1. Explain the concept of Resources Mobilization.

What measures do you suggest to increase the

resource mobilization in Namibia for the economic development? (10)
• Domestic resource mobilization refers to the generation of savings from domestic resources and
their allocation to socially productive investment.
• It includes the mobilization of human and financial resources for investment.
• The public sector mobilizes domestic resources through taxation and public revenue generation
for investment in social services and infrastructure.
• The private sector mobilizes the savings of households and firms through financial intermediaries,
which allocate these resources to investment in productive activities.
• Thus, enhancing domestic resources in poor countries involves deepening the fiscal capacity of
the state and improving the social rate of return to public investments.
• Solutions
• A) Broadening the existing tax base: It will be necessary to find way to tax the informal sector.
• Improvement in Tax Administration Capacity: There is a need to automate the business process
and procedures of tax administration in Africa.
• B) Tax administrations should be restructured to address the issue of a large informal sector in
economies.
• Tax officials should be trained in current methods of auditing to be able to audit multinational
firms. Government should provide adequate resources in terms of salaries and wages, equipment
and machinery and a friendly work environment with which tax official work.
• c) Rationalization of Tax Incentives: In the light of globalization new considerations have
 Low cost infrastructure especially in the transportation and communication sectors.
• d) Strengthen Tax Policy: Tax policy design must take the administrative dimension of taxation
carefully into account.
• There is a need for transparent and accountability where public and civil society scrutiny tax .Tax
policies should ensure the predictability and equity of taxes in order that it does not lead to
opportunistic tax avoidance and evasion.

2. Write a report instituting the strategies to improve agriculture output in order to achieve
growth and development (6)
•Agricultural transformation and rural development
•The role of agriculture in economic development has been viewed a passive (inactive) and
supportive.
•Economic development was seen as requiring rapid structural transformation of the economic
from agriculture activities to modern industrial and service sectors.
•As a result agriculture’s primary role was to provide sufficient low-priced food and manpower to
the expanding industrial economy. Today development economists realize that agriculture sector
and rural economy must play an important role in the economic progress of any economy.
•Agriculture and employment based strategy requires three basic complementary elements:
• (a) accelerated output growth through technological, institutional and price incentives changes
designed to raise the productivity of small farmers
• (b) Rising domestic demand for agricultural output and
• (c) diversified nonagricultural, labor intensive rural development activities that directly and
indirectly support and are supported by the community.
 3. Explain the effects of population growth and population policies the SADC countries
implement to maintain health population growth. (10)
 Population growth restricts economic growth according to the “pessimistic” theory- Supply
of some natural resources (non-renewable) and capital is fixed. Supply would grow more
slowly than the population. Population increase development goes down.

 Population growth promotes economic growth according to the “optimistic” theory-

Population growth exerts a positive influence on economic development. Human
ingenuity would create the technology to overcome any environmental constraints to
development.
 Population growth is independent of economic growth according to the “neutralist”
theory-Revisionist Theory-2 ( Neutral)-Population is a ‘neutral’ phenomenon in the
process of economic development. Policy Implications: Other issues must take priority,
e.g. economic reforms, free markets, democracy etc.
 Population growth and economic growth has shown that there are potential benefits
accrue from it. For instance East Asian countries have been able to achieve economic
prosperity and improvement in quality of life in spite of population growth. These
countries have been able to exploit the dynamics of demographic transition to achieve
economic growth by using the human growth resources as the engine driving the
economic development.
 Improved employment with adequate enrollments has promoted saving and
investment. On the negative side population growth is said to create a number of
problems, including famine, poverty and even unemployment.
• Population impedes economic growth because it put pressure on the available resources,
assault in production in per capita income and resources; this in turn will result in deterioration
in quality of life.

Policies to help population growth.

• .*Improve health facilities. Promote and educate the public especially women on health
education. The government need to promote HIV/AIDS awareness campaign to the public*
increased medical facilities like easy and cheap availability of contraceptives. If provided with
optimum medical facilities population rate will certainly decline.* Spreading awareness and
people made to understand the consequences of having many children like, lack of good
nutrition, education or medical facilities.* Providing education to all especially women, as
educated people know and understand the harms of having high population.* Some other
measures to control population growth can be providing incentives policies, women
empowerment eradicating poverty and legislative actions or contraception should be
mandatory not optional.

