Source document: https://docs-lawep.s3.us-east-2.amazonaws.com/1698935778386.pdf (Namibia)
Republic of Namibia Reply by the Minister of Finance to issues raised during the discussions on the Main Appropriation Bill for the 2011/2012 And The 2011/2012 - 2013/2014 Medium Term Expenditure Framework Presented by Honourable Saara Kuugongelwa-Amadhila Minister of Finance 12 April 2011 1.

Opening Remarks 2.

Honourable Speaker of the National Assembly, 3.

Honourable Members of the House, 4.


It is an honour for me to make a few answering remarks in response 2011/2012 Appropriation Bill and the 201112012-2013/2014 Medium Term Expenditure Framework.

comments made the on to 5.

The budget has drawn extensive comments from across the wide spectrum of society.

I am grateful to all Honourable Members who have contributed to the debate.

6.

Let me start by responding to questions about fiscal sustainability.
Over the past years, we have created the fiscal space that enabled us to follow an expansionary approach in order to strengthen our responses to the developmental challenges that continue to face our nation.

However, we have to remain fiscally sustainable at all times.

As a result, our debt to GDP ratio will stand at only despite the 28.3 percent significant expansion of the budget, well within the target of 30 percent.
Over the MTEF period, debt will average at 32.2 percent of GDP, well within the internationally accepted debt sustainability target and below the SADe target of 60 percent.

Our approach is therefore sustainable for now.

end of 201112012 the at 7.

I am saying for now because in the long term, it would be difficult to continue with an approach when expenditure far exceeds revenue.
To avoid a debt crisis, similar to that experienced elsewhere in the world, we must maintain our ability to satisfy expenditure demands for development and for debt servicing.

We have managed well so far and we shall continue on that path.

1 8.

A question was raised as to why our borrowing during the MTEF is biased towards domestic debt: this is a deliberate policy aimed at developing the domestic financial market and ensuring minimum exposure to foreign currency exchange risks.

- 9.
- 9.

I wish to inform that we have developed a borrowing plan which includes new types of borrowing instruments such as retail bonds and inflation linked bonds.

10.

Honourable Speaker; Honourable Members, 11.

Some Economists and some opposition Members have cast doubt on whether the TIPEEG approach will indeed deliver the desired outcomes, which are to create and maintain a significant number of jobs, grow the economy and improve standards of living.

My response is that it will and here is why.

12.


We have adopted an approach where a few targeted sectors with significant growth potential a significant boost.

These few, namely agriculture, tourism, transport and housing and sanitation were carefully selected because of the potential they have to create jobs, grow the economy and improve living standards.

receive 13.

Let me share specific consideration that made us select these sectors: 14.
Agriculture is the most important sector in respect of employment.

65% of the workforce is directly and indirectly linked to agriculture.

It is also the sector where import substitution is most likely to be achieved, and we must address food security as a matter of urgency.

Further, in agriculture there is significant potential for both upstream and downstream development.

2 15.

These are some reasons why agriculture was selected.
Let me now tum to how our intervention will unfold and let me start with the investment aimed at increasing production, is boosting the upstream potential.

that 16.
Our interventions are focused on: • Provision of water supply infrastructures such as dams and pipe lines, • Development of agriculture infrastructure such as irrigation systems; • Provision of subsidies for fertilisers and ploughing services; • Provision of improved seeds and breeding stocks, and other related farming inputs; Improved animal health; • • Provision of subsidised land acquisition and production loans; and • Generous tax incentives, deduction for both capital and operational expenses.
including allowable tax farming 17. facilities improves the potential Increased agricultural production and appropriate storage agro- processing.

A pre-requisite for creating value chains based on agricultural produce is a reliable supply of raw material of high quality and sufficient quantity.

Proper storage facilities, be it cold storage for perishables or silos for grains satisfy this demand and the serious supply constrain can be overcome.

of 18.
of 18.

It is our expectation that the private sector will take advantage of this opportunity and embark on further processing of agricultural products.

3 19.

Vegetable and meat canning, milling and production of cereal based finished goods becomes viable.

Equally, import substitution of fresh agricultural products is to be enhanced.

