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The political economy behind the development of a comprehensive industrial policy

The political economy behind the development of a comprehensive industrial policy

By Josef Kefas Sheehama.

Historically, the use of industrial policies by governments has proven beneficial to a number of countries. The vision of Namibia’s Industrial Policy is anchored in Vision 2030. Accordingly, by the year 2030, Namibia should be characterized as “a prosperous and industrialized country, developed by her human resources, enjoying peace, harmony and political stability.”

My aim here is not to repeat the history of Namibia but to offer opinions on what I think we can collectively do. I mean to say that the Namibian government uses various measures to influence the economy, such as in the agriculture sector by providing research and technical assistance and dissemination of such information to farmers through agricultural extension services and investments in irrigation projects.

Moreover, industrial policy differs from the macroeconomic policy as the government targets only a subset of the economy, while the macroeconomic policy which includes tax rates, rates of interest, and levels of fiscal spending, generally does not discriminate against companies or industries, whereas industrial policy includes subsidies on research and development and taxes, amongst other things.

The strategic trade policy favours the entry of domestic firms into global markets. The policy is that government can assist domestic companies in capturing profits from foreign competitors. Accordingly, the government policy can alter the terms of competition to favour domestic firms over foreign firms and shift profits in imperfectly competitive markets from foreign to domestic companies.

Namibia’s government stresses that its economic policy is based on a competitive market economy but some existing legislation still distorts competition. Several local companies feel disadvantaged and complain about the preferential treatment foreign investors receive. Economic policy in Namibia is guided by the need to achieve economic growth and to address high levels of poverty, inequality and unemployment.

One of the main failures of Namibia’s economy in recent years has been its inability to create sufficient jobs. In light of this, the government has adopted the Harambee Prosperity Plan (HHP) which seeks to restructure the Namibia economy to improve labour absorption and the composition and rate of economic growth. The Plan does not replace, but complements the long-term goal of the National Development Plans (NDPs) and Vision 2030.

Despite its focus on growth and job creation and the role of public spending on, for example, infrastructure in supporting these aims, the new government initiatives reinforce its commitment to macroeconomic stability and low inflation. Other specific aims of Namibia’s economic policy include developing a better-educated and more skilled workforce, enhancing competition, promoting innovation, halting and reversing de-industrialization, diversifying the economy into new sectors, building strong relations with other emerging economies and boosting intra-regional trade.

The Namibian Government still considers industrial policy to be a vital component of its broad developmental strategy for promoting and accelerating economic growth in a way that creates sustainable jobs and reduces the high levels of poverty and inequality in our country. The hope is that such broad-based industrialization will promote employment growth and increase the participation of historically disadvantaged people and marginalized regions in the mainstream economy.

Addressing the problem of chronic unemployment and the recent decline in the country’s industrial and manufacturing capacity, the plans outline cross-cutting actions that are crucial for industrial development. These include industrial financing schemes and skills development programmes, and pinpoint sectors which are to be promoted through targeted support for investment, infrastructure and industrial upgrading.

On 07 October 2021 the Development Bank of Namibia launched a climate adaptation facility. According to the DBN CEO Martin Inkumbi, it provides an affordable and tailored financing solution for climate and environmentally friendly projects. I am convinced that if we pull together with one aim we will grow and develop our economy.

Namibia’s trade policy, as articulated in the Government’s Namibia’s Industrial Policy and Strategic Framework is also informed and shaped by the county’s Fiscal Policy and the National Economy objectives.

Where further trade liberalization is pursued, it is done gradually and selectively, and with a focus on supporting broader programmes aimed at industrial development and employment creation. Despite its pro-poor economic and social policies, which have mainly targeted the housing, healthcare, social security and education sectors, there are still more job seekers than there are jobs, thereby exacerbating the government’s ability to tackle poverty and inequality which result from unemployment.

The SWAPO Party, as the dominant political force in Namibia, regards itself more a liberation movement than a political party. With liberation movements during times of struggle, there is the need for consensus in order not to expose divisions which could be used against the movement by the enemy. Communities have become frustrated with the performance of those in leadership, especially in the local government context, and particularly with regard to nepotism, corruption and the lack of transparency.


 

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