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.- Republic of Namibia Ministry of Finance BUDGET MOTIVATION FOR VOTE 09 -FINANCE ON THE APPROPRIATION BILL, 2019 Presented by NATANGUEITHETE,MP DEPUTY MINISTER OF FINANCE 26rd April 2019 Motivation for Vote 09: Ministry of Finance for 2019120 FY INTRODUCTION OF VOTE 9: FINANCE Honourable Chairperson Honourable Members; of the Whole House Committee; 1.
I have the honour to present to this August House, the budget of Vote 09: Finance for the financial year 2019/2020 and introduce the expenditure proposals as well as the estimates for the remaining two financial years.

2.
2.

The Constitution of the Republic of Namibia and the financial laws bestow upon the for managing the Ministry of Finance to carry out the following mandate: be responsible and formulate State Revenue Fund; oversee the Government aimed at promoting oversee macroeconomic The Ministry plays a dual role as a custodian of public finances and a steward of the financial service sector.

assets and liabilities; policies stability and sustainable fiscal and financial the implementation socio-economic development.
of 3.

In performing its mandate, the Ministry aims to achieve various Strategic Objectives that are clearly aligned to Vision 2030, NDP5 and the HPP.

These objectives are to: (a) Ensure effective regulatory framework and compliance; (b) Promote Macroeconomic stability (c) Maximize Revenue Resources (d) Monitor effective implementation of Public Private Partnership and Public Procurement Act (e) Oversee the management of State Assets and Liabilities; (f) Enhance Organizational Performance.
Honourable Chairperson of the Whole House Committee, 4.

I, would, like to take a few moments to reflect on some of the achievements attained in the previous financial year 2018119.

5.

On policy formulation, 5.1 The Appropriation Amendment Bill budget documents were finalised and tabled before this August House.

The Ministry further produced the Citizen Guide to the Budget.
This as a simplified version of the National interpreted in 7 local languages and it is aimed at educating the citizen, creating Budget, awareness and appreciation of the government budget by an ordinary person.

for 2018119 2019120 and corresponding 2 Motivationfor Vote 09: Ministry of Finance for 2019120 FY 5.2 The regulations the appointment of the Technical Committee in November 2018 that would appraise the PPP projects.
the PPP Act were gazetted, to operationalise facilitating for 5.3 SME Financing Strategy comprising of the Credit Guarantee Scheme, Venture Capital as well as Couching and Mentorship Programme was approved by Cabinet.

These SME Financing Strategy are ready for implementation under the Development Bank of Namibia.
5.4 Policy oversight was exercised with respect structures and In guidance were provided to bring about order to give driving force to public procurement, a Procurement Directive was issued consistent with the outcome ofthe 2nd Land Conference Resolution on local sourcing.

Work has also started on the outstanding bidding documents and some other regulations.

improvements on the procurement processes.

to the public procurement 6.


On the administrative side, the Ministry has progressed in implementing operational and institutional reforms, namely: 6.1 The Integrated Tax Administration System (ITAS) was launched in January 2019.

The system has a portal service that offers 24 hours on-line service to users (taxpayer and or their representative) and has the capability of reducing turnaround time for assessment of this tax returns.

The number of online users since the launch stands at 36 312.
However number does not that are represented by their accountants or bookkeepers as online users.

With continuous sensitization and education campaign for the it is anticipated that the number of users will increase during 2019/20 Financial system, Year.

include those taxpayers 6.2The NAMRA Board was appointed during December it was previously announced, the D-Day for NAMRA is set for the opt October 2019.
The recruitment contractor has since been procured to assist with the recruitment of NAMRA personnel.

The in consultation with stakeho lders.

are now being arrangements implemented transitional 2018.

As 6.3PSEMAS claims were subjected to a microscope exercise, resulting in some health care service providers, members and the administrator being thoroughly scrutinised.
The total to date amount recovered from Healthcare Service Providers and paid into State Account stands at N$13 062 734.08 and N$654 425 by pensioners who did not honour their obligations on time.

