The Namibia Economist

Entrepreneurs can enrich Namibia

The news that Namibia’s income distribution has improved from a Gini Coefficient of 0.604 to 0.58 shows that the country’s income distribution is improving, and that steps towards alleviation of poverty have actually made strides.
It is very noticeable that this has occurred against the background of growing urbanisation, a phenomenon more commonly associated with urban poverty, as well as a significant shift away from the traditional rural communal economy.
Part of this notable success must be attributed to the growing culture of entrepreneurship, which has been instrumental in creating employment and opportunities to earn incomes in urban areas.
Countries that have a high standard of living, have a strong class of entrepreneurs, big and small. As a result of the active participation of entrepreneurs competing to keep market share and satisfy the demand for various needs of society, industrialised countries have been able to build robust economies with good development impact indicators.
For example, the 2011 Human Development Report shows that the average person in Norway, which is at the top of the index league, and the average person in countries such as Niger, Burundi and DRC, which are at or near the bottom, certainly live in different human development villages. People in Norway are more than 40 times wealthier than people in Niger. They live almost twice as long. And they enjoy near universal enrolment for primary, secondary and tertiary education, compared with an enrolment rate of 21% in Niger.
It is difficult to imagine higher income levels without having a strong class of entrepreneurs who create businesses that create the necessary jobs and earning opportunities. It is also logical that the more sophisticated the entrepreneur, the more innovative they become, producing goods and services that fetch premium prices, and in the process pay higher incomes for the highly skilled employees and broadening the tax base from which the development is financed.
If experience shows that there is an overwhelming relationship between higher levels of income and people’s well-being, why do countries that lag behind not create the necessary enabling environment to free the potential of entrepreneurs and investors?
One answer lies in the fact that some countries have seen phenomenal economic growth because of their very effective policies of export-led industrialisation. This is particularly evident amongst the newly industrialised countries of South East Asia like Malaysia and South Korea. Since internal domestic markets have not been dynamic enough, these countries have opted to expand the horizon and space for entrepreneurship to grow.
A second answer lies in the fact that rich countries are the top performers on the competitiveness index of the World Economic Forum. Equally so, rich countries top the list when it comes to ease of business establishment. In other words, if an entrepreneur would like to establish a business venture in sub-Saharan Africa, the barriers to entry must be lowered. If we believe that the dynamic performances of national economies are a culmination of vibrant entrepreneurial groups, it makes sense that an enabling environment should be created for entrepreneurs to flourish.
A third answer lies in the quality and size of the pool of entrepreneurs. One of Namibia’s leading entrepreneurs, Mr Harold Pupkewitz, has said on several occasions that the secret of building successful nations “is not natural resources, but highly developed human resources: the dexterity of the human hand and the ingenuity of the human mind, which change dead assets into productive resources and so enrich the nation with the necessary productivity and efficiency – the wealth creators.”  Although the finance industry is mindful of risk, an excessive approach to risk can stifle ingenuity. Ideas must not be dismissed out of hand, but must be fostered with risk mitigation and mentoring.
In light of the good news, Namibia can take a moment to bask in pride, but only a moment: there is still much to be done. The three factors mentioned above will secure our prosperity: market expansion, lowering of the barriers and provision of a nurturing environment for innovation and ingenuity.
This piece is adapted from a paper David Nuyoma presented in 2007 at the Fifth International Conference on Entrepreneurship and Innovation held at the Polytechnic of Namibia.

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