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Value for Money

20 February 2014
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Minister of Finance Saara Kuugongelwa-Amadhila appeared very buoyant and positive about Namibia’s economic stability and future outlook when she presented the 2014/2015 national budget in parliament on Wednesday.

She said the country had made considerable progress in many spheres thanks to the proactive socio-economic development policies Government had implemented.

She projected GDP growth of 5 percent in 2014, up from an estimated 4.8 percent in 2013.

Kuugongelwa-Amadhila acknowledged that the country’s economy faces significant challenges ahead such as a jobless growth and a lopsided distribution of income and resource ownership, amongst others.

Based on what she outlined in her address to parliament we should all have a reason to feel reasonably pleased by the country’s economic performance.

Whether the minister is right in feeling so confident is hard to tell given the vagaries of the international economy and currency markets.

Some aspects of the budget remain a worry, and even more worrying is that some of them appear to be recurring problems that repeat themselves year after year.

The operational budget at a staggering N$48 billion consumes a grossly disproportionate 80 percent of the total budget of N$60 billion.

To make matters worse, 20 percent of the operational budget or 9.58 billion goes to the disastrously inefficient and wasteful State-owned enterprises.

We have some SOEs in this country that perform vital economic and social functions, but in most cases, allocating funds to the SOEs is as good as flushing money down the toilet.

The unique structural problems of the Namibian economy make it difficult to create employment in the private sector fast enough to provide employment for a growing labour force.

Government has therefore enthusiastically embraced its role as “employer of last resort”.

This can however, not continue indefinitely because the two objectives are for the most part mutually exclusive.

The bigger the portion of the economy that Government consumes the less chance the private sector has of growing and flourishing because Government suffocates everything else.

The fact that Government only allocates N$9.58 billion to the development budget but throws away N$9.52 billion on corporate welfare payments for the SOEs surely can’t be right.

Minister Kuugongelwa-Amadhila’s budget nevertheless has many positive aspects.

She announced that the N$ 14.5 billion Targeted Intervention Programme for Employment and Economic Growth (Tipeeg) – now in its third year of implementation – had created 83,315 jobs.

Without closer examination of the details of the various projects, it is difficult to make a determination on the veracity of this claim.

Those who live in areas such as Katutura see anecdotal evidence that seems to suggest that the number unemployed people hanging around street corners has fallen.

The N$8.3 billion Government has allocated for housing is a welcome development and hopefully shows that it is serious about President Hifikepunye Pohamba’s Mass Housing Initiative.

With both Tipeeg and the Mass Housing Initiative, success or failure depends on Government’s ability to keep inefficiency as well as fraud and other forms of corruption in check.

Government has allocated N$8 billion to agriculture, including funding for drought relief incentives, construction of earth dams, rural water supply and the Green Scheme projects.

The drought relief incentives scheme is a classic example of inefficiency on such a vast scale that it almost nullifies any benefits that people might derive from the programme.

The Green Schemes might maintain the illusion of success as long as Government continues to pump in vast amounts of money.

When Government eventually pulls the plug on the funding, they will collapse like a house of cards because history has shown again and again that collective farms do not work.

The most important points Minister Kuugongelwa-Amadhila mentioned included the need for Government to curb waste and bureaucracy that hampered economic development. She also spoke about the need for Government to improve internal efficiency, reduce waste and realise internal savings in public finance management.

Given the inertia and resistance to change among public servants, we wish the minister the best of luck in this endeavour.

Above all, she made the pertinent point that both Government and the people of this country want to receive value for money from the vast amounts of taxpayer’s money we spend.

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WINDHOEK OBSERVER

The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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