6.4In addition, Forensic Investigations for Healthcare Service Providers have resulted into 2 cases handed over to NAMPOL for criminal proceedings, 1 case heard by Arbitrator and 1 case currently been investigated by ACe.

The PSEMAS screening exercise is ongoing and results will be announced once completed.
3 Motivation/or Vote 09: Ministry of Finance for 2019120 FY 6.5The Customs Asycuda System and Integrated Financial Management System as well as the Scanning Equipment at the borders continue to perform well and routine maintenance is provided.

6.60versight was provided on the performance of the public entities under the jurisdiction of the Ministry of Finance and all have complied with the governance requirements.

Namibre, DBN and Bank of Namibia declared dividends during the period under review.

7.
7.

On enhancing organizational culture, Management System to all levels of the organizational reviews are conducted quarterly and annually.

the Ministry has cascaded the Performance structures, as such performance We also have many officials who graduated from the local Institutions of Higher Learning.
liyambo, a holder of MBA (Finance) Cum Laude, One of our Employees, Ms Hambeleleni received four awards at the recent UNAM Graduation, including both the Chancellor and the Vice Chancellor awards for best postgraduate student.

8.

I would also like to report that two staff Members of the Ministry have assumed leadership roles of the Regional Institutions as follows: • A Member of the Steering Committee of the IMF AFRITAC South, representing Namibia, Mr. Festus Nghifenwa .
• A Chairperson of the SADC Macroeconomic Subcommittee, Mr. James Seibeb.

INTRODUCTION 2019/2020 FINANCIAL YEAR OF PROGRAMMES AND RELATED BUDGET FOR THE Honourable Chairperson of the Whole House Committee, Honourable Members 9.

I now tum to the proposed budget allocation for Vote 09 and, in this regard, Hon.

to clarify the composition of Vote 9: Finance Chairperson, expenditure proposals.
allow me from the onset It comprises of : (a) expenditure to be appropriated as part of the 2019/20 Appropriation Bill and (b) expenditure that is deemed to have been appropriated as per section 10 (1) (b) (iii) read together with section 10 (2) of the State Finance Act,1991.

The section makes reference to other charges to the State Revenue Fund under the same It thus suffices to say that the amounts that I am about to introduce for deemed provision.
various programs of the Ministry, exclude or commonly known as interest payments totalling N$6.40 billion for 2019/20, N$6.71 billion for 2020/21 billion and N$7.02 billion for 2021122. for debt estimates servicing 4 Motivation for Vote 09: Ministry of Finance for 2019120 FY 1O.Hon Chairperson, The Ministry of Finance is requesting a total allocation ofN$4.40 billion for the 2019/20 financial year, N$4.39 billion and N$4.39 billion for 2020/21 and 2021122 financial years, respectively.

11.
11.

The greater part of the Vote's proposed Ceilings for the next three financial years are earmarked for cross cutting programs that are administered by the Ministry of Finance on the behalf of the whole Government.

This includes PSEMAS, Political Party funding and the Government's contribution to the pension fund for the Members of Parliament and Political Office Bearers.
the Contingency Provision, 12.Honourable Chairperson, the Public Service Medical Aid Scheme is allocated N$2.44 billion in 2019/20, N$2.37 billion in 2020/21 and N$2.58 billion in 2021122, respectively.

It is trusted that with On average, PSEMAS reforms, the allocation to this voluntary scheme would take a downward trend.

that allocation represents 55% of the Vote's ceiling.

13.Contingency provision is meant for emergencies that are unforeseen and cannot wait to be the materialization financial years.
It is difficult budgeted for in the subsequent of an emergency and, for this reason, a minimal amount of 5% of the Vote's Ceiling is being proposed to be allocated to this program as follows: N$204 million, N$205 million and N$296 million in 2019/20,2020/21 and 2021122, respectively.

The proposed allocation for 2019/20 is equivalent to 0.2 percent of the estimated total revenue for the Financial Year.
to predict 14.Allocation to Political Party funding is set at N$116 million for 2019/20 and N$119 million for 2020/21 and N$123 million for 2021122 financial years.

