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A New Revolution

A New Revolution

A New Revolution

Desmond van Heerden

WE here in Namibia are not quite as familiar with the concept of a revolution as some other African countries. When most of us hear the world revolution, we instinctively think of the revolutions that have happened in other African countries – the change of leadership and the violence that was associated with them. By contrast, we’ve been blessed with a stable democracy, and sound political leadership. And yet, we are nevertheless preparing for a revolution, albeit of a different kind.

In 1760, this revolution started in Europe. Robert E. Lucas, Jr., an economist, noted that, “for the first time in history, the living standards of the masses of ordinary people have begun to undergo sustained growth. Nothing remotely like this economic behaviour is mentioned by the classical economists, even as a theoretical possibility.” The population increased – the first period in history where both population and income per capita increased. Production methods switched to machines, new chemical manufacturing processes were pioneered, and iron production skyrocketed. Water and steam power started to be used, and machine tools were developed. Factories arose. This was a different kind of revolution. It was the Industrial Revolution.

The Industrial Revolution precipitated the start of per-capita economic growth for the first time in history, and as such, it should be no surprise that Namibia wishes to emulate that. In fact, in 2012, Namibia’s Minister of Trade and Industry, the Honourable Dr Hage Geingob, unveiled Namibia’s Industrial Policy. The document outlined the specific principles, vision, aims and objectives that will guide Namibia’s industrialisation efforts over the next two decades.

Namibia’s Industrial Policy is anchored in Vision 2030, and thus, as a first principle, aims that the country’s manufacturing and services sectors constitute about 80% of the country’s gross domestic product (GDP), that the country largely exports processed goods, which account for not less than 70% of total exports, that we have an established network of modern infrastructure that includes railways, roads, telecommunications and port facilities, and that Namibia has a critical mass of knowledgeable workers, and the contribution of SMEs to GDP is not less than 30%, all by 2030.

The second principle is, of course, macroeconomic stability, and the third, economic openness – as a small country, we need external markets. The policy outlines the need for a targeted approach, given our relative lack of resources. But the government recognises that while it has some role to play in Namibia’s industrialisation, it knows that industrial development can only be accomplished by partnering with the private sector – with the citizens participating. Hence the focus on SME development in the policy’s aims.

The policy, however, was just the framework. Government’s more detailed plan was revealed by the next Minister of Trade and Industry, the Honourable Minister Calle Schlettwein in Namibia’s Execution Strategy for Industrialisation. Called ‘Growth at Home’, it focuses on three strategic intervention areas, namely supporting value addition, upgrading and diversification for sustained growth, securing market access at home and abroad; and improving the investment climate and conditions.

Each of these areas, too, have specific goals, but since this is an execution plan, it has a shorter time span. Thus, for supporting value addition, by 2020 Namibia will have to achieve the following: manufacturing and services should account for more than 50% of GDP, at least 10 000 new jobs have to be created in the manufacturing sector, private sector investment has to benefit targeted sectors under Growth at Home, and Namibia has to improve on the World Economic Forum Business Sophistication Indicators, in particular on the sub-indicators “Nature of competitive advantage” and “Production process sophistication”.

To secure market access at home and abroad, the following needs to be achieved by 2020: the volume of locally produced goods supplied to the public and retail sector has to be significantly increased, Namibia’s ranking in the “Trading across Borders” category of the World Bank’s Doing Business Report has to improve by at least 5 ranks, the share of manufacturing within total exports has to increase to at least 30%, and Namibia has to improve on the United Nations Conference on Trade and Development (UNCTAD) Export Diversification Index.

Finally, to improve the investment climate and conditions, the following has to be achieved by 2020: Namibia has to be the most competitive economy in the SADC region, according to the standards set by the World Economic Forum, investment climate surveys should show that businesses feel that the climate and conditions in which they operate are more conducive, in particular with respect to the availability of skilled labour and access to land, and Namibia has to improve by at least 10 ranks in the “Starting a Business Category” in the World Bank’s Doing Business Report.

If we want a revolution, this is the one we need. With Namibia’s economic growth at a standstill, we should revolutionise our economic engine, and shift it into high gear. What is now required, however, cannot come from government – it should come from us, the citizen-entrepreneurs and the private sector. Government should support that – and now Finance Minister Schlettwein said as much in his mid-term budget review. It won’t only be government that sees a rise in its tax receipts, but the ordinary citizen will also finally see what Namibia can do if its people are at full employment. The road ahead has been mapped – we only need to gather the courage to follow it. Viva la Revolution Industrial!

Desmond P van Heerden, HonsBComm (Stell) is the Chief Analytics Officer of Trustco Group Holdings Ltd. Previous articles available online at http://toi.hopto.org/. He can be contacted at DesmondV@tgh.na

 

 

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