Cash grants can bring relief
Not unrealistic, says IPPR
Namibia imports nearly all the wheat it consumes and consumers are feeling the pinch.
Providing cash grants to those most in need of help would buffer many Namibians against spiralling food inflation, fuelled mostly by Russia’s invasion of the Ukraine, says the Institute of Public Policy Research (IPPR).The latest data released by the Namibia Statistics Agency (NSA) shows food inflation at 9.5% in September, up from 5.1% a year ago. Inflation for breads and cereals came in at 10.7% compared to 1.7% in September 2021.
Namibia imports a large proportion of the wheat it consumes, the IPPR says in its latest quarterly economic review.
According to the Namibian Agronomic Board (NAB), Namibia imported 92% of the 137 337 tonnes of wheat it consumed in 2020.
“Namib Mills and Bokomo are the country’s two main wheat importers. Importers pay a 5% import levy imposed by the NAB and there are also transport costs associated with bringing the wheat to the millers in Windhoek,” the IPPR says.
RUSSIA
Historically, Namibia has bought wheat from Russia which has offered good quality at a good price, the think tank says.
“However, following the invasion, importers are wary of importing from Russia as many shipping lines no longer wish to enter Russian waters or load on Russian territory.
“Russia was the world’s largest exporter of nitrogen, second largest exporter of potassium and third largest exporter of phosphorous fertilizers. In 2020 Namibia imported some 5% of the fertilizer it uses from Russia. Given this situation, it was to be expected that Namibia would be affected by events in Ukraine.”
Earlier this month, Namib Mills said the prices of basic food stuff will increase by up to 13% in November – the second increase this year.
It’s doubtful if Namibia can produce wheat and grains at competitive prices. The orthodox alternative to subsidising local production would be to provide cash grants to those most in need of help, according to the IPPR.
GRANTS
A basic income grant (BIG) is fiscally unsustainable, the IPPR has found. But experience with the Emergency Income Grant (EIG) introduced during the first Covid-19 lockdown may provide evidence that a “second best” measure is feasible, the think tank says.
“It is not unrealistic that room could be found for such expenditure within the national budget although questions could be asked whether this is the right target group (as opposed to payments targeted at children for example) and how often payments would have to be made (low-cost electronic payments can be more regular than expensive deliveries of cash) to avoid people spending all the money at once.
“It would represent a half-way house towards BIG and would be more efficient than food banks and would not be associated with significant labour market distortions,” it says.