On the campaign trail the president-elect promised to do two things that were very popular.
The first was to spend some N$85 billion on job creation and to deal with corruption. The president-elect was, however, short on specifics on both, and every former president has promised to do the same only to see unemployment and corruption increasing.
How do you address the problem of corruption in Namibia? If you believe it is not systemic, then the solution comes from getting rid of the 'bad apples' that hold official and ministerial portfolios.
NAMIBIA'S 'LICENSING RAJ'
If, on the other hand, you believe that corruption is systemic and is a result of the incentives that have been created both before and after independence, then killing off a few corrupt ministers might do the trick to appease your need for revenge, but it will do nothing to solve Namibia's problem with corruption.
The average Namibian student to whom I taught economics at the University of Namibia understood perfectly well that it was not what you knew, but who you knew or were related to that determined whether you die rich or poor.
Namibia, like India in the past, runs what is called a 'licensing Raj'.
This a system in which those who get licences from the government to own, buy or sell something valuable are the ones who become rich. In India if you got a government licence it usually meant you normally had to produce something to make money. Namibia's 'licensing raj' is worse than India's was.
What are these things given to the favoured few in Namibia? Land, fishing licences, mining and oil exploration permits.
The idea is simple enough: if you are connected to those in power, you will get a licence from the government at a price well below its real market value. You need know nothing about oil or fish or land.
You then sell it to the private sector at a much higher market price, and then the entrepreneurs develop the land, catch the fish or extract the minerals and oil. There are many quota holders who became millionaires without ever having caught a fish. What is even worse is that those who make millions pay no tax, because it is a capital gain and there is no capital gains tax in Namibia.
And so, if you get a fish quota and start fishing you will pay, at least in theory, company tax on your profits. If you sell the quota having done nothing more than kissing someone's posterior, you will make an instant tax-free profit. This creates a massive disincentive for production and development, and creates a tax burden on businesses who work and produce the wealth in order to subsidise those who are politically connected and don't have to work.
NO SMALL FRY
When undertaking an analysis of how much the Namibian government actually lost from the 'horse mackerel raj', we calculated in the book 'Fishrot - Fisheries and Corruption in Namibia' that the government gave away N$18 billion to the connected few and the fishing companies that bought horse mackerel licences over a 10-year period.
If the government had auctioned off the permits rather than handing them out to the 21 members of parliament and other connected individuals, there would have been enough money to rebuild most of the slums in Katututra and provide thousands of construction jobs for low-income Namibians.
Instead, we get crocodile tears from those in power about the poverty of Namibians.
This estimate of $18 billion in losses to the fiscus over 10 years does not include the licences sold for the more valuable species, like hake.
Here the 'Spanish Namibians' have raked in hundreds of millions in rents since independence.
KNOWLEDGEABLE PEOPLE
Fish are small fry. The big money is in oil.
Fifteen years ago, the licences for oil exploration were largely held by Namibians who were basically allocated these licences to 'knowledgeable people', some of whom made hundreds of millions of tax-free Namibia dollars from their sale to transnational companies which will develop the oil fields.
Now Namibian nationalists complain bitterly that the industry is foreign owned. This change in ownership was the inevitable consequence of the tenderpreneurs, the 'licensing raj' getting their profit. How much of the profits of the sales went back to the politicians in backhanders from the beneficiaries of the licences will never be known unless there are some exceptional deathbed confessions.
Some of the knowledgeable people were clever enough to retain a minority interest in the oil fields. From the huge discoveries that have been made in 2022 some will become United States dollar billionaires.
And so an economic elite will be created. But the knowledgeable people will keep their ill-gotten gains in Dubai.
These knowledgeable people may then give away a few dollars to the poor in Namibia to ease their conscience.
So how does the new president stop the corruption she and most Namibians complain of? Stop giving away licences to those who are connected and start auctioning the licences at market prices to those ready to pay the people of Namibia, i.e. the fiscus, not to the sycophants and knowledgeable millionaires.
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Minister of finance and public enterprises Iipumbu Shimii started auctioning a tiny portion of the fish quota, but could never extend this because there were those connected people who would be hurt by this policy.
This would not only eliminate the incentive to cosy up to politicians, but would also provide much-needed revenue to the state, which could then create jobs for the many Namibians desperate for them.
Getting rid of the 'licensing raj' in Namibia would have one particularly undesirable consequence. President-elect Netumbo Nandi-Ndaitwah has publicly complained that she has already received several death threats.
If she were to even try to implement such a policy, she would likely receive many more, and she may be removed from office.
It is for this reason that there will be no change in the system of licensing corruption until the people of Namibia decide they want real change.
- Roman Grynberg is a Polish-born professor of economics and author. He specialises in international trade and commodities.
