President Sam Nujoma outlines his achievements and looks to the future

Namibia's development since independence in 1990 has been described as 'conservatively cautious'. Do you agree with this assessment?

Our major focus since independence has been the promotion of growth and equity. Economic growth during the 1970s and 1980s was quite low but, since independence, it has risen to 3.5 per cent on average between 1990 and 1995. In the context of sub-Saharan Africa, our economic expansion has been stable - which is infinitely preferable to the booms and slumps of many of our neighbours.

Furthermore, we have so far managed to avoid a debt problem, because we recognise that excessive debt is an unsustainable option for developing countries. We recognise that Namibia has a relatively small export capacity at the moment, and we therefore do not have the capacity to service a large debt. We have therefore attempted to fund infrastructure and human resource projects internally by rationalising government institutions and employing appropriate fiscal measures. Our current debt:GDP ratio is 24 per cent, well below the warning ratio of 60 per cent and, indeed, once we reach an agreement with South Africa on our pre-independence debt, we expect our public debt to fall to 15 per cent of GDP during the 1996-97 fiscal year.

What are the key points of the Namibian National Development Plan (1) which was unveiled in November 1995?

The development plan articulates Namibia's medium-term national and sectoral objectives, targets and strategies. The national objectives which the plan envisages are: The key elements of the government's policy are:

What steps has the government taken to create this favourable environment?

In a relatively short time, Namibia has established itself as one of the most favourable investment climates in southern Africa. We have achieved this through effectively judging the political and economic climate across the region, and implementing domestic policies which will have long-term gains for the community as a whole.

The government is dedicated to developing and maintaining the attractive features which we already have, namely: a stable political environment; a well-developed and -maintained physical and service infrastructure; sound financial institutions; an excellent communications system; and a plentiful and disciplined workforce. As I mentioned earlier, we have avoided excessive public debt because we know that foreign direct investment and other private capital tends to flee from heavily indebted sub-Saharan countries.

In addition, the general investment regime is being improved and rationalised all the time. The Foreign Investment Act of 1990 created liberal foreign investment conditions and full protection of investments. Our corporate tax rates are competitive (manufacturers pay 17.5 per cent corporate tax, and exporters' tax - excluding fish and meat exporters - is 7 per cent), and Export Processing Zone (EPZ) enterprises enjoy a zero-tax regime. There are also a number of non-fiscal incentives such as training and promotional grants of 75 per cent and 50 per cent respectively for exporters and manufacturers.

The EPZ regime in particular is perceived as an industrialisation strategy for Namibia that will serve us well into the 21st century. EPZ incentives are available in perpetuity and include exemption from import duties, general sales tax, additional sales duty, stamp duties and transfer fees. Promotion for the EPZ scheme is at a fledgling stage, but already we have received a number of applications from foreign investors seeking EPZ status. These include a number of European companies (of seven EPZ approvals - amounting to N$200 million-worth of investment - three have been European, an indication that our EPZ scheme is hitting the target even before an aggressive promotional campaign).

What steps has the government taken to diversify the economy away from mining?

In the past six years, mining's share of total GDP has dropped from 28 per cent in 1989 to 13 per cent in 1995, indicating how far the structure of the economy is changing. The government's role in diversifying the economy is primarily three-fold:
That has meant, in the fishing industry for example, the establishment of a 200-mile Exclusive Economic Zone and effective monitoring of fish stocks to ensure future supplies. Since 1991, the fishing industry's contribution to GDP has almost doubled, from 3.9 per cent to 7.6 per cent in 1994. In good oceanic conditions, the industry typically grows at 6 per cent a year.

In 1995 Namibia's fixed investment:GDP ratio reached 24 per cent, 8 per cent higher than the sub-Saharan average. To boost national savings and foreign capital flows we have assisted the development of our stock exchange, requiring local companies to invest a minimum of 35 per cent of their assets in Namibia. We find that more and more companies are considering the stock exchange as a viable way to raise capital. Today, the Namibian Stock Exchange is the second largest in Africa, with a market capitalisation of over N$75 billion.

The government recently earmarked N$13 million for the establishment of national industry parks and small and medium enterprise development units to increase small producers' market participation. The government is also planning to encourage domestic and foreign investors to focus on areas which we have prioritised.

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What progress has been made in developing Namibia's human resources, for example, in education and health?

The importance of the social sector in Namibia is emphasised by the fact that 3 per cent of total government resources is spent in this area. These resources have been used to expand primary education, particularly in rural areas; the aim is to greatly improve Namibia's literacy rate. Vocational training and training in science and technology have been improved in order to ensure that Namibia gains the skills and techniques which will stand the country in good stead in the future.

Could you outline the government's efforts to tackle the income disparities between the cities and rural areas?

The question of income disparity has always been one of the government's preoccupations. We realise that many rural dwellers are drawn to the bright lights of Windhoek in the hope of finding employment. However, this does not always happen. The government appreciates that rural dwellers will only stay in their villages if they can find work there, as well as clinics, schools and recreational facilities. Our efforts are therefore aimed at decentralising and encouraging investment in areas in which the majority of our population lives.

South Africa is Namibia's principal trading partner. What effect have the political changes there in the past two years had on Namibia's development?

The democratisation of South Africa has had a positive effect on Namibia, both politically and economically. Imports and exports have remained stable (South Africa provides about 90 per cent of our exports), and we envisage that we will need to protect against importing inflation from South Africa. Inflation rates are likely to continue to rise there because of an expanding money supply, large budget deficit and increasing domestic demand.

As a direct result of democratisation, we expect South Africa to write off Namibia's pre-independence debt. We have seen a growth in socio-economic, political and cultural dialogue, which is to the benefit of us both. The number of South African tourists has risen (South Africans comprise the largest tourist contingent in Namibia). Finally, and not to be underestimated, is the psychological effect on the region of South Africa's democratisation, seen in, for example, the major push to develop the Southern African Development Community (SADC) into an effective trading bloc.

What benefits will the progress towards peace in Angola bring?

The first and obvious benefit will be that Angolan refugees in Namibia will be able to return home. Secondly, we will be able to normalise relations in terms of cross-border trade and the freer movement of goods, people and services. Finally, Namibian companies will be able to assist in the rehabilitation of roads, dams and bridges destroyed in the fighting.

Finally, how optimistic are you for Namibia's future?

I am particularly happy that, through our policy of national reconciliation, the Namibian people have settled their differences, pulled their country out of the ashes of war and are, today, geared towards the social and economic development of their country. Despite the problems posed by periodic droughts and our small population, we are rich in human and natural resources to develop our country and face the challenges of poverty, ignorance and unemployment with vigour and determination. Namibia's future looks very promising.

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©Kensington Publications 1996