Namibia: Agriculture, Trade 'Neglected'

The government has neglected key ministries and agencies that could help the country's economy recover from the damage done by the coronavirus pandemic.

These were the views of opposition leaders on the national budget for the 2020/21 financial year tabled in the National Assembly yesterday.

While motivating the N$72,8-billion national budget, finance minister Iipumbu Shiimi said the government's priority was on mitigating the impact of the coronavirus on the local economy.

He added that the government wants to stabilise the local economy to be able to withstand expected external shocks.

The agriculture and land reform ministry, which is considered a priority, was only allocated N$1,3 billion for the 2020/21 financial year. The water department in the ministry was allocated another N$929 million.

The trade ministry was only given N$174 million.

This is in contrast to the defence ministry's allocation of N$6,2 billion.

Shiimi said the government has given guarantees to the two state-owned banks - the Development Bank of Namibia (N$500 million) and the Agribank (N$350 million) - as emergency allocations.

These allocations, according to political figures' are not enough and point to a lack of government commitment to solve the socio-economic challenges facing the masses.

The politicians also said the allocation to the agriculture ministry shows the government's lack of commitment to implement the land reform resolutions passed at the 2018 national land conference.

Popular Democratic Movement parliamentarian Vipua Muharukua said the budget does not present an alternative policy initiative to improve the economy. Muharukua said the two ministries neglected by the government have the potential of easing the burden on imports and creating jobs.

"Instead of focusing on growing the economy while trying to contain the virus, now everything has been pushed towards dealing with the epidemic. What have we heard in terms of an alternative policy direction? The government has not given Agribank money," Muharukua said.

He added that the policy direction the government ought to adopt is: "Farmers must be optimally incentivised and allowed to produce".

"This points to a lack of leadership and lack of proper vision. This government has failed and it will continue to fail the country because they failed to deal with the challenges facing this economy, that is to make our country self-sufficient.

Landless Peoples Movement leader Bernadus Swartbooi also criticised the government for not budgeting to create an enabling environment for job creation. He said the trade and industrialisation ministry has not been given sufficient funds to implement policies that would stem job losses in various sectors due to the coronavirus.

"There is no emphasis on creating jobs to even out the losses that we have experienced in various sectors like the tourism and retail sectors. After paying salaries, what is the minister expected to do with about N$100 million, but also what can young people expect in terms of setting up new industries, moving the country to a greater manufacturing capacity?" Swartbooi said.

According to Swartbooi, the government could have focused on agriculture to produce more food and reduce imports, thereby creating jobs.

Shiimi later in an interview with The Namibian said the money allocated to agriculture and land reform was sufficient to support the land reform programmes and the implementation of the 2018 land conference resolutions.

Most of the resolutions from the land conference do not require huge amounts of money to implement, he said.

Analysts say the country will have to borrow large sums of money to be able to foot the expanded budget.

They described the budget as "big", "difficult to navigate" and as the most depressing since independence.

PSG Namibia's head of research, Eloise du Plessis, said the country would have to borrow much more to pay for what has been budgeted, with a debt to gross domestic product (GDP) ratio of 68,7%, where the cost of servicing debt will be 16,4 cents for every N$1 spent by the state.

"This is with the expected -6,6% economic growth; PSG's forecast is -7,8%. The defence ministry budget has not been cut, still 9,7% of the budget is allocated," she said.

Noting that Shiimi talked about policy certainty and investor confidence and improved administrative efficiency, she said: "I hope to see action."

Du Plessis added that the positives include that mines can still deduct royalties, which is a step in the right direction to gain foreign investment.

She said, however, there is still no clarity on the dividend tax for residents, tax on trusts, introduction of value-added tax (VAT) on income from listed asset managers, sugar and a mandatory requirement to issue tax invoices by 'VAT entrepreneurs'.

Corroborating Du Plessis' sentiments, Old Mutual's portfolio manager Tumelo Thudinyane said the budget shows clear evidence of the severe impact of Covid-19 and the disruption to the local economy, as well as the pre-eminent once-off need to address the impact of the pandemic.

The head of research at the High Economic Intelligence, Salomo Hei, commented that a more aggressive response to combat Covid-19 is expected and the modest increase in the development budget is "underwhelming".

He said the economy needed to be reset, as the only real response is encompassed in fiscal policy.

University of Namibia economics lecturer Omu Kakujaha-Matundu described the budget as the most depressing one since independence, with all macroeconomic forecasts looking down due to Covid-19.

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