Cost of living crisis

Government must urgently develop a feasible Rent Control Bill to facilitate the enforcement of rental control regulations and the establishment of the Rent Control Board to ensure tenants are afforded crucial safeguards against economic exploitation by landlords who may take advantage of the scarcity of affordable rental properties in the market.

This is one of the recommendations in “The Global Cost of Living Crisis from a Namibian Perspective”, a briefing paper by researcher Kitty Mcgirr. The report was released by the Institute of Public Policy Research (IPPR) recently.

While supply-side issues have typically been the primary focus in addressing the housing crisis, Namibia's worsening macroeconomic conditions have introduced new demand-side challenges. The escalating borrowing costs have made homeownership even more unattainable for a significant number of Namibians, Mcgirr said.

“With less people signing up for bank financing to purchase homes, it also follows that the demand for already extremely scarce rental accommodation will continue to incline,” she said.

Ceiling

Namibia’s rent-to-income ratio has increased to 39%, placing it on the cusp of the prescribed affordability ceiling of 40%, she added.

The typical expenses for rental units often do not align with average real wages, which have remained stagnant, particularly in the face of increasing inflation, Mcgirr said.

This situation has contributed to the ongoing escalation in rental costs. As of March 2022, FNB's Residential Rental Index showed a 12-month rental growth rate of 0.6%, the highest observed since the initial stages of the Covid-19 pandemic in May 2020. Additionally, the average rent for units with more than three bedrooms reached an all-time high of N$19 329 by the end of March 2022.

Despite provisions contained in the first Harambee Prosperity Plan (HPPI) for the Bill to be tabled in Parliament by the end of 2021, its status remains pending in 2023. The Rent Control Board, now under the ministry of urban and rural development (MURD), remains inactive, Mcgirr pointed out.

Flexible land tenure

To alleviate the housing delivery challenges faced by ultra-low and low-income earners, central government could strengthen its collaboration with local authorities to expedite the implementation of the adaptable land tenure system, Mcgirr suggested.

In 2012, the Flexible Land Tenure Act was enacted, which allowed for the creation of community land trusts responsible for holding land plots in trust for the community's benefit. This system offers a range of tenure options, including short-term leases and certificates of land occupation rights that can be subsequently converted into title deeds.

Moreover, a directive issued during the Second Land Conference mandated the government to facilitate the regularisation of informal settlements by establishing a flexible tenure registration system alongside the existing freehold tenure registration. In 2020, pilot flexible land tenure schemes were introduced in Oshakati, Windhoek, and Gobabis local authorities.

Government has since expressed a preference for flexible land tenure as a more cost-effective and administratively straightforward alternative to the formal freehold tenure system.

“Thus far, however, the implementation of flexible land tenure has been generally slow with central government on the one hand citing a reluctance to avail land by some local authorities and on the other hand local authorities bemoaning inadequate subsidies from central government to support land delivery.

“This points to the need for improved stakeholder communication and coordination to fast-tack the number of community land trusts being established and the number of leases and land titles issued to informal residents,” Mcgirr said.

Social protection

Despite the recent expansion of Namibia’s relatively comprehensive social assistance system, there still exist large coverage gaps in state protections for the most vulnerable, according to Mcgirr.

“Of particular concern is the absence of universal social safety nets for children and the unemployed. A case in point is the fact that 45 children were found to have died of malnutrition in Omaheke region alone between January and June 2023.

“This shocking figure underlines the need to expand the reach of child protections through the passage of a universal child grant,” she said.

This recommendation is not a novel one; even the former ministry of poverty eradication and social welfare advocated for the implementation of a universal child grant, set at N$275. This proposal was put forth during the review stages of its draft Social Protection Policy in 2019.

These suggestions were rooted in recommendations stemming from a 2013 study by Unicef and the ministry of gender equality and social welfare, assessing the effectiveness of Namibian social protection in mitigating child poverty. Additionally, the International Labour Organisation’s (ILO) Social Protection Floor Assessment of Namibia in 2014 supported these proposals.

Furthermore, the introduction of a universal child grant could help alleviate some of the burdens placed on the elderly population, Mcgirr said.

Although the positive effects of the old age pension are well-documented, the demands on elderly recipients often become so substantial that pensions are stretched thin, potentially leaving pensioners in a precarious financial situation, she added.

Unemployment

Current social protection schemes also provide little in the way of respite to the masses of Namibians impacted by the country’s extremely high structural unemployment rate, Mcgirr said.

