On 18 March 2021, President Hage Geingob unveiled government’s Plan of Action Towards Economic Recovery and Inclusive Growth – the Harambee Prosperity Plan II, with attendant Economic Recovery Programme. The minister of finance preceded the launch with the tabling of the FY2021/22 Budget, Medium Term Expenditure Framework (MTEF) and Accountability Report. Together, this targeted impact plan and fiscal strategy outline Namibia’s policy priorities, programmes and economic outlook for the next three to four years.
Here are 10 key themes to note:
Namibia’s fiscal position
Securing fiscal stability is of the highest priority, amidst prospects of moderate 2.1% economic growth this year, recovering from a steep and unprecedented contraction of 7.3%, largely spurred by the pandemic-induced lockdown and protracted drought. The budget of N$67.9 billion expects to source an estimated N$52.1 billion in public revenue from SACU receipts, income tax from individuals and VAT as well as the balance from debt funding. The imminent launch of NamRA should bolster revenue collection. The budget deficit is estimated at 8.6% of GDP, which is expected to decline to 5.5% by end of the MTEF. Public debt is expected to rise to about N$140.8 billion or 76.2% Debt-to-GDP (Namibia GDP is currently N$170 billion). Although this level of debt funding is unprecedented and sustainability is a concern, it is notable that the average level of debt regionally has increased beyond the prudential threshold of 60%. It is, however, becoming increasingly more expensive to borrow. To boost resiliency and recovery, MOF commits to a “growth-friendly fiscal consolidation”, essentially continuing to cut public expenditure while channelling resources into catalytic projects with large multiplier effects.
Prioritised funding for youth
Of the total budget, N$34 billion (50.1%) is allocated to the social sectors of health and social services (N$11.1 billion, including PSEMAS and Covid-19 vaccines); basic education (N$13.8 billion); higher education (N$3.2 billion including Unam: N$851mil; NUST: N$488mil and NSFAF N$1.2bil); poverty eradication, gender equality and social welfare (N$5.4 billion). SME financing will receive N$495 million, noting the revival of the equipment aid scheme this financial year. The development budget is N$5.6 billion (3% of GDP), which will create some stimulus. The tax regime maintained current thresholds for personal income tax and increased sin taxes (alcohol/cigarettes) while exemption on sanitary pads from FY2022/23 will provide relief and address equity and dignity for adolescent girls and women.
Namibia is set to benefit from the potentially high demographic dividend that comes with a young population, whose window of opportunity opened in the early 1990s and projected to close around 2060. A young demographic majority has a meaningful role to play in championing and implementing programmes and holding elected leaders accountable. HPPII focuses on delivering improved quality of public services, strengthening anti-corruption mechanisms through a more comprehensive legislative framework, and citizen participation and stakeholder engagement through structured dialogue mechanisms to foster meaningful participation, continuity in policy dialogue and shared accountability.
Where will growth come from?
Economic recovery will be anchored by growth in primary industries, with an expected rebound in mining activities. The HPPII Economic Advancement Goal specifies targeted interventions with the potential to unlock approx. N$27 billion, strengthening the fiscus and unlocking new frontiers for growth:
a. Better stewardship of natural resources and public assets (Sovereign Wealth Fund, Public Enterprise reform, update fixed public asset register; review regime for allocation of fishing rights, quotas and mineral licenses, and listing strategic economic assets such as the listing of MTC).
b. Increasing productivity of key economic sectors (business rescue legislative reforms; unlocking the economic potential of communal land, agriculture, blue and green economy, and leveraging PPPs for private sector-led growth).
c. Developing new engines of growth (investment policy, strategy and incentives regime; National MSME Fund; unlocking investments into a green and blue economy with Green Hydrogen/Ammonia resource).
What about Wakanda?
MoF drew an analogy, equating Namibia’s potential to that of Wakanda, a sub-Saharan African country advanced in tech and endowed with a natural resource ‘Vibranium’ (from Black Panther Movie). Our renewable energy Mix and GH/Ammonia potential is a pretty transformative strategic bet that could propel new growth, positioning Namibia towards net energy exports and stronger Forex earnings.
With increasing vulnerability, securing basic amenities for survival and human development is central to achieving social mobility and poverty eradication.
Key interventions include:
a. strengthening rural agricultural extension services for communal subsistence farmers through NAMSIP/AfDB programme; implementing local procurement directive via AMTA to enhance offtake markets for small-scale farmers; expanding coverage of school feeding programme; consolidating social grants to introduce a transitional, conditional basic income grant; determining the wage floor towards a national minimum wage; conferring citizenship to a specified group of stateless/undocumented persons in Namibia; delivering urban land, housing and sanitation solutions through innovative partnerships; converting certificates of occupancy into title deeds to enable collateralised lending; operationalising the rent control board; reviewing the national housing policy to introduce mixed developments and improve the affordability of urban land. Health: expanding infrastructure and neo-natal capacity; modernising the central medical store; decentralising dialysis and radiotherapy facilities; improving nutrition for malnourished children and lactating mothers, and developing a roadmap towards national health insurance. Education: concluding NSFAF sustainability model; rollout of the national internship/apprenticeship programme; establishing the industry skills committees towards demand-driven education. Sports: franchise hubs present economic empowerment opportunity for entrepreneurs, regionally. GBV: training for first responders; introduction of specialised courts for the hearing of GBV cases; enactment of national sex offenders registry and Child Justice Bill are just some of the wins for young people.
Employment creation is a central tenet. Through the following projects, HPPII aims to create up to 42 000 new jobs over the period: Erongo desalination plant; expansion of the Hosea Kutako International Airport; optimise the productivity of 10 Green Schemes, including Neckartal Green Scheme through PPP; optimise Walvis Bay container terminal and establish an economic free zone; develop GH/Ammonia national strategy; complete construction of 6 national roads; ICT Infrastructure Sharing; secure water supply through Oshakati purification plant, Rundu reservoir and purification plant as well as rural/peri-urban electrification through renewable energy mix.
Focuses on Economic Diplomacy to complement domestic economic and trade policies. Young Namibians will be supported to leverage opportunities presented through investment promotion, regional integration and the Continental Free Trade Area (AfCFTA), marking the single largest trading block with 55 participating countries with combined GDP of US$3.4 trillion and a consumer market of about 1.3 billion people.
Where will the money come from?
The budget deficit will be financed through a combination of domestic and external borrowing. PPP projects will be scoped and packaged through a N$400 million Project Preparation Fund. Listing of public assets will generate revenue, while revamped investment legislation and incentives and leveraging PPPs will unlock private sector-led growth. The approach, principally, is to crowd in private sector capital and know-how.
What will we do differently?
A Performance Delivery Unit will track the execution and implementation of HPPII projects, applying project management principles. Quarterly progress reporting. Bookmark www.HPPII.gov.na as a central information repository to track progress on this ambitious yet attainable Plan!
HPPII has the potential to significantly transform our country for generations to come. Let us proceed with cautious optimism and resolve to diligently execute our recovery and growth agenda with laser-sharp focus.
* Daisry Mathias is the presidential advisor on youth matters and enterprise development.