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Friday 18 January 2019
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Put a Price to Development and Sell it!

What is the equilibrium threshold needed for growth, who will fund it?

In Vienna 2016 the UN General Assembly declared the period 2016-2025 as the 3rd Industrial Development decade for Africa. As an African I am so delighted by the announcement as it a very positive declaration and something hopeful for us. Africa must be jubilant and unite in the midst of debt and seek solutions to overcome the oncoming economic storms. I thank God for making this continent very resource rich but in this article we continue to explore how we can sell our growth expectations and have tangible results.  As a continent we face the biggest skills shortages in the world because of the post-colonial syndrome and our survival was on agricultural produce. Countries use currency and aid to lure us into more debt and we need to step aside and take machinery in exchange of commodities, because money depreciates but production and machinery will enable us to create jobs. I want to sound diplomatic as possible but I will make a stern rebuke to the bondage of stagnation and the spirit of delay that is binding Africa’s breakthrough.

In 2012 “Ralph Martin et al” did a research for the London School of Economics by simulating regressions to see if industrialization creates more jobs and the result was positive. As per the research in, 2010 EU countries spend 9.6% of their GDP (1.18 trillion Euros) on manufacturing subsidies to back their industrialization plan. That means Namibia alone has to dedicate more than N$ 18 billion to subsidize or match this objective. This tickles my thinking of what the positive outcome would be if we spend less on development or infrastructure and focus more on industrialization goals, which will benefit us more. Our operational budget takes about N$ 55 billion whilst the development budget is N$ 11 billion for 2015/2016. Hence we build most infrastructure from debt that has no direct links to recover revenue. Debt like Eurobond is riskier than subsidized loans offered mostly by China. Infrastructure does not give quick returns whereas businesses and industrialization goals have better chances of job creation and higher revenue. Furthermore, UK in attempts to safeguard jobs worked together with the private sector and requested them to submit proposals for funds they need to improve business. The business sector for example had to declare their needs like improvements, required technology, etc. They were subsidised under the RSA program and created it 7% and more jobs. US subsidies on industrialization exceed US$ 60 billion annually.

Apart from subsidies, Industrialization require a parenting and grand-parenting relationship, which is not related to import of finished goods, totally not. Parenting is similar to what China and Japan did with South Korea, Taiwan, Vietnam and other ASEAN countries, by strengthening their intra-regional industrial dependence. The highest imported item of the European countries is machinery which is a cornerstone of industrialization. Our South African neighbours are triumphantly exporting consumables to us but ignore incentives to parent our industrial independence. China is parenting on its own while South Africa is grand-parented by USA and EU originated multinational companies (But rumours has it that Jacob Zuma has succeeded in lobbying for the BRICS more than the USA). The size of our economy does not determine that we do not have capacity for production and sales. I learn from most people that took part in the “Made in Namibia Expo” in 2014 that they started with smaller production while using mechanical methods and without applying expensive hi-tech tools.

As per NDP4 our core development indicators are income inequality, economic growth, and employment creation. In the spirit of Harambee we need to package our needs and sum up costs to quantify our development needs. In conclusion we are very diversified economically in resources and industries presence as opposed to other African countries because we export fish, minerals, machinery tools, grapes beef, etc which is a good motivation.  Subsequently desperate companies approach the Ministry of Industrialization requesting help to upgrade their production base from micro-business to medium and large enterprise, thus we can set out clear objectives and apply remedial action. If we sell our development needs, the region is waiting on us to follow suit and integrate more. God bless.




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