Namibia’s severe poverty reduced by nearly a quarter – report
According to the National Statistics Agency(NSA) and the World Bank Namibia’s fiscal policy has lifted 118 thousand people out of poverty and reduced the rate of severe poverty by nearly a quarter in a report launched this week.
Namibia’s social spending is comparable to other countries in the world and slightly higher than that of an average Sub-Saharan African country. The report, tells of a system of taxes and social spending that benefits its poorest citizens the most, while tax revenues tend to come from the richest 10% of citizens.
The report, Does Fiscal Policy Benefit the Poor and Reduce Inequality in Namibia? finds that the balance of the population that were living in extreme poverty in 2009/10 is faded mostly due to the outcome of direct cash transfers, especially the Old Age Pension. Evaluating the impact of government taxation and social spending and whether the government makes the best possible use of these tools to address poverty and inequality.
Statistician General, Alex Shimuafeni said that the report also shows that the coverage and efficiency of these policies could be further improved to reach more people. “Now we ask ourselves, where to from here?,” Shimuafeni said.
Shimuafeni said that World Bank estimates show that 16.9 % of the population lived on less than US$1.90 a day in 2015. “We wait for the latest figures that will come from the Namibia Household Income and Expenditure survey but what I can attest to is that poverty is still relatively high. This of course does not mean that it has not reduced, indeed it has, but it is still rife amongst us.” Shimuafeni said.
However, the impact of direct transfers on income inequality is relatively small. Health and education spending are the key drivers of inequality reduction, improving people’s opportunities and equalizing their income-earning capacity.
The report shows that even though Namibia’s direct transfers are progressive and matter for the poor, a large proportion of transfers is not going to the poorest. “The efficiency of transfers could be improved by better targeting and consolidation of social programs, and reducing leakages of existing programs.”
World Bank Country Director for Namibia, Paul Noumba, said. adding that that tackling poverty and unemployment in one of the most unequal countries in the world is no small task, but Namibia has outlined a clear strategy for the way forward in the Vision 2030 plan.
The World Bank, in line with its goal to help countries eliminate extreme poverty by 2030 and promote shared prosperity and improve the lives of the poorest of the poor say that Namibia’s progressive fiscal policies, and generous social spending has on the whole helped reduce poverty and inequality.
The Gini coefficient on income falls from 0.635 before the use of fiscal policy to 0.429 after its use, with transfers towards health and education (if monetized) accounting for about 78.2 percent of the reduction.
Other transfers given to the most vulnerable members of society include veterans and disability grants, child maintenance, and foster care grants. “This, together with a progressive tax system in which the rich pay more taxes than the poor, helps the government to reduce severe poverty,” Paul Noumba said.
“We hope this analysis will help policy makers improve existing policies that have been shown to reduce poverty and inequality, with the goal of lifting up those who are still living in poverty in Namibia.”