Finance minister Iipumbu Shiimi this week stated government is currently interrogating the state-owned-enterprise ownership policy at Cabinet level. The cross-examination is expected to drive government decisions on which SOEs to retain ownership and which to let go of. Shiimi made these remarks this week during a national budget review held by Nedbank.
“The policy will help decide which state-owned enterprises (SOEs) to keep. That is something on the horizon to help reform SOEs,” he explained.
Questions were raised whether government will consider getting rid of the national rail service operator, TransNamib, but Shiimi noted the company is of regional importance. For this reason, government is hard at work to revive the company that it says has been neglected for years.
“There has been neglect in the past and also limited investments to rail maintenance when we are comparing it with road infrastructure that has been ongoing almost every year. Government is working closely to make sure the company is capacitated. There are benefits that Namibia can reap from TransNamib being operational,” said Shiimi.
Furthermore, he stated Namibia operates as a capital-intensive economy: “We cannot rely on old engines of growth even though the country is commodity driven. We know extractive industries do not create enough employment, even though they produce enough revenue and foreign exchange.”
In ensuring the domestic economy can recover, Shiimi said government was in close consultation with the Harvard Growth Lab and received recommendations through their diversification strategy. According to him, countries that diversified successfully relied on existing know-how and are producing complex products where they receive a high profit margin. Shiimi added that Namibia commenced in December 2021 with the identification of potential products and industries.
“We are committed to working with the private sector in this journey. SMEs play a pivotal role, as they are the backbone of many economies, so they are not left out. They can help reduce the unemployment rate,” stressed Shiimi.
At the same occasion, senior portfolio manager at 91 Asset Management Malcolm Husselmann was concerned with how much government is spending on the escalating public debt. “We have to be competitive with our peers in terms of tax rates. Make it more attractive, relative to our neighbours and get certainty through a conducive policy environment for investors,” Husselmann advised.
Also participating in the discussion, Johan Nel, a partner at PWC said government should consider tax holidays for people to start new businesses. According to him, new businesses translate into additional employees, which ultimately increase domestic demand and pushes up tax revenue. Nel urged government to identify a competitive advantage for the country. He further emphasised an accommodative policy for green hydrogen production, saying this product should be produced at a low cost in order to enhance the country’s competitiveness.
Meanwhile, Nedbank’s executive for corporate and investment banking Tjivingurura Mbuende expressed concern about the operational budget, noting that it is a massive challenge that needs to be addressed as it does not contribute to economic growth.