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Budget cuts curtail industrialisation drive

Home National Budget cuts curtail industrialisation drive

WINDHOEK- The Ministry of Industrialisation, Trade and SME Development has also not been spared in terms of budget cuts for the 2019/20 financial year – a situation described to have adverse implications towards Namibia’s industrialisation drive.

The total budget allocation to the ministry for the financial year 2019/20 is N$295,1 million.

This allocation is divided into N$164,64 million for the operational budget and N$130,4 million is earmarked for development budget.

This translates to a budget reduction N$42,5 million – representing about 13 percent.

Deputy minister of industrialisation Lucia Iipumbu, who presented and motivated the ministry’s 2019/20 budget in the National Assembly last week, said the operational budget was cut by N$66,13 million, representing a 14.5 percent reduction.

Equally, Iipumbu revealed that the capital budget also suffered a blow with a reduction of N$23,79 million, or 22 percent reduction. 

She said during the same period last year, this ministry’s budget saw a cut of more than 43 percent.
She presented that these severe budget cuts have far reaching implications for the government’s noble initiatives to drive industrialization, and to increase trade, especially in the light of the African Continental Free Trade Area Agreement (AfCFTA), which Namibia ratified recently

Last year Namibia signed the trillion-dollar AfCFTA agreement, which requires members to remove tariffs from 90 percent of goods to allow free access to commodities, goods and services across the continent, but had not ratified it pending further scrutiny.

“These cuts would further undermine our resolve to strengthen the small-and-medium enterprises with the view to mitigate the difficulties of unemployment, poverty and other social evils. These budget cuts also severely limit our role in developing bilateral and regional value chains projects and investments within the Sacu and Sadc fora that now has frontloaded industrialization at the apex of regional strategy,” she indicated.

From the total operational budget of N$164 million, an amount of N$80, 37 million goes to remuneration, N$28, 49 million is earmarked for goods and other services, while an amount of N$55, 88 million is allocated towards subsidies and other current transfers.                      

Iipumbu reasoned that these allocations essentially indicate that the operational budget is only to finance remuneration, State Owned Enterprises (SOEs) and the operational expenditures such as utilities, thus there are no allocations to very critical operational areas of the ministry including support services. 

“This situation, undoubtedly leads to a dysfunctional ministry, SOEs and commercial offices which do not respond to its core mandate to attract local and foreign investments to create job opportunities in Namibia. For SOEs, we only received N$42 million which does not even cater for full remuneration of one of our SOEs,” Iipumbu noted.  
There are five main programmes in the ministry which need funding to meet the ministry’s mandate.

These include trade promotion; industrial and enterprise development; investment promotion; special industrialization initiatives, and supervision and support services.