The Minister of Finance Iipumbu Shiimi is set to table the 2023-2024 budget on the 22 February 2023. The total FY2023/24 budget is projected to be in the range of N$73 billion.
The upcoming 2023-24 budget should focus on protecting and driving the recovery of lives and livelihoods of Namibians, rebuilding resilience of the economy and catalysing socio-economic reforms. With this in mind, we expect a change in policy direction focusing more on infrastructure, manufacturing and agriculture to address unemployment, cushion citizens facing flood and special reserves of the victim.
Furthermore, the human capital development programme, that covers key sectors of education, health and green hydrogen technologies are projected to take the largest share, followed by security, integrated transport infrastructure, services and agriculture. Recognising and correctly valuing the performance, critical importance and increasing role of agriculture in economic development have important implications for public sector budgetary allocations and actual expenditures in agriculture, which continue to be low and inadequate. It needs to be recognised, however, that as Namibia moves from a stage of agriculture-based development, either the percentage share of primary agriculture or the percentage share of expanded agriculture to GDP will decrease significantly.
This is because other sectors of the economy, especially the service sector, become much more dynamic, therefore, growing faster especially in countries entering higher stages of development. It does not mean, though, that the agriculture or agribusiness sectors become less important. At the same time, more needs to be done to increase rural living standards, reduce regional income differentials and lower the rate of rural-urban migration, while concomitantly increasing agricultural production and enhancing Namibia’s food and nutrition security.
The government of Namibia should be implementing a rural development strategy with focuses on large modern farms and family farming. The effective implementation of NDP5 and HPP2 will strengthen Namibia’s position in agriculture. To make this shift, regulatory reforms should define the principles of public investment, lay out a framework for attracting private investment to the agricultural sector while enhancing access to finance, and enhance responsiveness. Agricultural production must increase accordingly in order to meet socio-economic and food and nutrition security issues.
The adverse effects on land resources and climate change must be countered with continued efforts to increase inputs and sustainable climate smart practices; protecting agricultural land against fragmentation, erosion, and degradation; and shifting production toward higher-value products and introducing land-saving technologies.
Furthermore, Budget 2023-24 must focus on green hydrogen as a key energy resource. The biggest challenges facing Namibia are to develop and demonstrate green hydrogen technologies that are technically and economically viable and cost-competitive, and to create a robust supply chain and delivery mechanism for these technologies. Leveraging Namibia’s significant renewable energy potential to position Namibia as a top producer and potential exporter of green hydrogen should be a priority. An increase in investment in the sector will ultimately lead to better development and more jobs. It is also crucial for the government to support the sector to enable the promotion of the hydrogen economy. Green hydrogen is a new but reliable technology for reducing carbon emissions in areas where electrification is ineffective. The growth of green energy is predicted to be among the fastest of any aspect of the energy revolution, generating specialised opportunities for businesses and ivestors. Moreover, we cannot ignore manufacturing. The manufacturing sector can potentially play a key role in the overall economic development agenda as well as initiatives geared at employment creation and effective reduction of poverty. We need to understand that the manufacturing sector is a big employer of both skilled and unskilled workers. If manufacturing is at full capacity, the manufacturing sector also contributes significantly to Gross Domestic Product (GDP).
In 2022, the GDP increased by 5.6% during the second quarter. The largest contributors to growth in GDP in the second quarter were manufacturing, accounting for 12.1%, wholesale and retail trade (10.2%) and agriculture bringing 10%. According to NSA, the Namibia economy grew by N$5.4 billion compared to the N$43.2 billion recorded in the previous quarter of 2021. The main contributor to the GDP growth of 5.6% during the quarter under review was the mining and quarrying sector, which contributed 2.6% to the GDP growth followed by financial services with 1.1%. This means that the domestic economy expanded to N$48.6 billion in the second quarter of 2022. As the recovery in the economy continues, the risk of sector-specific tightening measures or removal of accommodation is growing. Therefore, we need to protect and grow our manufacturing industries by funding them, placing huge taxes and levies on imported goods, creating policies that would encourage more production and getting our infrastructure up to date.Namibia belongs to us.
Therefore, it is our moral duty to conserve resources. We need to conserve resources because they are the main source of the daily needs. Improving governance and enacting policies will help safeguard limited resources. Accelerating structural reforms to build tax administration capacity and investments in digitalisation, enhance transparency, reduce illicit financial flows, and scale up domestic resource mobilisation. The executive directors must begin to understand that no matter how little budget allocated, they must provide accountability, integrity and transparency.
Hence, in order to achieve this, all sectors of the economy need to get due attention and resources to ensure the delivery of essential services to the people and stimulate growth. They should focus on revamping the curriculum and introducing education technology, skill development and quality improvement programs for teachers. President Geingob promises improvement in medical aid, and enhance public and private partnerships in the health sector. The industry, as well as the people of the country have high expectations from this budget in terms of tax reforms. It is expected that budget 2023/2024 would talk about the policies and measures towards infrastructure development, boosting exports and promoting a green economy. We cannot oversight digital transformation. The focus on these sectors is expected to help drive economic growth and create employment opportunities, while also reinforcing the government’s commitment to providing a better quality of life for all citizens.
To this end, the 2023-24 budget should ensure that reform measures are implemented, focusing on the attainment of Vision 2030. Therefore, to sustain poverty reduction, cost of living, volatility and growth over the next few years is possible, if the government makes good its intentions to support the agriculture, manufacturing, rural infrastructure development and export sectors.