4. What government policies may act as barrier to agriculture development? (5)

•Urban bias against agriculture takes many forms:

•-the holding down of agricultural prices to favor the industry / urban sector

•-the concentration of investment in industry

•-tax incentives and subsidies to industry

•-tariff and quote protection for industry, which raises the price of fertilizers, seeds and equipment

•-greater spending in urban areas on education, training, housing, nutrition and medical provision which
all affect productivity and quality of life

5. You are given information for Namibia unemployment rate as presented below

Age group Weight of age group Unemployment rate (%)

18-25 0.4 51
26-35 0.2 37
36-45 0.15 12
46-55 0.20 5
56-65 0.05 10
Total labor force: 25 000

(a) How many people fall under the age groups of 18-25, 26-35, and 36- 45 and 56-65? (4 marks)

18-25 age group= 0.4*25000=10000 people, 26-35 age group= 02*25000=5000 people, 36-45
age group= 0.15*25000=3750 people and 56-65 age group= 0.05*25000= 1250 people.

(b) Calculate total unemployment rate (2 marks)

Total unemployment rate= W1U1+W2U2+W3U3+W4U4+W5U5=

0.4(51)+0.2(37)+0.15(12)+0.20(5)+0.05(10)= 31.1%

(c) What policies the government can implement in order to reduce unemployment in the age
groups 18 – 25 and 26-35. Give local examples. ( 5 marks)

Reducing unemployment among teenager: - (1) providing technical skills (providing technical
skills job of training and providing technical skills youth counseling), (2) assist job seekers with
employment opportunity (matching jobs), (3) reducing unemployment benefit (because
unemployment benefit is similar to being stack in job search and (4) due to higher
unemployment benefit, government imposed higher unemployment taxes to firms having less
employment stability. National Agriculture Policy. Employment- equity Commission -
Affirmative Action (Employment). The aim is to redresses the imbalances at the workplace. It is
intend to foster fair employment practices with regard to recruitment, selection, appointment,
training, promotion and equitable remuneration for the previously disadvantaged persons
National Youth Service Program. Credit facility under the ministry of Youth, Sport

(d) Explain the roles of financial Intermediation in economic growth and development (8)
•Most studies conclude that financial development enhances efficiency in the allocation of
resources, thus stimulating the growth process.
 •The financial system reduces liquidity risk and facilitates the management of risk by savers and
investors. It channel saving into long-term assets that are more productive than short-term
assets. It facilitates portfolio diversification for savers and investors.
•It collect and processes information about investment projects.
•Financial systems collect and evaluate information more effectively and less expensively than
individual investors because of the economies of scale enjoyed by financial intermediaries.
•Low financial development or distortions in the financial system increase the cost of
investment and thus retard economic growth. •It allow individual small savers to access large
investment projects through the mechanism of fund pooling.
•Individual investors are usually too small to access the benefits of indivisible large projects.
•Pooling done by financial intermediaries allow the small investors to access this avenue. It help
diversify risk for small investors. Large projects carry large risks.
•It is difficult for small investors to invest in large risky investment projects by themselves.
•Financial intermediaries allow them to pool risks.
•They can form portfolios of large risky investments. •Long term projects require long term
investment. Most small investors cannot afford to invest in the long term.
•This temporal gap is bridged by financial intermediation.
•This process is called liquidity management.

6. Sub-Sahara Africa is facing a problem of raising more domestic resources which is necessary
for economic development. Briefly explain the challenges associated with domestic resource
mobilization in Sub-Sahara Africa and what policy recommendation you suggest to solve that
challenges.A) Low Savings: lack of saving or not enough saving are generated to facilitate the
required investments. •low saving rate in Sub-Sahara Africa explains the low level of economic
activity in the region and slow pace of growth. •Other factors include very low level of financial
intermediation and credit on the continent and the fact that over 40% of African savings are
invested outside Africa.
B) Capital flight: capital flight remains the most stumbling block to DRM. Tax flights from
developing countries are estimated to be higher than aggregate inflows from development
assistance. •Capital flight weakens DRM in Africa. It undermines social contracts and damages
good governance.
C) Tax incentive and exemptions: •Tax incentives distort resource allocation leading to some
sub-optimal decisions and therefore harmful to long term growth.
D) “Paradox of plenty”:– a characteristic of many mineral rich countries in Africa is that
countries with rich natural resources are often the worst governed. •Entire increase in tax
revenue in these countries came from natural resources taxes such as income from production
sharing, royalties and corporate income tax from oil and mining companies.
E) “Pareto Principle” : There are on few tax payers who contribute a bulk of the taxes.
F) Weak Administrative systems and organization capacities: there are weak administrative
systems, and poor quality data as a result of widespread informal activities. Limited reporting
and low levels of education in the general population and culture of non-compliance.
Solutions
 a) inter-African Trade: •Trade co-operation will bring down trade barriers which would erode
custom duties, which is the main source of domestic revenue for most of African countries. It
will be important to strengthen internal trade when trade barriers are eliminated.
•b) Broadening the existing tax base: It will be necessary to find way to tax the informal sector.
c) Improvement in Tax Administration Capacity: There is a need to automate the business
process and procedures of tax administration in Africa. •This would eliminate element of
discretion on the part of tax officials and reduce corruption. •African tax administrations should
be restructured to address the issue of a large informal sector in economies.
•d) Rationalization of Tax Incentives: In the light of globalization new considerations have low
cost infrastructure especially in the transportation and communication sectors.
e) Strengthen Tax Policy: Tax policy design must take the administrative dimension of taxation
carefully into account. Tax policies initiated should take into consideration whether such policies
are applicable elsewhere. •There should be transparent and accountability in these policies.

