Africa’s Development and Economic Crisis: Namibia in Context

Economic, social and political inclinations in Sub-Saharan Africa profoundly demonstrate the continent in multifold crises of development, with implications threatening not only the welfare and existence of broader segments of populations but the development base for future generations.

As per Aina (1993), a crisis in context of development, refers to a multi-dimensional situation by which a structure begins to experience a serious breakdown in the process of reproducing itself to sustain its survival. In terms of the nature of Africa’s crisis, for Aina, is characterized by features ranging from Africa being conflict ridden, economic growth disproportionate to population growth, increasing environmental degradation, a socio-cultural malaise of the continent, and Africa’s complacent and stagnated domestic politics defined by multiparty democracies dominated by former liberation movements with centralized authoritarian tactics and patrimonial regimes branded by strong cliental systems.

Africa’s poverty and her economic predicament is distinguished by export patterns virtually unchanged as agricultural products and raw materials still account for the bulk of trade, while domestic government development plans and industrial policies are met with failure, owing to the lack of sophisticated domestic markets and peripheral neoliberal capitalist structures inhibiting industrialization efforts thus perpetuating the dependence on imports of industrial consumer goods. In addition, Africa’s public sector is the significant source of employment, supplying up to more than 60% of the jobs in the formal sector. However, neoteric employment in this sector has been deterred by austerity measures due to the adverse liquidity crisis.

The concept of development entails a process of change and improvement that is for all- purposes positive and desirable. For Stiglitz, development represents a transformation of society, a movement from traditional methods of production to most progressive modern ways. Indeed, modern means are in demand, change is a generational necessity and governments are charged with the responsibility to practically improve the standard of living, extend lifespans and increase productivity.

The development crisis has been but a common occurrence the world over, although with more effect to Africa. The failure of the communist system was a failure of the political and social order of which the models between market socialism and capitalist economies were fundamentally misunderstood, as actors didn’t appreciate the role of institutions in the economy and the importance of the interface between the economy and governments as key players in society. As Stiglitz observes, ‘’the issue is one of balance, and where that balance is may depend on the country, the capacity of its government, and the institutional development of its markets”. 

Second, the Asian Financial Crisis of 1997 was a crisis that affected Asian countries, including South Korea, Thailand, Malaysia, Indonesia, Singapore and the Philippines. The trigger for the crisis was the 1996 export slowdown, which saw stock markets and currencies loose about 70% of their value. This devaluation deflated their currency leading to high inflation and a host of related issues.

Third, the US financial crisis of 2008, led to great recession and affected dependent economies, the world over. Without Africa being left out, the sudden stop of international capital flows produced a collapse of share prices and exchange rate. The rand depreciated 37% against the US dollar, leading to the collapse of commodity prices that hit particularly the mining and commodity industries. The ripple effects of the crisis rapidly spread to weak economies, with Namibia in case, being a commodity export market, leading to the overall contraction of its economy. The credit crunch had lengthy negative consequences for the development and growth capacity of the nation-state. While the current economic crisis presents a scenario where governments around the world are scrambling to stabilize their economies.

Developed countries employ(ed) developmental state driven approach to achieve and sustain the level of development they enjoy, by having their government control markets, establishing regulatory agencies and backing their financial institutions. This is because the US and Europe understand that unregulated capitalist economies lead to high levels of economic instability and widespread social issues. The contradiction and hypocrisy is that the same developed countries and their capitalism policing firms – rating agencies, WTO, IMF and their financial and economic wizards – coerce African governments to cease the regulation of market forces of demand/supply and cost pricing, ‘to trade freely, attract investment and achieve economic growth.’

While a few countries have succeeded in rapid economic growth, narrowing the gap between themselves and the more advanced countries, and securing their citizens out of poverty, many more countries have seen the poverty and inequality gap grow, as neoliberal capitalist markets, even when assiduously followed, have not guaranteed success. 

Successful countries, the ‘Asian tigers’ have not followed Washington Consensus strategies, but carved out paths of their own. Indeed, the rapid growth of the countries of East Asia wasn’t achieved through the promotion of liberalization and privatization of markets. Yet their success in development was accompanied by a reduction of poverty, widespread improvements in living standards, and even process of democratization. 

In most cases, government played a large role.  They followed standard technical prescriptions, of stable macroeconomic policies, while disregarding adverse policies.  These governments pursued highly productive investment in strategic economic sectors, complemented by industrial policies emphasizing the importance of education and technology to close the knowledge gap between them and the more advanced economies.  Moreover, governments intervened in trade to promote the export of their self-produced goods, also regulating financial markets, engaging in mild financial restraint, lowering interest rates and increasing the profitability of banks and firms.

With the effort to invest in key strategic sectors of the economy and the introduction of incentives and schemes to boost the domestic market in agriculture, small medium enterprises, et al, Namibia is in pursuant of the neoliberal capital market, based on free trade, minimal market regulation and export promotion. The government campaigns with such principle to attract FDI, which is not a sustainable means of development, despite what we are being taught in schools. For no country is built by foreigners owning its resources and factors of production. More so, Namibia fails to attract investment because TNC’s do not invest in fragile economies, whose governments cannot guarantee a stable currency and are therefore more attracted to Latin America and Asian markets.

