Range of woes underpins unemployment in Namibia

One of the most pressing issues facing Namibian officials at present is the country’s high unemployment rate. According to the latest Namibian Labour Force Survey, which was presented to Parliament earlier this year, 36,7% of the country’s population is currently unemployed, up more than 3% since the previous survey in 2000.

The study, commissioned by the Ministry of Labour and Social Welfare, focuses on the economically active population with the aim of providing basic information on the size and structure of the labour force. Three surveys have been carried out so far, the first in 1997.

But, warns Daniel Motinga, executive director of the Institute for Public Policy Research—a think tank based in the capital, Windhoek—“The rate of unemployment is generally much higher if one includes underemployment: people operating below their full capacity.
Total unemployment could well exceed 60%.”

The latest survey, conducted in 2004, also reveals gender and geographical disparities in unemployment: while more than 56% of men are employed, only about 40% of women have jobs. Employment in urban areas stands at 66,5%, nearly double the rate in rural areas, where it is approaching 35%.

Addressing a high-level employment creation forum earlier this year, Prime Minister Nahas Angula cited a small manufacturing base, weakening production in the agricultural sector and difficult climatic conditions as being among the factors undermining Namibia’s ability to create jobs.

Public spending

For Robin Sherbourne, an independent economic analyst based in Windhoek, the current state of affairs can be blamed on politicians who have raised public spending since independence in 1990.

“Namibia chose to increase public spending by bloating the civil service to provide much-needed jobs as a quick fix and as a means of racial rebalancing, and now spends most of its budget on salaries rather than development,” he noted.

In addition, “Political correctness has resulted in government sidelining foreigners to advise the government of Namibia on better competition and trade policies.”

The result? “Growth has been lacklustre. Namibia is rich in many aspects such as natural resources, but is poor in skills: dynamic entrepreneurs who can sell new products and services to a world market,” said Sherbourne.

Harold Pupkewitz, of the Namibian Employers’ Federation, agrees, describing the public-sector salary bill as an “unsustainable drain on the economy”—something to be addressed “as a matter of priority”.

“The cost of government is stunting economic growth and retarding job creation,” he says.

Competitiveness

In the Global Competitiveness Report for 2006/2007, produced by the World Economic Forum, Namibia took 84th place of the 125 countries surveyed. (The forum, a Geneva-based non-profit, focuses on leadership in a bid improve global affairs. It is responsible for organising an annual gathering in the Swiss resort town of Davos that attracts mainly leading politicians and business people from around the world.)

Increased foreign investment could play a key role in alleviating unemployment. However, entrepreneurs from abroad have a wish list of issues they would like addressed.

At Namibia’s second investor conference held last year, which attracted more than 100 participants from both the private and public sector, the need to overhaul incentive schemes and revise legislation governing corporations took centre stage. The first conference was held in 1997.

Corruption, widespread inequality, poor healthcare and declining per-capita income were mentioned as impeding Namibia’s chances of attracting foreign investment. Investors also found it difficult to obtain work and permanent residence permits.

Dirk Hansohm, of the Windhoek-based Namibian Economic Policy Research Unit, suggests that the way forward lies in more investment in the manufacturing sector, to enable processing of resources from agriculture, fishing and mining to create finished goods.

“Using raw materials to create employment has a long tradition in all countries with an abundance of natural resources,” he notes.

But, Hansohm says there is a need to guard against the government contributing to setting up plants that deliver poor-quality products at a much higher price than similar goods already available from foreign producers—something he warns will lead to “government-sponsored bankruptcy”.

For his part, Motinga says the government should redirect its budget towards job-creating projects. “Currently, less than 20% of government revenues go to capital projects. This should change at the soonest if we want to make a dent in unemployment,” he says.—IPS

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