Category: News Blog
Published on Wednesday, 06 April 2016 14:15
COMMENTARY ON HARAMBEE PROSPERITY PLAN
By Suta Kavari, Investment Strategist at Capricorn Asset Management
President Hage Geingob yesterday delivered his State of Nation, laying out his poverty fighting action plan, the Harambee Prosperity Plan.
The President’s said his marquee offering, the Harambee Prosperity Plan, is aimed at accelerating development in areas were progress has been insufficient.
The plan charts the most effective way to address poverty through wealth creation, through growing the economy in a sustainable and inclusive manner.
Included in the plan, government aims to build 20,000 houses, services a minimum 26,000 plots and build 50,000 rural toilets by 2017, quite the tight deadline.
The President also alluded to improving the efficiencies of state-owned enterprises, unlocking their value and thus relieving a burden on the national fiscus. This might hopefully tie into plans mentioned in the budget of partially list SOE’s on the stock exchange.
To combat hunger, a number of plans including emergency relief, improving agricultural productivity and introducing food banks were mentioned and will be implemented.
The youth were the biggest winners yesterday, with the President pledging to establish an enterprise development scheme which will provide access to finance and information enterprises for the rural youth to create income-generating opportunities.
Government funds, grants and schemes targeted at the youth will be ring-fenced under the Youth Enterprise Development Fund to focus on entrepreneurial youth start-ups with innovative funding mechanisms such as venture capital and collateral-free lending.
To fund the Harambee plan, the President promised to widen the tax base and include the informal sector and also investigate establishing a state lottery.
The establishment of a state lottery to supplement State revenue and ring-fence income for poverty eradication and social developmental programmes which was alluded to, should be approached with caution.
A lottery is essential another form of gambling, it is a regressive tax on the poor. The poor are the most avid buyers of lottery tickets, and a lottery ticket costs disproportionately more to a poor person than it does to a rich person.
Instead of taxing the informal sector, plans should be introduced to help incentivise more entrepreneurs. The informal sector, in some parts of the country, offers the young and poor the best opportunity to lift themselves above the poverty line, and provides much needed economic security.
So, instead of taxing the kapana stand, that kapana stand owner should be supported an d offered entrepreneurial training, so that he can turn that kapana stand into a ChesaNyama that employs the local unemployed youth.
The solidarity tax also got an honourable mention, the payment threshold for solidarity wealth tax will be finalised after consultations. “For the sake of clarity, it will not be N$78,000 per annum” the President added.
To achieve the goals set out in the plan, the Investment Promotion Bill and Business and Intellectual Property Authority Act will be expedited and finalised before September and the end of the year, respectively.
The Harambee Plan is an ambitious and commendable plan which sets out clear targets and milestone dates. The Harambee Plan together with the NDPs can be used as a vehicle to fast-track our development goals.