Seeing opportunities in economic downturn

Seeing opportunities in economic downturn

Transformation remains central to our national, social and economic agenda, which strives towards accelerated, sustainable and inclusive economic growth and shared prosperity.

Trade fairs provide an important marketing opportunity for local entrepreneurs, especially small and medium sized enterprises. It also serves as an opportunity to network and facilitate trade through business linkages between domestic and international entrepreneurs. The beneficial effects of trade on overall economic development have been well documented. Often the focus is on international trade or trade within regional economic blocs. However, trade in goods and services within the national boundaries of a country are of equal importance and highly encouraged. We must guard against tribalism, regionalism and xenophobia. Our fellow Namibians as well as citizens of neighbouring countries are not only our brothers and sisters, they are also the same people with whom we need to develop increased trade linkages throughout Namibia and SADC.

The world is fast changing around us, and we must, therefore, continuously adapt and evolve to remain relevant. Economic downturns, such as the one that Namibia and the world are emerging from, provide an excellent opportunity for governments and business sectors alike to interrogate their business models. This will give meaning to the words of Winston Churchill who said that one should “never let a good crisis go to waste”.

Indeed the Namibian government used the economic downturn as an opportunity to implement far reaching budgetary and structural reform measures aimed at putting the economy on a more sustainable growth trajectory.
The economic downturn was caused primarily by external factors, particularly the subdued commodity prices and the decline in SACU receipts. It was thus disappointing to note the insinuations that the economic downturn was caused by the government. This inference is directly attributable to domestic politics and has no truth to it.

Just as these measures started to work and “green shoots” became visible, Moody’s, an international rating agency, downgraded us, without any attempt to understand or acknowledge our efforts.

Incidentally, these deep budgetary cuts and reform measures were not implemented because of the insistence of Moody’s or others such as the IMF and World Bank. It was initiated because we value macro-economic stability, and we have a track record as such. That is why Namibia has never gone to the IMF for an economic bailout package or entertained any internationally imposed structural reform programs.

Most of our debt is local and in keeping with continuing the legacy of my predecessors, I am confident enough to say that Namibia will not seek IMF bailouts or accept so-called “structural reform packages” from external parties.
As a nation, we have much to be grateful for. We can be proud that we have made tremendous progress politically, economically and socially.

Our governance architecture is robust, supported by a solid foundation of peace, stability and the rule of law. Without these important pre-conditions, sustained development is not possible.

Notwithstanding the recent economic downturn, our macroeconomic architecture remains sound and our economic policies have helped to set us apart on the continent. We will continue to refine these policies, until we have become the most competitive economy on the African continent.

We want to be competitive not for the sake of it, but because ultimately we want to see a positive change in the livelihood of all our people. This brings me to my final thought on transformation. Our socio-economic transformation agenda must always result in the tangible improvement of living standards of all Namibians.

Shared growth is critical as inequality hurts the majority of Namibians who continue to be structurally excluded from effective participation in the economy. What we advocate for is broad-based participation in the economy and not just a few individuals becoming rich.

In other words, we would like to see the prosperity of many business people and also to see workers sharing in the profits of companies, through employee share schemes. I was recently encouraged to hear that at Paratus Telecom, a fully Namibian-owned company, the share value of the lowest paid worker is N$222,000. This means they have given shares to ordinary workers and a Namibian at the level of a cleaner enjoys an investment in shares worth that amount.

This is effective empowerment and wealth creation. Many other companies are doing exceptional work with empowering their employees and I encourage these companies to share these stories with me. Empowerment should not stop at employees. Communities in which firms are operating should also benefit from profits generated in their communities. This is especially applicable for resource-based firms such as mining and fishing companies.

Entrepreneurs are reminded that business should remain an expression of Namibian solutions to Namibian problems. While trading is acceptable, our Industrial Policy and Growth at Home Strategy calls on the business community to diversify the country’s manufacturing base, by adding value to commodities and other raw materials and by so doing, boosting the productive capacities of homegrown enterprises. Our development should remain locally relevant yet globally competitive.

In conclusion, let us be reminded that development should be based on partnership. The theme for this year’s SADC Summit was industrialisation through partnering with the private sector. We believe that the private sector should continue to be the engine of economic growth and the creators of wealth, with the caveat that it must be shared wealth.

* Dr Hage Geingob is the President of Namibia. This is an abridged version of the speech he gave at the opening at this year’s Ongwediva Annual Trade Fair.

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