20.
20.

I am convinced that Government's intervention in this sector, therefore, crowds in private investment by significantly enhancing opportunities for both upstream and downstream agricultural and agro-industrial activities.

21.

Our intervention in the tourism sector is targeted at tourist attractiveness enhancing destination and to increase tourist numbers.

countries the as 22.


Simultaneously our intervention in tourism is targeted at amongst others linking conservation to poverty reduction through communal conservancy programmes.

Through this, communities are enabled to benefit directly from environmental resources and tourism activities in their areas and therefore providing communities with incentives respective to manage and conserve their ecosystems and wildlife.
This has not only resulted in recoveries of wildlife populations outside national parks but it also created wealth and jobs for many households.

23.

Government efforts on community based tourism are further complemented by the Millennium Challenge Account conservancy management.

community towards support 24.

Honourable Speaker; Honourable Members, the tourism sector investment will also cover the development of infrastructures in the parks.
This will enhance the image of our parks and thereby attract tourists.

Investment in this regard will be directed at improving access roads to tourist ecological attraction sustainability in our parks.

sites, while ensuring 4 25. support Furthermore, is provided towards the upgrading of existing and construction of new tourism accommodation facilities owned by NWR.

The Namibia Tourism Board (NIB) to intensify marketing of Namibia as a tourist destination.
During this MTEF, NWR funded projects are estimated to create additional 660 jobs.

is provided more funding 26.

There are many in the linkages tourism sector, developments development of private tourism accommodation, operators, catering services, car rental and travel services.

associated with including the tour 27.

Namibia is currently ranked as the third fastest growing destination in Sub-Saharan Africa.
Available statistics indicate that for every 12 tourists who visit Namibia, one permanent job is created.

tourist 28.

In 2009, the direct impact of tourism on GDP amounted to N$3.1 billion or 3.8 percent, while direct and indirect impact amounted to N$II.5 billion or 14 percent.

29.

On employment the travel and tourism economy (direct and indirect) accounted for about 81,000 jobs in 2009, with significant potential to grow this number.

30.
30.

The Transport sector serves as the catalyst for economic development.

Investment in transport sector will address the development and rehabilitation of our strategic encompassing roads, transport railways, seaports and airports.

These in turn will enhance domestic linkages as well as regional economic integration and international competitiveness.

Transport infrastructure networks serve as key enablers of private sector growth.
infrastructure network, 5 31. a Such public investment transport infrastructure will create immediate job opportunities for the short and medium term.

Long term job sustainability will be secured through economic multiplier effects brought about by the improved infrastructural base.

the in 32.
the in 32.

The Investment in this sector will also promote growth in transport and related service industries such as transport its facets; ship repairs; dry ports and accommodation facilities along transport corridors to name but a few.

in all 33.

In addition to the direct budget interventions in hardware, Government is addressing the softer issues like red tape to improve the bureaucratic procedures or country's business climate.
Measures are instituted to promote consumer protection; competition and trade facilitations, market access and others.

34.

Housing and Sanitation - the focus of the budget is to ensure availability of serviced land, low cost houses for low income earners as well as urban and rural sanitation infrastructure.

35.

Through this programme, 875 house will be built in 201112012; 750 house in 2012/2013 and 900 house in 2013/2014.

36.
36.

The implementation of this program is expected to generate about 33,063 new direct and indirect jobs over the medium term.

37.

Further, the recapitalisation of NHE will contribute to the housing construction targets as set out in Vision 2030 and the NDP3.

Again this is a public works programme through which immediate jobs are created, but 6 through which the standard of living of the poor section of our society is improved at the same time.
38. debt Household is addressed through monetary policy intervention.

Bank: of Namibia has consistently reduced the repo interest rate over the past few years which now stand at 6.0 percent.

This translates in lower borrowing costs for households.

Furthermore, the credit Institutions and that bill Market Bill extend protection to household and individuals against abusive practices by businesses when they acquire credit.
is included in the Financial (FIMBILL) will 39.· elaborate of Education will The largest additional amount is earmarked for in the Education sector.

The Honourable investments Minister his introduction of Vote 10.