With Namibia classified as an upper middle income developing country, the period 2012 – 2015 saw the economy grow by 5.6%, this is 1.18% average a year. The NDP5, attributes this sluggish, negative and exclusive growth towards a lack of industrialization, infrastructure development and investment. External aid and investment, is unreliable, volatile and leaves the country vulnerable to external shocks due to the absence of strategies that would enable the country to respond and reverse such economic development crisis.

For instance, the 2008/2009 crisis was resolved in many of the industrial and emerging markets, by employing counter-cyclical economic policies, comprising interest rates that were lowered and fiscal stimulus programs enacted in pursuit to avert economic collapse (Culpeper, 2010). And Namibia does not have the latitude nor capacity to deploy such counter policies, ‘ones that cool down the economy when in an upswing and stimulate the economy when in a downturn’. For the country’s tax bases are narrow and domestic revenues insufficient.

The impact of these development and economic crisis is characterized by high inflation, perpetuated and prolonged unemployment, falling average incomes, increased inequality and additional high government borrowing. The class struggle is the order the day, with its effect on the working class and the youth in its majority. The youth see, feel and live with the effects of the crisis daily at school, at home and at work, and overall experience the lowest living standards in the country. In 2016, the World Social Employment Outlook report, found that 35% of young Namibians aged 16-24 are jobless, while 15% of the employed youth experience extreme poverty of those employed on internship and those underemployed. Of course, figures exclude the age bracket of 25 – 35.

The economic crisis is but a crisis of capitalism and Marx and Engels’ fundamental predictions – on the intense concentration of wealth, the development of monopolies and the inevitability of crises – have proven accurate. The Marxist theory highlights the capital market of development based on polarization, unequal relations, and subordination of industries of the peripheries. The ideas of Marxism properly enunciate this crisis of capitalism and therefore calls for a radical alternative development paradigm, in favor of the working people and youth, opposed to policies in favor of individuals and corporations to maintain the status quo.

Through a system of socialism - which is the conscious organization of society and production for the benefit of humanity by placing the means of production and mineral wealth in society under democratic workers’ control based on a national plan of production, that would be able to provide everyone with employment, education, housing, health care, transportation, access to culture and art and a say in the running of society.

Socialism as the alternative paradigm will be constructed on the condition of a people-centered development structure and based on universal human values. By this, development will not be measured solely in terms of GDP growth but assessed in the background of human contentment. Unregulated market forces lead to exclusive development culminating in the widening gap between the rich and poor, class struggle and violence in society. Hence a regulatory mechanism is key for the state to control market forces and thus help distribute development benefits and create genuine economic opportunities to the lowest strata of society.

Moreover, citizens can only play an active and non-partisan role in championing the common interests of the people through public deliberation of civil society engagement, to help institutions deliver public goods better. While the regional and local institutions of governance should be democratized to reflect transparency and accountability and be decentralized in the literal sense, to check the authoritarian attitude of the state and strengthen the process of the democratic machinery from the perspective of development based on cooperation as this would ensure the participation of all in the political and economic processes and equip the citizens with the responsibility of managing their own affairs at the grassroot level through people – centered planning and initiatives.

*M. Pendapala Taapopi, is a Namibian Youth and student at University of Namibia, from Eheke Village, Oshana Region. He is reachable at mtptaapopi@gmail.com

References:

Aina, T. (1993). Development Theory and Africa’s Lost Decade: Critical Reflections on Africa’s Crisis and Current Trends in Development Thinking and Practice. in Changing Paradigms in Development, (ed.) Von Troila, M. (page. 11-20) Retrieved From: https://www.diva-portal.org/smash/get/diva2:277547/FULLTEXT01.pdf

Bellu, L. (2011). Development and Development Paradigms A (Reasoned) Review of Prevailing Visions. Food and Agriculture Organization Of The United Nations. (page. 3). Retrieved from: http://www.fao.org/docs/up/easypol/882/defining_development_paradigms_102en.pdf

Culpeper, R. (2010). The Need for A New Development Paradigm. Retrieved from: http://policyoptions.irpp.org/magazines/g8g20/the-need-for-a-new-development-paradigm/

Ministry of Trade and Industry. (2012). Namibia’s Industrial Policy, 2012, Republic of Namibia. Retrieved from: http://www.mti.gov.na/downloads/namibian%20industrial%20policy.pdf

Namibia National Planning Commission, (2017). Namibian National Development Plan (NDP5, p.vi, 2017). http://www.npc.gov.na/?page_id=18

Rising, J and Lyon, R. (2015). The System Is Broken - For A Revolutionary Solution!: retrieved from: http://www.marxist.com/system-is-broken-for-a-revolutionary-solution.htm

Stiglitz, J. (1998). Towards A New Paradigm for Development. (page 5-7) 9th RAÚL PREBISCH LECTURE. UNCTAD. Geneva. Retrieved from: http://unctad.org/en/Docs/prebisch9th.en.pdf