President Dr Hage Geingo's statement delivered at the occasion of the OFFICIAL OPENING OF THE CABINET WORKSHOP ON THE NATIONAL EQUITABLE ECONOMIC EMPOWERMENT FRAMEWORK (NEEEF), 27 FEBRUARY 2018, WINDHOEK
(...) Good morning to all of you.
Income and wealth disparities remain a global and local concern. According to the World Economic Forum’s Global Risk Report of 2017, the growing increase in income and wealth distribution is the trend most likely to determine global developments over the next decade. Furthermore, a report released by Oxfam on the 22nd of January this year, states that 82 percent of the wealth generated in 2017 went to the richest one percent of the global population, while the 3.7 billion people who make up the poorest half of the world population saw no increase in their wealth.
Namibia is no exception to income disparities and inequalities. In fact, according to the World Bank - in terms of the Gini Coefficient - Namibia is unfortunately one of the countries with the highest levels of income disparities in the world. Yes, since 1990, we have made good progress in reducing poverty, with the overall poverty rate declining from 70 percent in 1993/94 to 18 percent in 2015/16. However, the fall in income disparities as measured by the Gini-Coefficient, has only seen a marginal decline from 0.70 to 0.58 during the same period. This amply demonstrates that while poverty and income disparities are inter-related, the two should not be conflated.
With poverty on the decline, the argument is advanced that there is no need to proceed with reforms aimed at addressing underlying structural inequality. This argument is faulty. A World Bank Report on the Distributional Impact of Fiscal Policy in Namibia, released in 2017 argues correctly that the main reasons for the decline in poverty and the minimal decline in income disparity may be attributed to Government interventions, such as our relatively progressive tax policy and a system of comprehensive social safety nets. In terms of the progressiveness of our tax system, the World Bank report states that the top ten percent income earners accounts for 70 percent of tax collection. The Namibia Statistics Agency reinforces the earlier point I made in its 2009/10 Report on Income and Expenditure. It highlights that about 16 percent of the population directly and indirectly benefited from social grants back then.
Don’t forget an elemental fact: these grants are directly funded by the state from the national budget. In the current Financial Year - that is 2017/18 - an amount of N$6.7 billion was allocated for the administration of various social safety nets.
We are proud that we are able to cater for most of our vulnerable citizens, through social grants. But we cannot build a prosperous nation around that model. We have to address the underlying structural impediments, which make it difficult if not impossible for many Namibians to effectively participate in the economy, and engage in wealth creating opportunities.
Income inequality is aggravated by our unique political history, including the burning land question. It is an unfortunate reality and daily experience - black Namibians continue to bear the biggest brunt from this dark period of our history. It is why we will intensify corrective interventions during the remaining period of the Harambee Prosperity Plan. Later this year, we will convene the second Land Conference. The conference will aim to deal with inefficiencies and challenges around land redistribution; restitution and tenure. I shall not dwell on that here.
The NEEEF consultations and the implementation of the strategy constitute a necessary intervention in dealing with structural inequality, of which income disparities and lack of participation of the black majority in the economy remain a glaring legacy of our past. We will not allow the status quo to continue.
Please, click here for a pdf version of the President's sptatement on NEEEF