Streamline government, says Klaus Schade

Streamline government, says Klaus Schade Ahead of the tabling of the national budget on Wednesday, the director of the Economic Association of Namibia, Klaus Schade, has suggested that government streamline the activities of four of its ministries into one.

Asked about his expectations of the budget, he said: “We could think outside the box in order to address the current fiscal situation: streamline government structures and merge ministries.

“For instance, social grants and social welfare services are shared between four ministries. They could be consolidated within one ministry.

“Government could move towards a cost-recovery medical aid scheme that is based on a percentage contribution by each public servant rather than a fixed-amount contribution. A percentage contribution to PSEMAS would benefit the lower-income groups since it would include a redistributive element.

“Review and reduce the large range of allowances and rather pay decent salaries.”

In light of the consolidation path finance minister Calle Schlettwein is continuing on, Schade said: “I expect a continuation of fiscal consolidation with cuts to non-priority expenditure. Despite the fiscal consolidation, government is expected to increase the old-age grant by another N$100 per month and could consider increasing the foster-care grant, vulnerable children grant, etc, as well. More funds might be allocated to address infrastructure bottlenecks such as water supply.

“We might see a recovery of Southern African Customs Union transfers that would boost the revenue side. Government will certainly continue with efforts to collect outstanding taxes.

“Except for the usual increases in excise duties (duties on tobacco, tobacco products and alcohol) in line with SACU decisions, I do not expect increases or reductions in tax rates.”

SACU executive secretary Pauline Elago said during a recent call on President Hage Geingob at State House that Namibia's share of the customs union's receipts would be more satisfactory than the previous year.

Namibia's share of the SACU pool was reduced by almost N$3 billion in the 2016/17 financial year - markedly less than it had received before.

The latest National Accounts show that Namibia received just over N$17 billion in SACU transfers in 2015. Namibia receives as much as one-third of its revenue from the SACU pool.

On general developments in the economy, Schade believes the tourism sector will perform well while the agriculture sector is showing recovery.

His outlook for the construction sector is not rosy, though.

“The agricultural sector, both livestock and crop farming, is expected to perform better than the past two years because of improved rainfall. The mining sector is expected to increase production, in particular zinc and diamond mining. Despite a recovery in uranium prices, it is not clear whether the Husab mine will substantially raise production or produce on a small scale waiting for further improvements in the uranium price. The tourism sector is expected to continue its strong performance, in part because of new airlines including Windhoek in their schedule,” Schade said.

“Because of the completion of major construction projects namely B2Gold, Swakop Uranium and Weatherly's Tschudi copper mines, as well as Dundee Precious Metal's sulphuric acid plant in Tsumeb and government's freeze on capital projects, the construction sector will contract.

“Given retrenchments in the construction sector, combined with a high debt burden of private households and a high inflation rate as well as a drop in demand from Angolan customers, it is expected that the wholesale and retail trade sector will feel the pinch,” he warned.

OGONE TLHAGE