Finance Minister, Calle Schlettwein, has defended government’s participation in the economy after Popular Democratic Movement (PDM) Member of Parliament, Nico Smit, recently complained that the State is over-regulating the economy making it difficult for people to do business.
According to Smit, government has strangled the economy with red tape while pumping money into government agencies that do not contribute to the economy.
“We have come to the point where we over-regulate the economy, pay exorbitant salaries to more than 80 boards ostensibly to oversee the multitude of government agencies with no tangible results, no contribution to economic activity and no regard for the pillars of the economy.
“We rank poorly in the Doing Business Index indicating the extent that we have strangled the economy with red tape and an army of civil servants who do not add one cent to the prosperity of the private sector,” Smit said.
In his response to Smit’s concerns, in a speech read by the Deputy Minister of Finance, Natangwe Ithete, Schlettwein said Smit’s arguments can only be advanced by a select few “haves” who believe that wealth and prosperity will trickle down from perpetual concentration of ownership of means of production.
“This neo-classical proposition has been widely discredited as empirical evidence indicates that it produces sub-optimal economic and social outcomes.
“It is thus no coincidence that this protectionist and individualistic mind-set continues to be resistant to shared prosperity and redistributive development policy,” Schlettwein said.
The minister argued that if government was to leave the economy in the hands of the few elites, they will never ensure that wealth is distributed.
According to Schlettwein, government wants to develop effective partnerships and supportive policies to realise optimum development outcomes.
“Our private sector still faces opportunities to unleash its potential role in the domestic economy. If and when the domestic private sector investment is not coming forth, the government cannot and must not stand idle.
“As well, the private sector could on business imperative grounds, seek opportunities and propose offers in areas where alleged overcrowding by the public sector is observed,” Schlettwein said.
Smit said government’s belief that it must have ownership in everything was allowing some people within the public service to loot resources meant for everyone.
He complained that government’s overwhelming role in the economy had resulted in a bloated civil service.
“There are two fundamental issues that the government is unwilling or unable to face and to address. The first is its own participation in the economy as if it were a private sector company and the second is the size of the civil service.
“The government’s participation in the economy stems from the misguided belief that the government must have ownership in everything in typical socialist fashion. Some people may believe this, but only as long as they benefit from the gravy train,” Smit said.
He said the size of the civil service stems from the misconception that the government is an employment agency and that the more people it employs, the bigger prosperity there will be for everybody.
“For as long as the economy and by implication the budget process rests on these two fundamentally flawed concepts, we will continue to be forced to respond to crises all the time and use our limited resources to prop up an extra-large civil service we do not need,” Smit said.
Bank of Namibia Governor, Iipumbu Shiimi, recently said the public wage bill uses up to 50 percent of the country's revenue, and stands at 16 percent of the gross domestic product (GDP).
“If we add state-owned enterprises, the wage (bill) goes up to 70 percent,” said Shiimi, adding that the current wage bill of N$30 billion was one of the factors contributing to the country's prevailing cash flow problems.
Smit also complained about the budget allocation to the Ministry of Defence every year.
“There is no reason why Defence should get N$6 billion. We are not at war with anybody, there is no civil strife, and there is no other external threat to our political stability. If we had a small professional defence force with well-trained soldiers, we could achieve the same amount of protection for a fraction of the cost,” Smit said.