Pierre Mare
I wanted to write a light-hearted comment about relative poverty and mobile bandwidth but a couple of posts about people who have electricity yet can’t afford to use it gave pause for thought. Also note pedestrians carrying water to their households, showing they can’t afford that utility either (nor the taxi). Relative poverty, in a nutshell, is when people have potential access to utilities, products and services but can’t afford them (relative to others) and make trade-offs. Absolute poverty is when people fall below the income level necessary for basic needs such as food, housing and healthcare. Namibia obviously has both types.
There are two main sources of relative poverty. Firstly there is income. If income is limited the earner has to make trade-offs. That doesn’t need much explanation. Secondly, there is pricing of products, services and utilities (which would include debt poverty).
Currently the main measurement of Namibian poverty is contained in the Multidimensional Poverty Index (MPI) Report 2021.
What needs to be understood and considered is that relative poverty can have an incremental effect on absolute poverty, where income inequality is high. For instance an increment in the cost of water and electricity will have an impact on disposable income. That might lead to inability to pay a household cleaner, for example. The increment in the utility bill leads not only to loss of income for the cleaner, but also loss of income support for the cleaner’s dependents, and a further nudge towards absolute poverty. That will also ripple into formal and informal retail and wholesale, leading to loss of employment capacity. Like the butterfly flapping its wings, the inferences are almost limitless.
Anything that fosters relative poverty and reduces household discretionary income in Namibia should be viewed as a threat to a) the status quo and b) growth.
The argument for now appears to be policy based, a process of eking out or preserving gains. However that will not be enough. The scope of policy in a free economy should be limited, and the inventiveness of enterprises should outstrip policy development.
On the other hand, perhaps it’s time to go back to Economics 101. A price increase may drive short to medium-term gains but it will have a drag effect on long-term growth and economic development. Discretionary household income is not always the same as disposable income.
Pierre Mare is a brand marketing specialist
