This week we celebrate Independence Day
here in Namibia, but as we celebrate, it might behove us to take a long, hard
look at our country, and how it’s being managed. Minister Schlettwein presented
his budget to parliament just a few weeks ago, and the documentation has been
made available on the Ministry’s website, so let us pore through the documents,
and take a look at what’s ahead.
Namibians should not be surprised to hear
that the economy is expected to have contracted by 0.4% during 2017. Namibia is
expected to recover somewhat economically during 2018, with growth expected at
1.2% for the year before increasing further to 2.1% in 2019. With recovering
commodity prices, government expected the mining sector to be at the forefront
of this recovery. So how did government structure its budget?
Let’s start at the top, with government
revenues. In total, the government expects to receive about N$ 56.7 billion
from various sources, a 1.3% decline from last year, reflecting Namibia’s
difficult situation. N$ 53.2 billion will be from taxes, with N$ 22.2 billion
from income taxes – as paid by us every year, and paid by the various companies
operating in Namibia. Another N$ 34.5 billion is collected via indirect taxes,
like VAT, that you pay when purchasing products or importing products, and
transfer duties and property taxes. Then an additional N$ 3.4 billion is raised
from other sources, such as dividends and profit shares from government investments
and interest of loans and investments, royalties on minerals mined, and fines
and administration fees.
So far, so good. It seems quite prudent,
given the state of the economy, and it seems the government has learned not to
make the mistake of over-estimating its revenues, having learned hard lessons
from two years ago. So, let us take a look at the expenditure now. Minister
Schlettwein’s budget indicates that the government intends to spend N$ 65
billion this year, also a decline of 2.3% from the previous year. How is this
allocated?
As usual, the biggest expense is the N$
13.5 billion is budgeted for Basic Education. It has been noted that education
is the greatest equaliser, and the Namibian government is certainly striving
toward it, as government spending on education dwarfs other spending by a
significant amount. In fact, Namibia is one of only three countries in the
world where education is the top spending priority for government. Namibia
spends about N$ 18 700 per learner per year, but with our high failure
rate, the ministry has to urgently improve the quality of outcomes. An
additional N$ 3.2 billion is budgeted for Higher Education, Training and
Innovation. In total, 28.9% of expenditure goes to education, or about 9% of
GDP.
Health and Social Services receive N$ 6.5
billion in the budget, and N$ 3.4 billion goes to the Ministry of Poverty
Eradication and Social Welfare. The
budget increases the old age pension grant to N$ 1 250 per month, allowing our
oldest and most vulnerable of citizens to be placed above the national poverty
line. In total, the Social ministries above receive 49.2% of the budget.
The Ministry of Transport is allocated N$
3.5 billion, and has to complete several phases of ongoing road construction
projects, as well as invest in industrialization and logistics hubs over the
coming years. The Ministry of Agriculture, Water and Forestry will receive 2.1
billion, and PSEMAS N$ 2.5 Billion. The Ministry of Finance will be receiving
about N$ 4 billion, and is tasked with establishing a Revenue Agency to improve
the efficiency of tax collection and ensure government revenue targets are met.
In total, these economic and infrastructure ministries above receive 21.7% of
the budget.
The Ministry of Defense and the Ministry of
Safety and Security receive N$ 6 billion and N$ 5.2 billion respectively. The
Ministry of Home Affairs and Immigration will be receiving N$ 609 million and
the judiciary N$ 366 million. These Public Safety Ministries are kept funded at
significant levels as we don’t want to compromise the safety of the nation, and
in addition, President Geingob’s zero-tolerance stance on corruption will keep
these ministries quite busy. These ministries have the second largest share of
the budget, with a total of 21.7% of the budget, with the remaining 7.8% of the
budget allocated to administrative ministries, such as Urban and Rural
development and International Relations and Co-operation, amongst others.
As you may have noticed, our government
expenditures exceed our revenue – this is what is called our budget deficit.
This year, however, it only amounts to 4.5% of GDP, in contrast to the 5.4% of
last year. This is due to the fiscal consolidation stance taken by the Ministry
of Finance to maintain our macroeconomic stability and sovereign credit rating
of our bonds. As a result of the prudent budgeting, only N$ 8.3 billion worth
of debt funding will have to be raised by government this year.
This budget, at least, should give some
reassurance that the government is keeping its eye on the ball, and positioning
itself against adverse conditions, while simultaneously attempting to put the
country on the right footing for rapid growth should the opportunity present
itself. Still, this quick summary is no replacement for your own – every
citizen should avail themselves of the documents as presented on the Ministry
of Finance website, and make their own assessment. With the independence
celebrations on our mind, we should remain cognizant of the fact that it
remains our duty to keep the government accountable and transparent. A strong
and independent Namibia is only as accountable as its citizens.
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