MIXED EXPECTATIONS IN 2011/12 BUDGET

THIS March, Minister of Finance, Saara Kuugongelwa-Amadhila was largely expected to come up with solutions to address the reduction of revenue from the Southern African Customs Union, stimulating economic growth and creating a platform for private sector growth during the announcement of the Namibian national budget 2011/12.

Local business analysts and industrialists were hoping for an expansionary budget that would clamp down on unemployment.

Tarah Shaanika, Chief Executive Officer of the Namibia Chamber of Commerce and Industry (NCCI) called for a budget that would allow the growth of industry and create more opportunities for national economic growth.

“The economy was depressed by the 2009 global economic slowdown. Although there are obvious signs of recovery, there is a need to use the budget to stimulate economic activities and boost recovery in the near future as this will go a long way in creating efficiency in both public and private sectors.

“With such high unemployment levels and slow growth over the years, the Government should use the budget to push for more economic activities in sectors which have higher potential for creating more jobs to fuel faster economic growth. We expect a budget which will support Government plans in terms of Vision 2030 and National Development Plan III.

“We expect the Minister of Finance to continue pushing for improvements in revenue collection to finance Government projects in education, health and infrastructure development.

“In addition, we expect the Minister to be creative in finding some sort of replacement for revenue from the SACU pool which is expected to decline over time,” said Shaanika.

Industry also expects the minister to come up with an annual budget that allows the private sector to play a meaningful role in the country’s economy.

This, they feel, will create a concrete public-private sector partnership in future.

“No, we did not see much if any consultations on the budget. We think the national budget is an important tool for stimulating economic activities and address key national challenges such as improved education system, infrastructure development and maintenance as well better health care systems.

“The private sector has an important role to play in all these and should be consulted on the budget. We hope that we will still have a chance to have consultative engagements with Government on the implementation of the budget and future budgetary processes,” said Shaanika.

While industry expects Government to come up with long term solutions, the biggest challenge faced by Minister Amadhila is how the country would come up with modalities to avert the losses incurred from dwindling SACU revenue pool.

The 2009/2010 financial budget experienced massive slowdown in inflows from SACU revenue prompting the Minister to call for the diversification of revenue collection in other sectors last year.

Most countries within the SACU revenue pool including Botswana, Swaziland, and Lesotho received lowered revenue prompting their Heads of States to convene and map the way forward in boosting revenue collection.

The budget has been tipped to come up with stimulus policies that would support the ongoing efforts to turn around the performance of the education sector.

Amadhila reported a 98 percent implementation rate and this saw most of the budget projects that were being funded pushed forward.

She also created a conducive environment for the State Owned Enterprises and most parastatals by injecting capital in public institutions including Air Namibia and the Development Bank of Namibia.

The heavy investment in the education sector ushered a new era in the country’s education with the Minister, Abraham Iyambo making frantic efforts to revive the structure and the delivery of education in the country.

FNB Chief Economist and Senior Manager Research and Development, Daniel Motinga, said the budget should have more emphasis on creating sustainable job opportunities as compared to short term jobs.

“I think the ongoing economic recovery will be top on the Minister’s plans . She will be asking key questions about the sustainability of the global markets and what it means for our exporting sectors because higher and bigger exports mean potentially higher growth and thus higher future revenues for the fiscus.

“Another issue is, of course, the long term capacity of this economy to create jobs. I am sceptical that the budget would, in any meaningful way, lay the path to sustainable job creation.

“Budgets can only create temporary jobs. I am of the view that sustainable jobs can only be created by growing private enterprise. So the budget should explore ways in which the private sector will be expanded or kick-start the so called PPP (private public partnership) agenda,” said Motinga.

He also added that the dwindling SACU revenue pool could prove a problem in the planned expenditure for the 2012/2013 budget.

‘This is a serious risk to the medium term outlook particularly as the domestic economy is slowly exiting the economic slowdown. I think, if this risk materializes, then sustainable expenditure realignment through a policy mix of expenditure switching and reduction is necessary. Given this context, I remain wary of an expansionary fiscal policy over the medium term given the fiscal uncertainties. My base forecast assumes a reduction in the expenditure growth into 2012/13,” said Motinga.

Motinga added that the Minister should take consolidatory measures in the future to her previous fiscal policies as this would help stabilize the economy.

As has become tradition, Prime Focus will host a budget luncheon, the day after the budget is presented and will invite a host of economic, social and political analysts, leading businessmen and captains of the industry to come give their opinions of the budget in the presence of the Finance Minister. PF