necessarily devastates tax revenue while increasing government expenditures. To make up the shortfall the government must turn to its citizens and institutions, issue debt and borrow. Should this borrowing not result in a commensurate increase in productivity to restore government funds then the nation is likely to, over time, default on its debt obligations or revert to austerity measures. When a government runs out of money it can no longer uphold its end of the lockdown deal. It can enforce lockdowns; it cannot protect the livelihoods of its citizens.

Today, record government debts and depressed revenue from company taxes betray a weaker Namibian government less able to sustain future lockdowns. Despite the progress that has been made against the spreading of COVID-19, the surge of the Delta variant shows that this pandemic is not over yet. Nor can Namibia be sure that this is the last pandemic it will have to endure. The June lockdown caught the country by surprise. If meaningful vaccine coverage is not realized in the coming months, future lockdowns should not come as a surprise.

Fortunately, Namibia’s public sector can take unilateral action to ensure that it is better prepared to protect the Namibian people if, or when, another lockdown is on the cards. Broadening the tax base as well as addressing revenue deployment deficiencies will increase policy options and restore fiscal safety-buffers. While a united global front may one day bring the Covid crisis to an end, carrying out internal economic structural adjustment will remain as one of Namibia’s most pressing bureaucratic problems, one that it must solve alone.

The blanket lockdown is a blunt tool that will need to be re-parameterized to best fit the needs of a middle-income developing country like Namibia. All lockdowns come with costs – but yet they have been embraced precisely because they are so singularly effective in the fight to reduce infections and save lives. Yes, lockdowns are flawed and yes, they work. If the Namibian government were to face a fiscal cliff, finding itself incapable of entering the lockdown deal with the public, then it has done them a disservice. Now more than ever all options need to be kept on the table.

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Kimber Brain is a junior economist at IJG, an established Namibian financial services market leader. IJG believes in tailoring their services to a client’s personal and business needs. For more information, visit www.ijg.net.