Our Domestic Products

Originally published in the Informanté newspaper on Thursday, 29 September, 2016.

Alex Shimuafeni, Namibia’s Statistician-General, released the figures for Namibia’s Gross Domestic Product this week. And the news was anything but good. For the first time since the beginning of 2013, our GDP growth was negative. Two quarter is a row would qualify as a technical recession, but luckily in Namibia’s case, it appears to be the result of external factors, and not structural problems.

But what is GDP? Gross Domestic Product, yes, but what does this mean? The IMF states that "GDP measures the monetary value of final goods and services - that is, those that are bought by the final user - produced in a country in a given period of time (say a quarter or a year).” So, in other words, it is the Gross (without deductions) products (or services) produced during a given time frame, domestically (locally). 

In other words, it is what we, here in Namibia, produce and contribute to the economy during a certain time. It can generally be regarded as an indicator of the level of economic activity that occurs.  So, for example, when using the expenditure approach to measure GDP, the formula would be GDP = C + G + I + (E – I). C would be private spending, with G being Government spending and I being investment, or business’ capital spending. E – I is net exports, or Exports less Imports. 

As mentioned, GDP is frequently used to gauge the level of economic activity. But it does have some drawbacks – namely, any unreported economic activity would naturally not be included. Black market activities, or under-the-table employment and any other illegal, but still economic, activities will not show up in these figures. Some people also like to use GDP as a measure of material wealth, when in fact it is a measure of economic productivity, and these are not necessarily related. 

In Namibia, GDP is calculated by the Namibia Statistics Agency, headed by the Statistician-General, as mentioned above, and it succeeded the Central Bureau of Statistics, who used to perform this function. They are the central statistical authority for Namibia, and collect, produce, analyse and disseminate official and other statistics in Namibia. So let us see what our Statistician-General and his armies of statisticians combing the country found. (I imagine there to be an army of statisticians. After all, why else would one need a statistician-general?)

One of the key factors to take into account when measuring GDP, is inflation. After all, if only the prices of goods increased, but not the actual amounts of goods produced, GDP should remain constant. Namibia’s GDP is calculated with base inflation being measured in 2010, and all amounts are adjusted to that base before being measured. Inflation has this year been quite high compared to last year, averaging at 6.7% in the second quarter, due to increases in the price of food due to the drought. Our net exports have improved, insomuch as we imported less and exported more, but Namibia is still running at a trade deficit of N$ 7.3 billion. In other words, we import N$ 7.3 billion more than we export. As can be seen in the formula above, any improvements here would translate to GDP growth.

Onto the specific sectors of the economy. Agriculture and Forestry had a decline of 5.2% in this second quarter – its sixth consecutive quarter of declines. It is thus evident that the prolonged drought has severely affected this sector, although it is showing some improvement due to improvements in drought management. The fishing sector showed growth of 3.3%, marginally slower, but recovering from three consecutive negative growth quarters.

Mining and quarrying declined by 13.2 % in the second quarter, mainly due to a decrease in diamond production of about 31.5%. The manufacturing sector also experienced a decline of 9.4% due to declines in non-ferrous metal production, beverage production and grain mills production – also an effect of the drought. In contrast, the electricity and water sector performed quite well, recording 25.7% growth – mainly, as expected, in the electricity sub-sector. 

But it is the construction sector that was the hardest hit by the current drought. After 10 consecutive quarters of 20% plus growth, it had slowed to near zero last quarter, and shows a decline of 19.9% in the second quarter. Hotels and Restaurants recorded a similar decline of 15.5% as well, possibly due to adverse worldwide economic conditions affecting tourism.

But it is not all bad news. Wholesale and retail trade might have slowed down, but it still recorded a 9.6% growth, driven by supermarket and furniture sales. The transport and communication sector grew by 3.5%, spearheaded by the port services sub-sector, and the financial services sector grew by 4.1%, with the banking sub-sector leading the way. 

And that, as they say, is the state of the economy. If nothing else, the Namibia Statistics Agency has highlighted the effect of the drought on our economy. At least a drought is an external factor, beyond our control, and can easily be reversed by a good rainy season, no matter how doubtful that seems. For the rest, well… I’m sure Alex Shimuafeni and his army of statisticians, armed with their laptops and loaded with Excel, will be there to tell us otherwise.

A Namibian House: To Be True

Originally published in the Informanté newspaper on Thursday, 22 September, 2016. 
 

