Tuesday 18 May 2021
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How do we fight inequality? Govt asks



…. seeks foreign help for local problems

….Africa-China links discussed


Government’s efforts to close the inequality gap which continues to subject thousands to poverty recently led to it roping in renowned economists to assist with measures on how to tackle the inequality.

The arrival of United Nations Economic Commission for Africa UNECA, Dr. Carlos Lopes and former World Bank Chief Economist Joseph Stiglitz for the High Level Leadership Seminar, where Namibia’s Country Profile was also launched, was aimed to assist government to address inequality.

The economists urged government to concentrate on Domestic resource mobilization, which can also act as a foundation for attracting Foreign Direct Investment.

“One of the ways to mobilize domestic resources is to rethink the source of tax revenue: instead of raising VAT, Namibia can think of a progressive way of penalizing thresholds. Namibia has the second best capitalization market in Africa and its pension funds account 80% of its GDP,” said Lopes about Namibia’s untapped pension reserves.

Although Namibia’s Gini co-efficient declined in recent years, the situation on the ground shows a different picture. The populace continues to call on government to prioritise on investments and to devise measures that will ensure that the country’s abundant natural resources are used to improve the lives of 819 000 Namibians currently living below the poverty line.

Government has struggled over the years to maximize yields from its three biggest sectors-mining, agriculture and fishing. All three contribute a mere 20% to the country’s Gross Domestic Product.

Namibia continues to be a net importer of food, with about 80% of the local consumption coming from outside the country while in fisheries and mining the resources leave the country in its raw form-creating millions of job in other countries while close to 600 000 thousands Namibians languish without jobs around the country.

Government seems to be struggling when it comes to selling its ideas to the nation.

President Hage Geingob wanted to know from the two economists during the seminar how government can best implement its policies without creating uneasiness in the country or seeming authoritative.

“What do you propose we do to tackle inequality, do we take from the rich and give to poor or in which way do we do it. We proposed a wealth solidarity tax and people hit the ceiling. We have peace and unity but how do we move forward while majority are poor….how can we address the situation?” asked Geingob.

He also wanted to know whether it is possible to implement programmes in a democratic State without coming across as an authoritarian state.

With several grants and social programmes aimed at assisting the poor such as drought relief, orphans and vulnerable children grant, old-age pension, war veterans, disability grants and the upcoming food banks, Lopes warned that if the grant system is too fragmented it could increase the financial burden on government.

“Fragmentation of subsidies increase the transaction costs, everyone below a certain threshold should receive the same subsidy,” Lopes said.

Lopes gave an example of the grant system used in Brazil whereby people under a certain threshold are granted the same subsidy.

Stiglitz urged government to negotiate better deals with multinational companies and to renegotiate the contracts that do not benefit the country.

“It is not a taboo anymore to renegotiate contracts if such contracts do not benefit the nation,” said Stiglitz.

According to Lopes: “The world is still perceiving Africa on its fragilities and the continent becomes the image of fragility itself. In order to reverse this perception, the continent needs to pay exclusive respect to numbers because statistical data can build a reliable narrative of the continent.”

“Because the statistics of the continent are poor, the numbers are poor, we, Africans, are responsible for the misperceptions playing around,” he said, adding that the Harambee Prosperity Plan is ambitious but a feasible plan to tackle inequality.

China-Africa relations

Namibia has in recent years developed a strong relationship with China, the current biggest trading partner of Africa.

Lopes cautioned that China’s investment on the continent may look big, but on a micro-level it is minimal.

“As Africans we think China invests a lot in Africa simply because they are visible in the construction sector, but their investment on the continent is only 4.3%, the rest is a result of state contracts won through bidding that is in actual fact paid by our governments,” said Lopes.

With China having announced that it plans to invest US$60 billion in Africa just recently, Lopes urged African governments to position themselves well.

Lopes is of the opinion that China’s planned investment is aimed at countering the China-Africa trade decrease and perceptions that China has lost interest to invest in the continent.

Namibia’s love for China has never been a secret, with government officials constantly jetting to the Asian giant on official trips.

Just last month, local weekly newspaper Confidente reported that over N$20 billion dollars in proceeds from multi-million and billion dollar government contracts, which are secretly awarded to the Chinese state companies, have left the shores of Namibia in the past 36 months.

“In investigations carried by this publication, Chinese owned companies are handpicked by Government to submit bids for public tenders and capital projects at the expense of locally owned companies that are bypassed under the guise of lack of clearance certificates,” states the report.

A majority of the projects being ‘dished’ to the Chinese, according to the media report, are being funded by Exim Bank of China, a Chinese owned bank tasked with implementing Chinese policies in industry, foreign trade, diplomacy, economy, and provide policy financial support so as to promote the export of Chinese products and services. Media reports suggest that China has so far in Africa completed some 1,046 projects, built railways to a total of 2,233 kilometres, and laid 3,350 km of highways.

According to the largest public database of Chinese development finance in Africa, researchers claim that there are currently 3,030 active projects in Africa. China is clearly racing to deliver on commitments made in 2012, when then-president Hu Jintao offered $20 billion in loans to African countries, doubling its previous pledge.

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