Income and wealth disparities spell deep concern – President

WINDHOEK, Feb. 27 – 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.

This was reiterated by President Hage Geingob speaking at the launch of a Cabinet Workshop on the National Equitable Economic Empowerment Framework (NEEEF) earlier today.

Said Geingob, “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.”

Income and wealth disparities remain a global and local concern.

Namibia is no exception to income disparities and inequalities according to Geingob , and 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,” he added.

Geingob added that there had been a faulty argument that assumes that with poverty on the decline, 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,” said the President.

In terms of the progressiveness of Namibia’s tax system, the World Bank report stated that the top ten percent income earners account for 70 percent of tax collection. Meanwhile, the Namibia Statistics Agency in its 2009/10 Report on Income and Expenditure highlighted 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,” he said.

The grants, explained Geingob, make it possible to cater for most vulnerable citizens, through social grants, though the model impeded building a prosperous nation around it.

Land

“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.”

Geingob said his administration would intensify corrective interventions during the remaining period of the Harambee Prosperity Plan, adding that later this year, the second Land Conference would be convened.

“The conference will aim to deal with inefficiencies and challenges around land redistribution; restitution and tenure. I shall not dwell on that here.” – Musa Zimunya

musa@namibiadailynews.info