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How Namibia’s Fiscal Policies Reduce Nationwide Poverty


Gaining independence from South Africa in 1990, Namibia is a young country struggling with an issue that plagues many other surrounding nations: poverty. With half of its federal budget spent on social programs, the government of Namibia is actively fighting against the unfair distribution of wealth.

To combat the poverty rate, Namibia introduced many programs to benefit the poor. These programs include pensions, supplemental security income, foster care grants and revenue tax cuts for the poor instead of taxing the wealthier citizens. But the question remains: in the 27 years since its independence, what’s the outcome of Namibia’s fiscal policies?

Vision 2030, taken on in 2004, is Namibia’s guiding development strategy. The main grounds of Vision 2030 fights to end poverty in the country including, but not limited to, the fields of health and development.

In June 2017, the World Bank published a report that gives insight into the long term effects of these efforts. One statistic indicates that poverty fell at a staggering rate of 59 percent in 1992 to 15 percent in 2010. The country’s Gross Domestic Product (GDP) grew at a rate of about six percent between 2010 to 2014. The implementation of new programs, such as Vision 2030 and government subsidies, attribute to this decline in poverty.

The report notes that human development has improved greatly due to increasing the citizens’ subsidies. The developments include a rural water subsidy and two housing subsidies; the Build Together Program and the National Housing Enterprise. The rural water subsidy reaches the poorest citizens in dire need of water. The housing subsidies are only available up to urban areas.

The progressive income taxes, subsidies and government investment in social programs gave Namibia’s fiscal policies the kick start it needed to begin the long-term journey out of poverty. Though these policies have undoubtedly reduced poverty, the economy must create more jobs for the 34 percent of unemployed citizens.

This can be done by investing more in activities that provide unskilled workers a place to harness their potential in the workplace and in their lives as a whole.

– Vicente Vera

Photo: Flickr

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Unemployment In Spain

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In his first speech since his father Juan Carlos abdicated the throne, Spain’s future King, Crown Prince Felipe, addressed his country’s begrudgingly slow economic recovery. He referred to Spain as “united and diverse.” These remarks came a week after a new report noted that 1.26 million Spaniards have been without jobs since 2010. These citizens, unemployed for at least three years, are representatives of the 500 percent increase in Spain’s long-term unemployed population since 2007. They are 23.1 percent of Spain’s unemployed population and their numbers are continuing to grow with each passing year.

In the first quarter of 2014, Spain’s unemployment rate fell to 25.73 percent, down from a record high of 26.94 percent last year. During the same quarter, Spain’s economy grew at a quarterly rate of 0.4 percent, its best period since 2006. These increases have caused politicians and the International Monetary Fund to reassert their confidence in Spain’s recovery prospects, but that confidence has proven divisive within Spain.

Fiscal policies by Prime Minister Mariano Rajoy and his conservative Popular Party have been lukewarmly received by the general public. On June 6, the Spanish government approved a $15 billion stimulus package to spur growth and promote their renewed confidence in the economy. However, 26 percent of Spain’s population remains on government benefits. This figure is second in the EU only to Greece.

As reform efforts begin to take hold throughout Spain, civil unrest has resurfaced. Much of the focus is now geared toward high levels of income inequality. There has recently been a boom in tourism in Barcelona, accounting for a record high of 7.5 million visitors in 2013, but the unemployment rate still looms at 18 percent. Protesters are noting changes in government policies which have only affected the well off and have left the despondent with little to aspire to.

Spain’s corporate tax rate has recently been lowered to 25 percent from 30 percent, but the ability of the country’s educational institutions to produce well-trained students for prospective employers is questionable at best. Two-thirds of Spain’s 38.6 million residents over the age of 16 have only a basic education. Of these residents, 32.5 percent are currently unemployed. The youth unemployment rate is also nearly double that of the national rate. Slow recovery rates have dissuaded international investment and stymied growth in Spain’s financial sector.

Spain recently announced an early 1.3 billion euro repayment of a 41 billion euro EU banking rescue loan. This announcement was positioned as a confidence boosting measure. Whether it proves a catalyst for a Spain bereft of chronic unemployment, only time will tell.

– Taylor Dow

Sources: Digital Journal, Euro Weekly News, Fox News Latino, Latin Post, The Local, RTE News, The Spain Report
Photo: Wall Street CN