The specific allocation to political parties will be informed by the results of the 2019 national elections.

15.

Honourable members will recall that in 2015, this August House passed the proclamation is expected to contribute to the pension fund of Members of and as such the government and Political Office Bearers.
The Actuaries determined the government's Parliament liability to the amount of N$805 million.

To date an amount of N$205 million has been paid.

Leaving a balance ofN$ 350 million to be paid in the financial year 2019/2020 and N$250 million in 2020/21 financial year.

16.An amount of N$ 151.4Million is allocated to some of the Public Enterprises under the supervision of the Ministry of Finance of which N$50.9 million is for DBN for the SME database.
The DBN Financing Strategy and the establishment allocations are N$50.9 million and N$63.4 million respectively for 2020/21 and 2021122.

Agribank is allocated N$73.4 million for 2019/20 with N$68.4 million and N$98.4 million.

For 2020/21 aimed at strengthening Agribank balance sheet and to expedite the implementation of the 2nd Land Conference, to a feasible extent.

An amount ofN$26.9 million is allocated to the Financial Intelligence Centre of the manufacturing This proposed and 2021122, respectively.
allocations are 5 Motivation for Vote 09: Ministry of Finance for 2019/20 FY 17.With regards to the Other Statutory bodies' allocation, N$3 million for each of the three financial years is allocated to the Public Procurement Review Panel and N$25 million each for the first two years and N$15 million for the 2021/22 financial year to the Central Procurement Board.

18.The Namibia Revenue Authority is allocated N$141 million for 2019/20, with N$41 1.6 the 2020/21 and 2021122 respectively.
As top-up million and N$303.2 million for allocations for the operations of the Agency.

19.The Ministry hosts the Financial Literacy Programme is co-sponsored by various through the Ministry of Finance allocated an annual amount ofN$2 that agencies.

Government million annually up to 2021122.


20.1 will now introduce to the House brief details of the other six programmes of the Ministry and activities for which funds are required: Programme 1: Economic Policy Advice Honourable Chairperson of the Whole House Committee, Honourable Members; 21.
Under this programme, the Ministry formulates macroeconomic policy and fiscal policy framework for the budget, coordinates the formulation of the financial sector policies and coordination further targets under NDP5 and HPP.

The following are the coordinates specific planned activities for the next year: and International The programme collaboration.
the financial of Regional sector for 2020/2021 by monitoring the implementation 21.1 Undertaking annual Industrial Economic Survey, producing Mid- Year Budget Policy fiscal Statement into the Financial Year 2019/2020 and, policy stance during the first 6 months producing the Medium-Term Policy Statement lay down the roadmap for fiscal policy stance over the period of three financial years ahead, as well as an updated Fiscal Strategy for the next MTEF.
of government's that will 21.2 Citizen Education on Budget and Financial Wellness: The Ministry will continue to educate the Namibian citizens on the content of the National Budget and its Socio- Economic impact.

and further equipping them with knowledge and behavioural change towards financial services and products.

The main aim of the programme is to advance knowledge and stimulate the culture of entrepreneurship as articulated in the Namibia Financial Sector Strategy.
21.3 Produce terminal NDP5 and HPP progress reports for Financial Intermediation Sector under the coordination of the Ministry of Finance.

For this Programme, million for 2020/21 and N$9.7 Million for 2021122 financial years.

the Ministry is requesting an amount ofN$9.1 million for 2019/20; N$9.4 6 Motivation for Vote 09: Ministry of Finance for 2019120 FY Programme 2: Revenue Management Honourable Chairperson of the Whole House Committee, Honourable Members; 22.
Under this programme, collection through domestic resource mobilisation.

