First Lady Monica Geingos sounded an alarm regarding the country's economic landscape, revealing that merely 10% of Namibians are actively engaged in the first economy, a statistic that poses significant risks to sustainability.
Geingos emphasised the urgent need to relocate a substantial portion of the population into the first economy to address the alarming wealth inequality gap.
Her impassioned plea highlights the pressing issue of economic inclusivity and the crucial steps required to forge a more equitable society in Namibia.
She said this during a visit to Namdia this week.
"There are too few people in the first economy, 90% of people operate in the second economy, and this is the risk for everyone in the first economy because it is not sustainable. The inequality that we all know as the second most unequal country from the income perspective is unsustainable. We have the high youth demographic, and therefore we must and have to bring more people from the second economy to the first," she said.
She further encouraged the full potential development of young people as their birth right.
Namibian remains one of the most skewed economies in the world regarding the unequal distribution of wealth.
According to the World Bank Wealth Inequality Index, Namibia ranks second on the top 10 list, second to South Africa since 2015 as one of the countries with the highest wealth inequality in the world, with a Gini coefficient of 59.1%.
The Gini coefficient is a statistical measure of inequality that describes how equal or unequal income or wealth is distributed among the population of a country.
In a report compiled by the Business Rescue Task Force (BRTF) to President Hage Geingob, with recommendations and amendments to legislation to save businesses from financial distress, it was stated that the growth of previously disadvantaged Namibians is still at a vulnerable and fledging stage, especially post- Covid-19.
Similar to numerous African countries, Namibia experiences income inequality, as highlighted by the BRTF.
"This inequality is deeply entrenched in the economic framework, where a handful of high-income sectors generate substantial wealth, benefiting only a select few individuals. Consequently, the majority of the workforce finds themselves confined to lower-income sectors, earning significantly less," the report indicated.
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The BRTF emphasised that this inequality carries immense moral and economic ramifications and it is a pressing issue that demands immediate attention to ensure that no Namibian is marginalised or left behind.
Wh i l e N a m i b i a ' s unemployment is reported to be around 34%, youth unemployment is estimated to be around 50% while the country has around 67 000 unemployed graduates. However, in recent years, the employed have been battered by stagnation in salaries, increased cost of living fuelled by drought, economic recession and Covid-19. To make matters worse, recent aggressive increase in the repo rate has left workers with increased bond and loan repayments.
According to economist, Makaisapi Tjiumbirua, the broader economy is significantly impacted by the repo rate.
"The repo rate significantly affects the overall economy. Changes in the repo rate influence borrowing costs for both individuals and businesses. This can affect consumption, investment, and economic growth. The repo rate also influences the exchange rate of a country's money, which influences export competitiveness and demand," he stated.
He said changes in the repo rate can similarly affect inflation.
"When the repo rate increases, it becomes costlier to borrow money, which can reduce demand for goods and services. When demand declines, prices diminish, which can result in a decline in inflation. Alternately, when the repo rate falls, it becomes cheaper to borrow money. This can lead to an increase in demand for goods and services. This increase in demand can lead to price increases, which can lead to inflation," he explained.
Last week, the Bank of Namibia increased the repo rate by 50 basis points, from 7.25% to 7.75%.
