N$500 million Psemas allocation questioned … as parties poke holes in Shiimi’s budget

N$500 million Psemas allocation questioned … as parties poke holes in Shiimi’s budget

Lahja Nashuuta

Maihapa Ndjavera

Finance minister Iipumbu Shiimi has been lauded by some for his interventionist budget to shield Namibians from the brunt of drought, but others have received it with mixed emotions. 

For the latter, the budget leaves much to be desired.

One of them is economist Klaus Schade, who has raised concern regarding the recent N$500 million allocated to the Public Service Employees Medical Aid Scheme (Psemas).

From his hilltop view, the allocation underscores the urgent need for reform within the scheme.

Some opposition political parties have also weighed in, bringing their dismay to the fore.

The allocation was highlighted during Shiimi’s mid-term budget review on Wednesday, when he said a total of N$2.4 billion has been earmarked for subsidies and transfers to government organisations, including coverage of the Psemas shortfall.

Schade pointed out that “the additional funding speaks volumes about how much reform is needed” in Psemas, suggesting that the current structure may not be sustainable without significant changes.

Psemas has been under scrutiny due to its financial sustainability issues, and the need for urgent reform. The economist also criticised the government’s low execution rate of capital projects, which stands at less than 40%. This is particularly troubling, given the critical role of the railway sector in unlocking economic opportunities in emerging fields such as oil and gas, and green hydrogen. Schade said: “We need to investigate why the implementation of capital projects is limping”, adding that this issue could hinder future economic growth.

In his budget presentation in February 2024, Shiimi outlined a comprehensive budget of N$100.1 billion, which included N$74.6 billion for operational expenditure, and N$12.8 billion for development projects. However, he acknowledged that due to low execution rates, N$2.1 billion has been identified for reallocation from development to operational budgets. Schade expressed concern over this shift. “The government has reallocated funds from development to operational budgets, which is worrying, because sufficient infrastructure is essential to attract investment and enhance economic competitiveness.”

Despite these challenges, there were positive notes in Shiimi’s budget review, particularly regarding expected reductions in public debt over the medium-term expenditure framework (MTEF). Another economist, David Jarrett, likewise commented on the mid-term budget review’s lack of clarity regarding the government’s financial challenges, as the fiscal year progresses. He emphasised that while the review meets expectations, it remains unclear how the government will effectively support domestic production, amid a high reliance on imports.

“The real benefit would have occurred if specific local actions were targeted,” he noted, suggesting that initiatives like electric mobility or horticulture could help reduce import dependency. Jarrett also highlighted that while increased tax amnesty might yield short-term benefits due to improved efficiency from the Namibia Revenue Agency (NamRA), this advantage is likely to diminish as compliance levels rise.

Political lens 

Reacting to the mid-term budget, Landless People’s Movement (LPM) chief whip Utaara Mootu credited the finance minister for availing additional funding towards the construction of classrooms, but emphasised a need for an education curriculum revamp.

“The budget’s allocation to construct 512 classrooms is commendable, yet it barely scratches the surface of what is needed. The issue here is not just the construction of classrooms, but also the transformation of an education system which fails to prepare our young people for a competitive, modern economy,” she said. 

Mootu maintained that Namibia needs not just physical infrastructure, but digital access, updated curricula, and above all, hope for a future where education leads to real opportunities. What is also concerning for her is that 80% of children aged 0–5 years do not have access to early childhood development (ECD), according to both the 2011 and 2023 Namibia population and housing census reports. Out of this, 5% is due to distance, and 10.3% is due to financial constraints. “There needs to be an urgent intervention for children living with disabilities; they have systematically been excluded from the education system, which is a human right,” the youthful lawmaker continued.

She advised the government to emulate the Zimbabwean education system and learn from its success, where the curriculum targets a more skills-based approach to foster industrialisation. Motuu also touched on the agricultural sector. “How can we talk about food security when our farmers struggle to make ends meet? There needs to be an accumulation-from-below approach, targeting small-scall farmers. Namibia’s agriculture requires radical reform and support — not just drought relief, but a proactive vision for long-term resilience,” she noted.

Priorities 

Echoing similar sentiments was the Popular Democratic Movement’s Inna Hengari. She praised government for prioritising housing and education in the mid-year budget, but said more needs to be done to address the countrywide housing crisis.

“The housing crisis in our urban areas is equally dire, and demands immediate attention. The current situation, where hardworking Namibians struggle to find affordable housing, is unacceptable and unsustainable. We must prioritise the development of affordable housing solutions in our urban areas,” she stated.

 She further said: “I commend the minister’s commitment to addressing our economic policy priorities, particularly through the introduction of tax relief measures, the tax amnesty programme, and initiatives in housing and education. These are indeed constructive steps. However, to achieve meaningful economic transformation, it is essential that we adopt a more ambitious pace, and deepen the scope of these reforms.”  Hengari said the provision of affordable housing requires bold action, including substantial resources allocation and targeted support for low-income households.

“We need a comprehensive, long-term strategy that includes urban planning reforms, zoning changes to promote higher density development, and innovative financing mechanisms to make homeownership accessible to all,” she added.

The parliamentarian also welcomed the allocation of N$139.0 million to the Conditional Basic Income Grant to additional qualifying beneficiaries in urban localities, stating that it is a positive move towards addressing urban poverty.

“However, we must ensure that this programme is sustainable and effectively targeted, and that intended beneficiaries actually receive the grant,” she cautioned.

-lnashuuta@gmail.com

-mndjavera@nepc.com.na