ECONOMIES ARE RUTHLESS… but also forgiving
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fter gaining independence in 1990 the Namibian economy enjoyed a honeymoon phase spanning 25 years. During this period, annual GDP growth was mostly positive, with only one out of the twentyfive years experiencing negative growth. Although Namibians were prospering, we were living in the moment without planning for future sustainable growth. Much like J. Paul Getty’s description of The Roaring Twenties, “the period of that great American prosperity which was built on shaky foundations.” Today, a prosperous Namibian economy is but a distant memory, faded by stagnation, depression and, to make matters worse, a pandemic. The goal of this story is not to dishearten. Far from it. The goal is to address where we went wrong, as well as what needs to be done to revive this nation. A prosperous economy requires informed policy decisions to accommodate growth. Simply injecting money is not enough. An example of this issue is the Namibian education system, which has the largest budget allocation of all sectoral expenditure yet lacks progress. Poor policies might not be evident immediately. However, over time the cracks
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begin to form, bringing us to the present day, scratching our heads and asking where we went wrong. Namibia’s economic model has been rather simple to date – exploit natural resources, while adding limited value. The lack of industrialisation has limited the country’s capacity to create sustainable jobs. Between 2016 and 2019, the Namibian economy slumped roughly 0.5% annually. This was mainly driven by contractions in the mining and construction sectors, as well as weak growth in neighbouring countries, which adversely impacted demand for Namibian goods and services. There are a multitude of underlying factors that have culminated into the present state of the economy, but in the interest of simplification we will focus on two broad factors: human capital and the overall business climate. Firstly, although progress has been made in the Namibian education system, educational outcomes are still dismal. The current average duration of schooling is a shocking 7 years out of the potential 12 years. This poor education system has failed the many young adults of today who are either structurally unemployed, as their skills are incompatible with the formal sector, or they find employment in the informal sector, which pays lower wages relative to the formal sector.
