Namibia has made progress in reducing income inequalities and poverty levels amid the difficult economic conditions she faced in the last five years.
According to the preliminary results for the 2015/16 financial year, Namibia’s Gini coefficient now stands at 0.572. This is a 25 points decrease in the index from the 0.597 recorded in the 2009/10 financial year.
The Gini coefficient is the world’s accepted standard to measure inequality of wealth distribution and poverty levels in any country. The higher the figure – closest to one – the more unequal is the society while the lower figure – closest to zero – represents a society with the most equal wealth distribution.
“In spite of the challenging economic environment we should take pride in the fact that we are one of the few economies which have brought about a consistent reduction in income inequalities and poverty through growth and targeted policy interventions,” finance minister Calle Schlettwein said in his first meet with the media last week.
The new figures are according to the preliminary 2015/16 Income and Expenditure Survey and demonstrate a consistent reduction in income inequality and poverty.
Last year was not an easy year for Namibia “because of the convergence of numerous negative factors”, said the finance minister. Not only did the regional economy perform poorly, the trade volumes with Namibia’s main trading partners – South Africa and Angola – were very poor.
Compounding these were depressed commodity prices, the severe drought and significant shocks to public revenue which necessitated the targeted expenditure cuts currently being experienced.
Furthermore, the significant shocks to the regional and domestic economy and their consequent effect on public revenue necessitated that Namibia implement timely and targeted fiscal consolidation to align expenditure to the revised economic and revenue outlook and maintain sustainability.
“As such we have managed to reduce the budget deficit from what would be 9.1 percent to 6.3 percent in the current year,” said Schlettwein. In addition to this is the Mid-Year Review target to further reduce the budget deficit close to 3 percent in the next financial year as a measure to stabilise and eventually reduce growth in public debt.
“Although our debt levels have increased we have put measures in place to bring it down to 35 percent of GDP, and it is noteworthy to emphasise the relativeness to some other economies in the region, for instance South Africa, whose indebtedness is estimated at 51.4 percent to GDP for 2016 and Angola around 72 percent to GDP,” said Schlettwein.
It is because of those challenges, said Schlettwein, that Namibia’s small economy faced a difficult environment, and for which the estimated GDP growth for 2016 is expected to be 2 percent less than the previous estimates of about 4.3 percent.
Source: New Era