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RFA aims to inject N$13 billion into Namibian economy

2020-09-30  Edgar Brandt

RFA aims to inject N$13 billion into Namibian economy

Edgar Brandt

The Road Fund Administration’s current business plan hopes to inject about N$13 billion into the Namibian economy during the next five years, of which about 80% or some N$10.4 billion has been earmarked specifically for road sector projects. According to the RFA’s recently tabled annual report for 2018/19, this investment model is based on the same magnitude of the RFA’s projected income level.

The report, tabled in Parliament recently, indicates that the RFA’s revenue grew by more than 56 from N$1.6 billion in 2014/2015 to N$2.5 billion in the during 2018/2019. During the same time, the RFA’s assets grew from N$720 million N$1 billion. 

According to the World Economic Forum, Namibia’s road infrastructure is rated 10th best globally in terms of connectivity and 28th in terms of road quality, mainly due to improved funding towards road maintenance programmes and effective roads management. 
In his chairman’s report, Penda Ithindi said the positive results achieved were mainly due to strong financial discipline, robust governance processes, innovative technology, processes and systems, and an empowered and dedicated workforce. 

“Most importantly, the organisation’s commitment to consistently deliver value for its shareholder, road users, its employees, funding partners and communities aided in achieving such positive results,” Ithindi stated.
 He added that the RFA will continue to strengthen its liquidity position and financial buffers to shore up capacity to respond to unforeseen circumstances and service its financial obligations. 

Said Ithindi: “Consequently, we will strive to find more creative funding mechanisms to sustainably increase road maintenance funding from N$2.6 billion annually to the optimal level of N$3.2 billion needed to maintain the quality of our N$101 billion net value road network”.
In the same report, RFA CEO, Ali Ipinge, suggested that one to find more creative funding mechanisms is to review the ‘user pay’ principle. According to Ipinge, the current Road User Charing System (RUCS) will be reviewed and an equitable system investigated, where each vehicle category pays a proportionate share of road use. He added that Mass Distance Charges (MDC) automation will also be investigated, while a feasibility study on road tolling is already in the pipeline.

Since its establishment in 2000, the RFA has invested a total of close to N$20 billion in the maintenance and preservation of the national road network. Also, RFA’s revenue has increased from N$300 million in 2000 to N$2.50 billion in 2019. 
The annual report further shows that the RFA recorded a surplus of N$201 million at the end of March 2019, which Ipinge said is owed to the fact that not all projects commenced. He noted that this surplus will be directly reinvested into road maintenance and preservation. 
Said Ipinge: “The RFA is proud of its achievements over the past five years, which are a direct result of our consolidation and prowess at navigating through extremely difficult conditions. It is no small feat moving from a position of negative equity, substantial losses recorded, expenditure exceeding revenue, to one of growth in revenue of 60%, presenting a strong balance sheet, and with assets at a healthy N$1 billion”.

Ipinge also noted that the RFA invested more than N$68 million in staff housing at various border post offices.
“Our Manufactured Capital constitutes the physical infrastructure of the road network, our 20 representation points, and our digital infrastructure. To this effect, an investment of N$2.4 billion was made in the maintenance and preservation of our roads, and funding towards the maintenance of access roads was increased by a massive 30%”.
Ipinge, however, lamented procurement delays due to requirements of the new Procurement Act, calling it a ‘major challenge’.  “While we acknowledge the need for adherence to the Act, the processes have inhibited our ability to move quickly on major projects,” Ipinge stated. 

2020-09-30  Edgar Brandt

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