Since the start of his presidency, our President, Dr Hage Geingob, has spoken of ‘building a Namibian House.’ He has stated that “Namibians want a house where everyone feels a sense of belonging, where everyone is presented with a fair opportunity to prosper in an inclusive manner and by so doing, ensure that no one feels left out.” I feel that Namibians in general agree with that sentiment, and have hope his Harambee Prosperity plan can build the house the President proposes. But while the plan has concrete goals, it lacks in one significant area – what we as the Namibian people need to be for the plan to succeed. There are several values I believe to be crucial for our Namibian House, and one of these, is honesty. 

Honesty has many definitions, but the one I prefer, is that honesty is the refusal to fake reality. In other words, refusing to pretend that certain facts are different depending on your viewpoint. I’ve heard it described as the flipside of rationality – where rationality binds one to think and act while considering the relevant facts, honesty compels one to do so without choosing to distort or ignore facts.

 Honesty frequently appears simple, and yet it is anything but. After all, if you apply for a job, and list your actual qualifications, you will be able to perform your duties, and keep your job and perhaps even be promoted. But if you lie, soon your lack of skill will be noticed, and you’ll lose your job. Similarly, cheating on a test might seem like an easy pass, but knowledge builds upon previous knowledge, and with each coming test, your ability to pass honestly becomes more difficult.

And therein lies the rub with dishonesty. It spread to infect your life like a multi-headed hydra, growing a new head every time one is cut off. A person who lies to cover up fraud at work, soon has to lie to her friends about where her extra money came from. They have to lie to their boss and falsify reports. Now they have to worry that the lies told to their work colleagues and friends are different, and that they don’t find out the truth. As people want to know more and more, additional lies have to be told to cover up previous ones. To avoid dishonesty being exposed, more and more lies have to be told – a veritable house of cards that can come crashing down at any moment. 

The sad part is that while an honest person can afford to surround herself with competent people with good judgement, the dishonest person cannot afford that – after all, they might suss out the truth. They can only surround themselves with the gullible, and the foolish. Dishonesty can never be contained, and its effects never escaped. 

After all, can you truly enjoy the fruits of dishonesty? If you stole a beautiful necklace to give you your partner, you might enjoy making him or her happy, but every time you see it, you’ll be reminded that you could not provide it yourself – you had to steal it. And every time someone else looks at it, that anxiety of being caught out will be there. 

Perhaps the saddest thing about dishonesty, is that all that effort and mental gymnastics required to maintain a web of deceit, could have been used to obtain those rewards honestly! If all that time and effort had been expended towards productive goals instead of trying to feed this hydra of dishonesty, imagine what could have been achieved!

Honesty is especially important for our Namibian House, because dishonesty has a profound economic cost. Trust in strangers save on what economists term transaction costs – the price you pay for doing business. If people can trust one another to do what they say, and deliver what they promise, these costs remain small. But if such trust is not to be found, these costs escalate. Suddenly formal contracts have to be drawn up. Courts need to intervene in even the smallest affairs to ensure that justice is being served. Lawyers are therefore required, and soon these costs add up.

When dishonesty infects a nation – when the integrity of the average citizen’s word is in doubt – economic downturn is sure to follow. Research has shown that in societies where trust and integrity are paramount, their economic and political futures are much brighter than in those where they are neglected. 

An easy measure of our honesty as a society is perhaps corruption. For a Namibian House that aims to combat poverty, it is clear where we need to focus our energy – after all, it is the poor who shoulder most of the burden of corruption in society. An increase of only 0.78% in corruption causes a corresponding drop of 7.8% in the income growth of the poorest 20% of the population, according to an IMF study.

Namibia has made some strides in this area at least, moving from 55^th in Transparency International’s Corruption Perception Index in 2014, to 45^th in 2015, giving us a joint 4^th position in Sub-Saharan Africa, after Botswana (28^th), Seychelles (40^th), Rwanda (44^th) and being alongside Mauritius. We still have a long way to go, but it is worth it. The World Bank states that: “countries that improve on control of corruption and rule of law can expect (on average), in the long run, a four-fold increase in incomes per capita. Similarly, such a country could expect, on average, a 75% reduction in child mortality.”

I believe honesty is a key ingredient we need to foster in ourselves if we are to build this Namibian House. It promotes authenticity, fosters courage, and shows you care. It shows maturity and self-acceptance, and fosters connections between us as members of the new Namibian House. It frees us as Namibians to be our true selves. And after all, how can we be true to ourselves, if we cannot be true to others?