For now, it is however important to say that these additional funds are aimed at improving the outcomes of the Educational system in general and enhance Tertiary and Vocational more Education.

With this approach, we anticipate to close the existing in developing a knowledge-based economy.
skills gap and achieve our objectives specifically, during 40.

Concerning the call for increase in Social Safety Nets the Right Honourable Prime Minister has provided detailed information on our generous social safety nets.

41.

Namibia is among only three Sub-Saharan African countries which provide for social grants to their senior for Orphans and citizens.

We Vulnerable Children (OVCs) and the people with disabilities.
We have now added our Veterans of the Liberation Struggle to the recipients of social grants.

also provide grants 42.

In addition to social grants, the Government medical aid enables more Namibians to access medical services.

7 Apart from sustaining this, it supports the health industries and enables Doctors to settle in remote areas, thereby taking health services closer to the rural communities.
43. billion, At N$3.4 expenditures on welfare programmes are quite high and that leaves little flexibility for significant increases.

In spite of this, Government has adjusted the various welfare grants regularly to safeguard against the erosion of their value as a result of inflation.

In this MTEF, therefore, we have focussed on expanding the coverage to reach all qualifying beneficiaries.

44.
44.

As ability to utilise to the Government's the the implementation proposed development expenditure, rate for Government spending has increase over recent years, and in the 2009/10 financial year, the execution rate stood at 98 percent of total budget.

This shows that the Government's and programmes is improving in line with increasing funds.

remains Further, as indicated previously, Government seized with the issue of addressing the remaining bottle- necks in the implementation of capital projects.
administer projects ability to 45.

Honourable Speaker, Honourable Members, let me now respond to other issues raised during the general debate.

46. of the House On Revenue Administration, I wish to assure are that we Honourable Members contemplating to implement a range of to strengthen revenue collection and administration.

These reforms include review of tax laws; development of new tax administration systems; improved communication with taxpayers and taxpayer education.
I also announced that we shall introduce some new taxes, the detail of which are being finalised and will be communicated soon.

reforms 8 47.

A question was raised on how many Government guarantees were called.

This information is provided in MTEF books every year.

However, I would like to report that over the three past years, defaults on loans triggering guarantee calls amounted to N$38.4 million, spread as follows.

48.

49.

50.
48.

49.

50.

N$27.0 million, in 2008 N$ll,4 million, in 2009 0 million, in 2010 N$ 51.

As can be seen, calls have been brought down significantly by about 58 percent over the last three years.

the guarantees 52.

A call was made for the channelling of all donor grants through the State Revenue Fund.

It is correct that our laws require for all income to the State to be paid into the State Revenue Fund.
Furthermore, Development through the Paris Partners have committed themselves Declaration to provide untied aid and to make use of countries' systems.

In spite of this, many donors continue systems.

We shall to provide aid outside of the countries' continue to engage all development partners to live up to their commitments under the Paris Declaration.

53.

Concerning revenue projections the correct figure is 14.0 percent growth and not 25 percent as quoted by one Honourable Member.
The details of the revenue the MTEF documents.

for 2012/2013, projections contained are in 54. the Concerning the worry contingency funding, I need to inform the Hon.

Members an international that provisions for that cater standard item in the appropriation are clear criteria for unforeseen circumstances.

There contingency expressed over acts the are 9 allocating contingency funds and since these funds are already appropriated as part of the budget, there is no need to appropriate allocations again.

55.
55.

With regard to the call for the Ministry to hold management of SOEs accountable, I wish to clarify once again that oversight authority over different SOEs is vested in the respective portfolio ministers as provided for in the statutes governing to the establishment and operations of such SOEs.

56.
56.

Further, I have previously indicated that all SOEs management would now be required to account for their performances in terms of performance agreements which will be signed by the respective SOE Boards and their portfolio ministers.

As oversight authorities for the SOEs under their ministries, the respective portfolio ministers have the responsibility to enforce these performance agreements and ensure that their ministries' accountability reports also cover the operations of their respective SOEs.
57.

As protects to whether Government infant this issue is dealt with under the ambit of industries, SACU.