7. Use diagram discuss and explain Todaro immigration model. (10 marks)

8. Southern Africa countries are facing a problem of high population growth. Explain different
population policies they implemented in order to mitigate population growth. (5
marks)
.*Improve health facilities. Promote and educate the public especially women on health education.
The government need to promote HIV/AIDS awareness campaign to the public* increased medical
facilities like easy and cheap availability of contraceptives. If provided with optimum medical facilities
population rate will certainly decline.* Spreading awareness and people made to understand the
consequences of having many children like, lack of good nutrition, education or medical facilities.*
Providing education to all especially women, as educated people know and understand the harms of
having high population.* Some other measures to control population growth can be providing
incentives policies, women empowerment eradicating poverty and legislative actions or
contraception should be mandatory not optional.

9. Suppose you a land advisor to the Ministry of Land Reform, advise the minister of Land
Reform how rural development will be achieved through land reform, supportive policies and
integrated development.(9)
Land reform
•Land reform entails a redistribution of right of ownership or use of land away from large
landowners in favor of cultivators with limited or no land holdings.
•It can take many forms: transfer of ownership to tenants who already work the land to create
family farms, rural cooperatives or state farm •An individual proprietor who has well-defined,
exclusive and secure rights to land knows that increased effort or skill that leads to a rise in
output also improve income. Farm structures and tenure patterns must be adapted to the dual
objectives of increasing food production and promoting a wider distribution of benefits of
agrarian progress. •Agricultural and rural development would be benefit the majority of people
only if there is a joint effort between the government and all farmers.
•This can be done through the provision of secured tenure rights to individual farmer. Thus the
farmer will has an incentive of made improvement in his or her farm.
Supportive Policies
•government must create support system that provide the necessary incentives, economic
opportunities and access to needed credit and inputs to enable small cultivators to expand their
output and raise their productivity. •Changes in rural institutions that control production (banks,
moneylenders, seed and fertilizer distributors),
•Supporting government aid services (e.g. technical and educational extension services, public
credit agencies, storage and marketing facilities, rural transport and feeder roads), Government
pricing policies with regard to both inputs (e.g. removing factor- price distortion) and output
(paying market-value prices to farmers)

Rural public works projects: mobilizing labor to raise crops depends on the nature of property
rights over the use land and the prices paid and received for agricultural inputs and outputs. The
creation of a rural infrastructure through the mobilization of rural labor must be the main aim of
economic planners in developing countries.
•credit cooperatives set up by the small farmers are another potential solution to the lack of
sufficient credit in rural areas. Each farmer must save a small sum and these sum are pooled,
one or two farmers can borrow to buy a new thresher or pump
 •Extension services: rapid progress in rural areas depends on the introduction of new inputs
and new techniques- provide the link between the research laboratories and the rural
population.
Development of rural markets: rural marketing network has impact on productivity in
agriculture.
•The key to increase role for the market is specialization, low-cost transport and acceptable risk.
Even when the transportation system is adequate, farmers in developing countries may limit
their dependence on the market because of the risk it entails.

Integrated Development Objectives

•Rural development depend primarily on small farmer agricultural progress (a) efforts to raise
both farm and nonfarm rural real incomes through job creation, rural industrialization and the
increased provision of education, health and nutrition, housing and a variety of related social
and welfare services.
(a)A decreasing inequality in the distribution of rural incomes and economic opportunities
•The capacity of the rural sector to sustain and accelerate the pace of these improvements over
time.

10. Explain the policy implications of the Todaro migration model. (10)

 Reduce imbalance in urban-rural employment opportunities.

 Eliminating various capital subsidies and curtailing the growth of urban wages through
market-based pricing.
 Wage subsidies and factor pricing can be counterproductive- eliminate factor pricing distortions
by suing correct price –implementing wage subsidies
 Creating an appropriate rural-urban economic balance – e.g. improve credit access,
better agricultural training, social investment in rural areas, improving rural infrastructure.
 Expansion of small-scale, labor intensive industries: can be done through government
investment and incentive and improve access to credit.
Indiscriminate educational expansion will lead tom further migration and unemployment-

 Program of integrated rural development should be encouraged.

 High rate of urban unemployment
 lower level of agricultural output