The Hand That Rocks The Cradle

Originally published in the Informanté newspaper on Thursday, 15 September, 2016.

The past month the country has been having quite a dialogue on the New Equitable Empowerment Framework, or NEEEF. Various solutions have been proposed to remove barriers of socio-economic advancement in order to enable previously disadvantaged persons to access productive assets and opportunities of empowerment. The initial discussion focused, rather to its detriment, on race, instead of on another group of previously, and some would say currently, disadvantaged persons.

This is a group comprising 51.4% of the population, and which the SWAPO party itself recognised when it committed itself to equal gender (zebra) representation. I’m referring, of course, to women. And while our constitution in Article 10 states, “No persons may be discriminated against on the grounds of sex, race, colour, ethnic origin, religion, creed or social or economic status, “ and in Article 14 states, “Men and women of full age, without any limitation due to race, colour, ethnic origin, nationality, religion, creed or social or economic status shall have the right to marry and to found a family. They shall be entitled to equal rights as to marriage, during marriage and at its dissolution, ” it took until the 1996 passage of the Married Persons Equality Act to grant women their full, constitutional, rights.

Until 1996, if she was married under civil law, a woman’s autonomy was restricted due to Dutch-Roman common law. She was treated like a child! No married woman could bring a case to court! She could not sell or buy property! She could not sign a contract, take out a loan, be a company director… Not any of this, without permission from her husband. In addition, if married within community of property, the husband had control of their joint estate, even though half of everything belonged to her. 

It can thus not be said that any group has been quite as historically disadvantaged as women. And the advantages of empowering them are quite phenomenal. Women tend to do more work in caring for families – in fact, on average, women devote 1 to 3 hours more a day to housework than men and  2 to 10 times the amount of time a day to care (for children, elderly, and the sick). In our country, women are the ones who tend to communal farms! With the current drought, they were in fact the worst hit!

And yet, when women are empowered, spending patterns change. Women tend to spend more on child welfare – and children are our citizens of the future. Anything that benefits them, benefits the nation. When women join the labour force, the country has faster economic growth! In fact, about 25% of the economic growth in developed countries over the past 50 years is due to increased education of their girls.

For every additional year of education a woman receives, child mortality drops by 9.5%.  It is estimated that if women farmers receive the same access as men to productive assets (as NEEEF envisages), agricultural output could increase by 2.5% to 4%. In fact, women contribute substantially to food production worldwide. They often grow the majority of staple crops for domestic consumption and petty trading, and raise chickens and other smaller animals.

And women are paid less than men. Women in most countries earn on average only 60 to 75 per cent of men’s wages. Yet, more women than men work in vulnerable, low-paid, or undervalued jobs. But women’s economic equality is good for business! Companies greatly benefit from increasing leadership opportunities for women, which is shown to increase organizational effectiveness. It is estimated that companies with three or more women in senior management functions score higher in all dimensions of organizational effectiveness.

But here in Namibia, thirty-two percent of married women aged 15 to 49 have experienced physical violence at least once since age 15. 33 percent of married women aged 15 to 49 report having experienced physical, sexual, and/or emotional violence from their spouse. Among married women who had experienced spousal physical violence in the past 12 months, 36 percent reported experiencing physical injuries. Six percent of women reported experiencing violence during pregnancy. Sadly, fifteen percent of Namibian women who have experienced violence have never sought help and never told anyone about the violence.

Why is it that more than 20% of Namibians believe that husbands are justified in hitting and beating his wife if she burns the food, or argues with him, or goes out without telling him, or neglects the children, or refuses sex? Why do we live in a country where 24% of females aged 15 to 24 had rape as their first sexual encounter? Why do those females aged 10 to 14 who’ve had a sexual encounter report that in 42% of the cases it was rape?

Violence perpetuates violence, and allowing it in a household raises children that perpetuate it. Violence is the last refuge of the incompetent. This violence against women (73% committed by people known to the victim) paints a picture of a still-disadvantaged segment of our society – a picture we should urgently change.

NEEEF and the Harambee Prosperity Plan requires solutions – and one is staring them in the face. Global data suggests that gender inequality is strongly correlated with national poverty levels. Our ruling party has shown that it is willing to do what is necessary to close the gender gap – but it needs to do more. In 1996, the Marriage Equality Act made a man and a woman joint heads of the household. If we want to build a united Namibian House, it is time we did the same with our country.