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TIPEEG had positive effects on economic growth, jobs and incomes, says Calle

2018-09-20  Edgar Brandt

TIPEEG had positive effects on economic growth, jobs and incomes, says Calle

WINDHOEK – Finance Minister, Calle Schlettwein, has dismissed critics of the Targeted Intervention Programme for Employment and Economic Growth (TIPEEG) which was implemented between 2011/12 to 2013/14. Responding to statements made by McHenry Venaani, leader of Popular Democratic Movement (PDM), Schlettwein said the N$14.7 billion TIPEEG actually had positive effects on economic growth, jobs and incomes.

TIPEEG was rolled out over a three-year period as a targeted intervention to create employment, permanent and temporary jobs, and to develop infrastructure for long-term economic growth. The total budget outlay for TIPEEG including public works was N$14.7 billion, with a sectoral focus on agriculture, transport and logistics, tourism, and housing and sanitation.

However, Venaani recently characterised the overall impact of TIPEEG as a failure, alleging that TIPEEG was one of the reasons why the economy is bleeding today due to the lack of a trickledown effect and that TIPEEG targets were not met, money was stolen and the projects were not completed. Venaani also cautioned government not to make similar errors for other foreign-funded projects. 

“Such statements sound utterly apocalyptic, but need to be checked against the facts,” Schlettwein responded in the National Assembly on Monday. 

“Economic growth averaged 5.6 percent between 2010 and 2014. This average is significantly higher than the long-term average growth rate of 3.9 percent since 1991. The annual real growth rates achieved during the TIPEEG period are one of the historic highest achieved to date,” Schlettwein noted. 

The finance minister added that during the implementation of TIPEEG, gross income per capita increased by more than 60 percent, from N$38.2 billion in 2010 to N$61.9 billion in 2014. During the same period, inequality, as measured by the Gini index, slowed from 0.58 to 0.56. 

“Out of this substantial rise per capita incomes, the evidence brought about by the successive National Household Income and Expenditure Surveys between 2009/10 and 2015/16 indicate that not only did per capita incomes rise significantly, but the incomes of the middle-class and the bottom quartiles increased the most, hence the discernible impact on poverty reduction. 

Over the same period, poverty and inequalities significantly decelerated. Extreme poverty reduced from 15.4 percent in 2019/10 to 10.7 percent by 2015/16, while absolute poverty declined to 17.4 percent from 28.8 percent over the same period,” Schlettwein stated.  
He further noted that out of the N$14.7 billion total allocation, N$13 billion was spent, resulting in an overall execution rate of 88.9 percent. As per the provisions of the State Finance Act, unspent money allocated to budget programs is returned to the Treasury for reallocation to the same or other alternative uses within the national budget system.
“If Honourable Venaani is privy to the information of money having been stolen as per his public statement, it is expected that he would come forth to report such criminal dealing,” said Schlettwein. 
“While the declining path on these indices cannot be entirely attributed to TIPEEG, there is no denial that the programme has had added momentum on realising high growth and pushing back the frontiers of poverty and inequalities. Such discernible progress cannot be termed as a failure, regrettable or anything to be apologetic about,” Schlettwein charged. 
He added that over 15 800 permanent jobs were created, while the temporary jobs were in excess of 87 000 as a result of public works programs. 
Said Schlettwein: “The TIPEEG period is the only time when such large number of jobs were created under a public works program. The opportunistic statement that there was no trickle down of growth and incomes is far-fetched and contrary to this best available empirical evidence.”  
He continued that the propagation that TIPEEG was funded through foreign loans is not entirely in line with the facts. “The question to be raised is whether the overall outcome of TIPEEG, positive as it is, was optimal and commensurate with the magnitude of investment made. I reiterate that the results should have been better, that the productive, industrial and digital capacity of the economy would have improved, that the outcomes are sustainable and more permanent jobs should have been created. This is the balanced context in which the outcomes of TIPEEG should be assessed,” said Schlettwein. 
He noted that the onset of the current subdued economic environment in 2016 was on account of a perfect storm operating on the income side and the related macroeconomic linkages, warranting expenditure-based measures to align with the new macroeconomic outlook. 
“These factors have their origin in the commodity price crash, persistent droughts in the agricultural sector, currency volatility and weak performance in large trading partner economies,” Schlettwein explained.  

2018-09-20  Edgar Brandt

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