The programme comprises of inland taxes, customs and excise.
the Ministry aims to maximise revenue 22.1 The Ministry will also undertake the following activities aimed at promoting the efficiency of the tax administration: Work on the proposed tax amendments and levies; enhancing compliance with and enforcement oftax laws; conduct life style audits; public tax education campaigns and awareness and promotion of voluntary tax compliance.
22.2 With the launch of the Integrated Tax Administration System (ITAS), continue to champion for increased registration and leverage the technological of all the system to streamline business processes taxpayers' services and the ease of paying tax.
the Ministry will innovations thereby improving the provision of 22.3 Review and Develop Customs Legal Frameworks: Amendment of Environmental Levy under Schedule No.1 of the Customs & Excise Act, 1998 to include more goods that are to the environment; Amendment of the Customs & Excise Act No.
20 of 1998 to harmful align it with regional and facilitation of trade; Increment of Fuel Levy rates, and Amendment of Export Levy Act No.2 of2016 aimed at encouraging domestic value addition and optimization of revenue collection.

legal framework and to enable smooth Customs operations 22.4 Upgrading the Customs ASYCUDA system to the latest version to enhance system capability and to interface with other pertinent systems and the National Single Window.

the Ministry requests N$590.1 million in 2019/20.


For For the execution of this programme, the other MTEF years, the indicative amounts are N$506.6 million for 2020/21 and N$522.9 million for 2021122.

Programme 3: Government Expenditure Management Honourable Chairperson of the Whole House Committee, Honourable Members; 23.Under this programme, the control over the budget execution and the accounting for the State expenditure and management of the State Account.
the Ministry undertakes the formulation of the budget, 23.1 The programme intends to work on the following major reform activities, namely; the new to provide for the requirements of GSF2014, draft Public Finance Chart of Accounts Management bill, review of non-tax revenue in collaboration with line O/MI As with aim 7 Motivation for Vote 09: Ministry of Finance for 2019120 FY to increase its share of contribution to total State Revenue as well as finalise business processes to implement an enhanced and more up to date technology platform for the Integrated financial Management Information System (IFMS).
23.2 Finalise the guidelines for the allocation and transfers to Public Enterprises and Statutory Bodies.

23.3 The PPP Unit will continue to work collaboratively with O/MiAs on developing a number of PPP initiatives.

A number of relevant and innovative projects are under consideration.

in the renewable electricity generation, health and housing sectors.

These are for instance, The detailed project concept and execution approach for affordable housing unit has been approved by Cabinet.
23.4 Further, the PPP Unit together with the Ministry of Health and Social Services have engaged the International Finance Corporation to assist with the option analysis studies on the Paediatric Intensive Care the build-operate at and the operation of three dialysis Unit at Windhoek Central Hospital Windhoek State Hospital, Oshakati State Hospital and Rundu State Hospital.

and transfer of the two projects, namely: facilities 23.5 The study was completed in November 2018.
To move forward, project preparation works for selection of Consulting Services for the provision of transaction advisory services for these PPP projects is to follow.

The Ministry is requesting an amount of N$566.2 million for 2019/20 For 2020/21 and 2021122 Financial Years, the proposed allocations are N$561.8 million and N$701.0 million respectively.
Programme4: Government Procurement Management Honourable Chairperson of the Whole House Committee, Honourable Members; 24.Public procurement is at the centre stage of improving and promoting growth across all local sourcing and in infrastructure development, fields of the economy and is pivotal empowerment of local companies.
25.Amongst the functions of the Policy Unit in the Ministry of Finance is the development of investigations guidelines, implementation tool and website development is currently working on possible amendments of the tools required to conduct performance and impact assessment, capacity building strategy, e-procurement will be prioritized.

The Policy Unit Act and regulations, hence will require consultations with all relevant stakeholders.
25.1 During the financial year 2019120 the Policy Unit further intends to conduct country wide in the further attempts to build capacity amongst public officials and the Policy Unit will and draft reports with recommendations.

As required by Section training/workshops the business community at large.
Where non-compliance conduct investigations is envisaged, 8 Motivation for Vote 09: Ministry of Finance for 2019120 FY 7(1) (e) of the Public Procurement Act, an annual report will be prepared and tabled in the National Assembly.

