Time to diversify
Is the country spending enough and is the country spending well? These are the few questions that were discussed when the Economist caught up with Philip Schuler, Senior Country Economist for Namibia representing the World Bank. From the short parley the deficit spending of Namibia currently remains a disconcerting feeling amongst country observers. Schuler firstly noted that eyebrows are raised at the government concerning how it plans to pay off the money borrowed. Will it be able to generate enough revenue to meet its creditors? Lastly, he wondered whether the increased spending is actually producing the desired results. He noted that certain sectors, like health, that have been receiving extensive support with several grants and funding of astronomical proportions will have to tighten their belts with looming talks of cut-offs.
“ A risk that’s coming up shortly is in health care. Namibia receives a lot of foreign grant money for this sector. This is going to end the PEPFAR programme which was an emergency fund. Global fund on Tuberculosis and Malaria is also going down and this is a result of donors not putting in as much money as before (European markets being down, mismanagement of the funds at a global level have lead to donations decreasing). The expectation is that government should be able to pick up the supply of these much need ARVs and other drugs. So healthcare financing will be a challenge over the next couple of years. A big problem is that the grant money isn’t going through the government (directly to the treasury or the ministry) currently but to the specific programmes: an overeater delivery system. So this management problem poses a separate challenge to government. What people have to realise is that the funding goes to a specific disease and not necessarily to a healthcare system.”
With 23 years of independence the success story of Namibia’s performance should be masticated gently explained Schuler. He drew caution to the worrisome skeleton in Namibia’s closet: capital vs labour growth. “Since independence and probably before there has been a moderate growth. (around 4.2 percent) unfortunately it hasn’t really generated any jobs because if one looks at where the exports are, its in diamonds, minerals and meat production which aren’t labour intensive. Another area of growth can be seen in the services sector driven by public administration specifically SACU which again isn’t changing the structure of the economy.”says Schuler.
He mentioned that meat production has done particularly well in an example of a niche product that could generate more growth. In addition to expansion in agriculture there could be expansion in manufacturing for a niche product as well which could generate growth for the country.
Amongst the goals of the NDP4, Schuler recognised that not all is dark and grey. He applauded Namibia for being awarded the opportunity to host the Adventure Travel World Summit. He suggested that Namibia should find more ways to draw in the American and European tourists who seem to add value to the tourism sector in terms of figures. He also applauded the noteworthy efforts by government to improve the logistics sector of the economy. He noted that the roads are relatively good and that harbour activity was worth mentioning. “There are a lot of people that think Namibia could automatically succeed as a hub with the uncongested Walvis bay being closer to Europe, North and South America. Business with Copper Belt in Zambia and DRC offer a long term potential investment opportunity if Namibia can secure that the copper gets exported through Walvis bay.