Namibia has improved on its competitiveness ranking as per the latest World Bank Global Competitiveness Report.
The Global Competitiveness Index identifies and assesses the factors that underpin the process of economic growth and human development. It highlights the necessity of addressing the spillover effects and externalities, positive and negative, intended or unintended, of a policy or strategy beyond the direct objective it pursues.
The region was led by Mauritius which ranked at 52, South Africa, the second most competitive in the region, improved to the 60th position, while Namibia (94 from 100), Rwanda (100), Uganda (115th) and Guinea (122nd) all improved significantly.
Meanwhile, the World Bank has also slashed the economic growth forecast for sub-Saharan Africa for 2019 to 2021 by 0.2 percentage points from its earlier projection, citing a slowdown in fixed investment and policy uncertainty in the global economy.
According to the bank, the regional economy was anticipated to pick up by 2.6% this financial year, from a 2.8% growth that was projected in April.
The World Bank has also said that GDP growth would soar to 3.1% in 2020 and 3.2% in 2021.
“Despite some improvements, the external environment is expected to remain difficult and uncertain for the region,” the bank said in its October Africa’s Pulse report. According to Professor Klaus Schwab who compiled the report, sustained economic growth remains a critical pathway out of poverty and a core driver of human development.
He said there is overwhelming evidence that growth has been the most effective way to lift people out of poverty and improve their quality of life.
“For least-developed countries (LDCs) and emerging countries, economic growth is critical for expanding education, health, nutrition and survival across populations. The importance and policy relevance of growth has been re-affirmed in the United Nations’ 2030 Agenda for Sustainable Development, adopted by all UN member states in 2015, which identified 17 Sustainable Development Goals (SDGs) to be achieved by 2030. Goal 8 calls for “sustained, inclusive and sustainable economic growth.
Growth is also a means or a prerequisite for achieving many of the other SDGs, including ending poverty in all its forms everywhere.
For most of the past decade, growth has been subdued and remained below potential in many developing countries, hampering progress on several SDGs.
The competitiveness landscape painted by the GCI in 2019 demands more effort to restore productivity and growth to lift living standards,” said the Professor.
Meanwhile, the professor has referred to a recent UN progress report warns that the world is not on track to meet several SDGs.
Said Schwab, “On Goal 8, LDCs have missed the target of 7% growth every year since 2015. Extreme poverty reduction is decelerating. At current pace, it is estimated that by 2030 the rate will stand at about twice the 3% target set in Goal 1.”
He said the World Bank estimated that, as of 2015, 3.4 billion people or 46% of the world’s population lived on less than $5.50 a day and struggled to meet basic needs. “After years of steady decline, hunger (Goal 2) has increased and now affects 826 million or one in nine people up from 784 million in 2015,” he said.
A glimpse of global economic activity
The Professor cautioned that the shadow of the Great Recession looms large, the global economy is predicted to be heading for a slowdown.
“Over the past decade, growth in advanced economies has been anemic.
Many emerging economies, including Argentina, India, Brazil, Russia and China, are experiencing some slowdown or stagnation. In least-developed economies, growth remains well below potential and highly volatile.
Although several factors explain this lackluster performance, persistent weaknesses in the drivers of productivity growth, highlighted by the GCI, are among the principal culprits,” he said.
Will monetary policy save economies from over-heating?
Schwab posited that since the Great Recession, policy-makers have kept the global economy afloat primarily through ultra-loose and unconventional monetary policy.
“But despite the massive injection of liquidity, four of the world’s major central banks alone injected $10 trillion between 2008 and 2017, productivity growth has continued to stagnate over the past decade,” he said.
He added that although loose monetary policy mitigated the negative effects of the global financial crisis, it may have also contributed to reducing productivity growth by encouraging capital misallocation.
“With extremely low (or negative) interest rates and ongoing deleveraging, banks have become less interested in lending to businesses and prioritized fee-generating and trading activities instead.
Further, in allocating corporate loans, banks seems to have favoured firms that were not credit-constrained (and less risky) rather than credit constrained ones that might have more productivity potential,” he said.