25.2 Further, the Standard Bidding Documents/guidelines revision and finally the E-procurement pre-implementation this financial year.
and operational manuals are due for phase will commence during 25.3 The following activities will be carried out under this programme: Investigations of reports; Internal Structures operationalized; • • Development of the Procurement Performance Assessment System • • Annual Procurement Plan report will be tabled in National Assembly; • Capacity Building Strategy will be implemented; • Public Procurement Act, 2015 will be amended and Regulations will be developed.
the Ministry is requesting an amount ofN$30.3 For the implementation ofthe programme, million for the Financial year 2019/20; N$10.6 million for the 2020/21 financial year and N$10.8 million for the 2021122 financial year.

Programme 5: Civil Servant Managed Health Care (PSEMAS) 26.0ne of the overall government cross cutting programme coordinated by the Ministry is the administration of the Public Service Medical Aid Scheme (PSEMAS).

This is a voluntary inclusive of dependents.


scheme with membership currently standing at 296 637 members' 26.1 The specific roles of the Ministry of Finance are to ensure the effective coordination and management of PSEMAS through the registration of members and the coordinating of member's services and administration of the benefits.

26.2 During this financial year the Ministry has started with a PSEMAS reform project and administration of PSEMAS.

system.
system.

The aim of the Biometric to The Ministry will system is to effective management enhance implement a Biometric drastically curb and minimize fraud.

identification 26.3 During this process, PSEMAS members and dependants will be re-registered physically identification and issued with a biometric smart card that are imbedded with member features.
This is to ensure that beneficiaries are positively identified; proof of presence is assured and medical expenditure is authorized in accordance with scheme rules and benefits.

The introduction of the biometric system is expected to strengthen control for this expenditure item.

26.4 In addition to the introduction of the smartcard, contract and strengthening the Ministry also envisages to review the audit capacity of the current piloted service provider PSEMAS.
9 Motivation/or Vote 09: Ministry of Finance for 2019120FY For this programme, N$2.37 billion for 2020/21 financial year and N$2.58 billion for 2021122 financial year.

the Ministry is requesting N$2.44 billion for 2019/20 financial year; Programme 6: Policy Coordination and Support Services 27.

This programme involves policy supervision, general administration, the risk and security the internal audit function, and IT Management.
This programme management includes the responsibility to ensure that the activities of the Ministry are executed in accordance with relevant policy targets of Government.

function, 28.

This activity entails policy oversight of the financial sector, formulation of policies and administration and coordination of the Ministry's activities at other levels of Government and with the private sector.

regular policy guidance further provides of applicable laws.
It 28.1 The Ministry will safeguard the continuous functioning of the IT systems by enhancing Network capacity and ensure the complete interface with IFMS, ASYCUDA and relevant systems.

Further the Ministry will consistently update ITAS Web portal as well as Maintain and support ITAS Information System" 28.2 The Ministerial and Functional Customer Service Charters will be reviewed and published during this financial year.
This programme is responsible for ensuring that the Performance Management System reform is being implemented.

In order for the Ministry to effectively manage and supervise the attainment of its strategic plans and corresponding annual plans, the Ministry is requesting an amount ofN$771.03 million for the 2019/20 financial year; N$935.85 million for the 2020/21 and N$571.05 million for the 2021/22 financial year.

Honourable Chairperson, Honourable Members, 29.


In conclusion, let me extend my sincere appreciation to the Minister of Finance, Executive team and all the staff of the Ministry who tirelessly worked to make Director, Management the finalization of the National Budget and the budget for Vote 09 a reality.

30.
30.

I now move, Honourable Chairperson of the Whole House Committee and Honourable Members, and request this August House to consider and approve the requested budget for 2019/20 financial year, and estimates of ofN$ 4.40 billion for Vote 09: (Finance) N$4.39 billion and N$4.39 billion for 2020/2021 and 202112022 respectively.

I appeal to you Honourable members for your support for the allocation of Vote 09: Finance.

I thank you!

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