Further, in line with the SACU Treaty we have established the Competition Commission through an Act of Parliament which is aimed to promote a competitive business environment.

58.
58.

With regard to how government sees the role of industrialization in promoting accelerated growth, the government through the Ministry of Trade and Industry is currently working on an Industrial Policy for Namibia for which funding is provided under the MTEF.

Further, efforts have been launched to develop a SACU wide industrial policy.
Under this initiative, all Member States are to develop ambition papers on industrial development 10 in SACU which in the case of Namibia coordinated by the Ministry of Trade and Industry.

is being 59.

On how the budget will support 5MB development and youth employment, the revised tender bill, which as I have informed this House, is now with the legal drafters provides amongst others for tender reservation for SMEs and youth companies.
Further a special funding facility for 5MB contractors has been established at the DBN and this will earmark funding for SMEs and youth contractor companies.

60. the Hon.

Speaker, Hon.

Members of Parliament, argument that there is not enough in the budget for crime prevention is incorrect, given the increased allocation in this MTEF to this sector.

On average, the department of police will receive an annual increase of 52 percent over the MTEF period.
This will increase, in particular, funds allocated to combating of crime and border control.

61.

Concerning funding for disaster management, we have capitalised the National Emergency Disaster Fund to the amount of N$120 million in the last budget and an amount of N$60 million is provided under this MTEF.

In addition, N$100 million is availed through the Road Fund Administration for the rehabilitation of roads damaged by the floods.
The Emergency Management Bill currently under formulation will further strengthen government's response to emergencies and disasters.

At this juncture, I wish to express our appreciation for the generous support so far received from local and international partners towards emergency relief to people affected by floods.

62.
62.

On the request to engage the opposition MP's on the Appropriation Bill prior to its tabling, I wish to emphasise the point that I made several times before that through the informed in advance of MTEF, the public is well 11 Government's expenditure plans.

I once again urge those who wish to make input into the budget formulation to use the MT£F to engage the OJMJA's on their specific can be that programmes considered with time.

their proposals in order 63.


A lot of time and efforts are required to develop the programmes under the budget.

They cannot therefore be redesigned on the floor of Parliament.

Besides, MTEF programmes extensive consultative process between O/MlA'S and Communities of which the individual MP's are members.

They are also based on NDP's, which were formulated through equally consultative processes.

formulated through are an 64.


Speaker, a recent Honourable survey by The International Budget Partnership, an independent rating agent, ranked Namibia the second highest in the SADC region, behind South Africa, in terms the transparency of the budget process.
65. this budget On the commitment of to youth this comes through very clearly in the empowerment, increased allocations to programmes aimed at providing skills to the youth including the bursary scheme which will assist the youth to access tertiary education.

Further, I have indicated that once the new tender bill is passed, tenders will be set aside for youth enterprises and funding will be earmarked to youth enterprises under the DBN's bridging facility.
The Youth Ministry and the Youth Council will have the obligation to verify youth ownership in the companies that will come forward to benefit from the tenders earmarked for youth contractors.

Tender allocation will, however, have to be subject to the transparency as required by procurement laws.
Successful youth enterprise development will however only be realised if, in addition to public tenders and funding, the youth will be provided 12 with all-round support including skills and management training and linkages of youth enterprises to the rest of the economy.

63.
63.

So while we are committed to support the programmes under the vote of the Ministry of Youth, youth empowerment must be mainstreamed into the programmes sector programmes, only then will we be successful in our efforts to empower the youth.

That notwithstanding in terms of this budget the vote of the Ministry of Youth has grown significantly under this MTEF.

all OIM!

As private and of 64.


Honourable table an amendment Speaker; Honourable Members, in conclusion I wish to inform this House that during the Committee stage I will to the Appropriation Bill to cater for remuneration adjustment for is negotiating with worker public servants.

Government adjustment representatives for workers remuneration the during the this year.
To allow for implementation of the outcome of such negotiations, Cabinet has decided that an amount of N$844 million is to be provided for in this budget.

course of 65.

With these few words, I appeal for your support of the 2011/2012 Appropriation Bill.

I thank you!

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