The introduction of an unemployment grant for all Namibians aged 18 to 59 who are without employment could potentially offer individuals a foundational level of financial security to assist them in entering and achieving long-term integration into the labor market, she suggested.

For instance, jobseekers would have the means to cover transportation costs for submitting their resumes to potential employers. The case for an unemployment grant is particularly compelling, considering the significant job losses resulting from the government-imposed Covid-19 lockdowns in 2020, decisions made without prior consultation with the public and justified on the grounds of public health and safety, Mcgirr added.

“However, the structure of the Namibian labour market presents obvious challenges to the workability of this kind of policy intervention,” she said.

“Most significantly, identifying the grant’s intended beneficiaries is bound to prove practically challenging and administratively costly given the number of Namibians employed in the informal economy and other subsistence-based activities.”

BIG

A universal basic income grant (BIG) may represent a better strategy to close the social protection gap, Mcgirr said.

As advocated for by long-standing proponents like the Namibian BIG Coalition and the Economic and Social Justice Trust, among others, a universal BIG set at N$500 per month for individuals between the ages of 19 and 59 could yield numerous positive outcomes in addressing Namibia's triple challenge of unemployment, poverty and inequality.

In addition to alleviating day-to-day consumption poverty, a reliable cash transfer would enhance the country's human capital index by empowering families to invest in their children's nutrition, health and education, Mcgirr said.

This, in turn, would lead to a "larger payoff in terms of future productivity and incomes". Moreover, the BIG would inject much-needed liquidity into the domestic economy, bolstering consumer purchasing power, all while serving as a protective buffer against entrenched labor instability and broader economic shocks, such as the significant inflationary pressures stemming from the global cost of living crisis, she added.

Agriculture

To resolve the structural imbalances in the labour market fuelling high unemployment and the high dependency rates brought forth as a result, a greater pool of public investment needs to be targeted towards labour-intensive industries such as housing construction and agriculture, Mcgirr recommended.

As well as diversifying and expanding domestic output, promoting agriculture for development could also greatly improve domestic food security, she added.

Furthermore, there is an imperative for increased technical and financial backing for the agricultural sector to unlock its capacity as a driver of GDP growth, Mcgirr said.

Enhancing technical proficiency will necessitate augmenting public funds with elevated private sector investments and the establishment of enduring public-private collaborations to advance infrastructure development.

One pivotal area of concentration could be augmenting the productivity of smallholder farming in the Northern Communal Areas (NCAs) through a comprehensive review of livestock management policies and the facilitation of access to essential farming inputs, irrigation, and post-harvest facilities, she said.

According to Mcgirr, these initiatives would play a pivotal role in modernizing local production techniques by broadening smallholder farmers' entry to value addition and food processing technology. This is particularly pertinent in regions like Zambezi, Kavango East, and Kavango West, where fertile land is underutilized.

Additionally, assistance could be extended through knowledge dissemination on climate-smart best practices, training, skill transfer, and heightened incentives to promote local food production, she said.

Land reform

“Land reforms could also help jumpstart Namibia’s nascent agricultural potential,” Mcgirr said.

Currently, there is an inverse correlation between farm size and productivity in Namibia. Many of the large-scale commercial farms in the country produce relatively small agricultural yields given their substantial size.

This issue is further exacerbated by the presence of the Veterinary Cordon Fence (VCF), ostensibly designed to control the spread of animal diseases but in practice acting as a market barrier for smallholder farmers in communal areas, Mcgirr said.

The VCF not only restricts approximately 1.5 million cattle in the Northern Communal Areas (NCAs) from accessing Namibia's most lucrative commercial export markets, but it also forces northern communities to pay elevated prices for meat products originating from the southern regions. During the Second Land Conference, a resolution was passed, directing the government to gradually eliminate the VCF by 2032.

However, resistance from farmers south of the VCF and other market stakeholders, who seek to maintain a regional monopoly over national beef exports, has impeded progress in this regard, Mcgirr said.

Moving forward, expediting the removal of the VCF is advisable to enhance local agricultural output and food security, as well as to ensure that the benefits of increased productivity are more equitably distributed among the population.

It is also essential to implement contingency plans, including ensuring operational quarantine facilities in the NCAs and developing a coordinated strategy for managing grazing rights for communal livestock farmers living along the borders of Namibia, Angola, and Zambia, she proposed.