Food prices just keep going up leading to potential unrest and instability
By Josef Kefas Sheehama.
Crime is increasing constantly due principally to the high level of pervasive poverty and inequality. For instance, most recently, robbers broke into the Miracles Centre Church Thursday night and ransacked the church property looking for money and valuable items.
As an Economics and Business researcher as well as a local Pastor, I cast my imagination beyond this incident to understand what happened. We are very much concerned. It is not just Windhoek, perhaps all the urban towns in Namibia are at a situation where we might just have an economic crisis, which would mean the urban population that depends on markets, would not have purchasing power to even buy basic commodities, basic items for the household. In addition, prices are expected to rise further throughout 2022 due to the energy crises and trade risks. Namibian consumers have imported N$3,7 billion worth of goods resulting in a trade deficit of N$2,5 billion but still 59,4% lower than the N$6,1 billion recorded in May 2022. This indicates that consumers are forced to spend less as disposable incomes are under pressure.
Namibia’s informal sector has been ravaged by COVID-19, while fuel prices have risen. Moreover, the government lacks the fiscal space to mitigate the impact. As they grapple with hunger, poverty and the pandemic, the risk of violent protest and political instability stemming from rising food prices looms large. The Municipality of Windhoek threatens to formulate a new policy to prohibit home shops from operating in residential areas, which escalates further tension. As hunger rises, so too does the potential for socio-economic disruption targetting the government. Namibia’s punitive set of social, environmental, economic and political challenges makes it ripe for unrest. It is bad to see that political parties are interested in the masses of voters, but failed to address economic inequality.
Pressure on the country’s food system has been worsened by the drought in 2018 and 2019. Farmers have also moderated harvests in light of uncertainty induced by ever-changing COVID-19 regulations. This is also driven by the global energy crisis and production risks due to supply disruptions caused by the Russia-Ukraine unrest.
Unemployment hasbeen upward trending particularly among the youth, who have borne the brunt of ongoing jobless growth and economic marginalization. Young people across the country have become politically engaged, showing a willingness to punish incumbents who are unresponsive to their plight. Furthermore, overspending and debt accumulation have eroded the public balance sheet while the remaining fiscal buffers have been exhausted on external shock responses. This means the government cannot cushion civilians against rising food prices and food insecurity, and stave off associated political risks. A mixture of poverty, unemployment, inequality, bad politics and bad economics, has kept the country on edge.
Moreover, addressing systemic economic injustice is often a matter of economic reforms that give groups better access to jobs, health care, and education. In many cases, lack of access to basic services stems from enormous inequalities in resource distribution. Redistribution of benefits and resources can thus be an important component of social structural changes to remedy injustice.
There are various institutional and economic development reforms that might be put in place to raise living standards and boost economic growth. In addition, by creating social and economic safety nets, tension and instability caused by unfair resource allocation, can be eliminated. Namibia needs to stimulate productivity and investment in the broad food supply chain. Furthermore, innovation along the food supply chain should be strongly incentivized and rewarded. Namibia is home to a myriad start-ups at the forefront of developing crops, creating high yield but sustainable agriculture and aquacultural produce, and reimagining the food supply chain. The transformative potential of start-up SMEs should be harnessed, and paths opened that channel funding and capital to such businesses.
The informal economy is associated with two major aspects, one is the growth of the economy and the other is related to poverty and inequality. Most people opted to get into the sector because it became an avenue for their survival. The most informal economy workers in this country are youth, the population majorly affected by our country’s unemployment rate. Street vendors, kapana vendors, domestic workers, wood-covers, men on the side of the roads, cattle herders amongst others, are the major operators in the informal sector.
The Government must address the critical needs of the poorest and most marginalized as a matter of priority. The informal economy, one thing is sure, may be referred to as informal but it provides critical economic opportunities for the poor and the vulnerable. One of the key driver of the informal economy, is that such businesses often operate under the radar and does not need registration with any relevant government agencies. Overall, the informal economy is enduring; but suitable regulations and policies are required to improve the sector and introduce formalization. The decision for these businesses to formalize depends on the benefits that are derived from formalization over the risks of remaining in the informal economy.
Young people must be at the heart of government plans for the future. The need is for leaders to see the value in creating an enabling environment for young people to tap into blue and green economic pathways to drive sustainable development and create jobs. Young people want to share their knowledge and be taken seriously as key partners and they need to have more opportunities like this. Economic reforms together with structural and technological change, are bringing about new business opportunities and with them demand for new skills. Furthermore, the private sector’s role in encouraging growth and economic development cannot be overstated. Private investments by the corporate sector are critical to higher growth rates and economic development. Effective partnerships between the government and private sector in critical areas of infrastructure and long-term investments would expedite development. Corporates are integral to fostering innovation and entrepreneurship and ensuring the future progress of an economy.
To this end, resolving the food price hike and associated insecurity is an economic, social and political imperative. Given the tenuous position on a global scale, food insecurity could be the spark that lights the tinderbox. To douse it, we must act fast.