State-owned enterprises are paying less to the government while taxpayers remain exposed to N$11.8 billion in state-guaranteed debt, as falling mining revenue adds pressure to public finances.
The amount is equivalent to 4% of Namibia's gross domestic product, highlighting the financial risk the government faces if public enterprises struggle to repay their loans.
The pressure is becoming more visible as government revenue falls short of expectations.
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In the 2026/27 financial year mid-year budget review tabled in parliament, finance minister Ericah Shafudah says lower dividends from public enterprises, together with falling mineral royalties, had forced treasury to revise its revenue projections downwards.
"Non-tax revenue has been revised down to N$5 billion from N$6.1 billion, mainly due to lower mineral royalties and public enterprise dividends," Shafudah says.
The revision means the government expects to collect N$1.1 billion less in non-tax revenue than initially budgeted, adding to the pressure on public finances.
LESS MONEY COMING IN
Public enterprises are expected to contribute to state revenue through dividends and other payments when they make profits.
That money can help the government fund public services and reduce the pressure to raise taxes or borrow more.
But with dividends declining, the state has less money coming in at a time when its mining revenue is also under pressure.
Shafudah says mining remained the main source of weakness, with mining company taxes and royalties expected to fall to N$5.2 billion from N$6.1 billion.
Diamond revenue has been hit particularly hard.
"Diamond taxes and royalties have fallen from N$5.8 billion in 2023/24 to a projected N$414 million in 2026/27, an estimated shortfall of N$5.3 billion over the medium-term expenditure framework," she says.
The government has, therefore, reduced its total revenue forecast to N$88.1 billion.
The combination of lower mining income and weaker returns from public enterprises leaves the Treasury with less room to meet its spending commitments without relying more heavily on other taxes or borrowing.
UNPAID TAXES ADD TO PRESSURE
The risks extend beyond borrowing.
Budget figures show that the government previously had to absorb N$1.358 billion in legacy tax liabilities owed by public enterprises.
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When an enterprise fails to pay taxes such as value-added tax or pay-as-you-earn, the government loses revenue it was supposed to collect.
If the same enterprise also struggles to repay state-backed loans, the financial burden on the public purse can grow further.
The Ministry of Finance has warned that the financial position of public enterprises and the possibility of defaults remain important risks to the national budget.
"Sovereign debt dynamics and balance sheet exposures continue to require rigorous management due to elevated borrowing costs, public debt levels, and looming rollover risks," the ministry says in its fiscal risk statement.
The Treasury says it intends to strengthen the checks carried out before government guarantees are granted and to monitor whether beneficiaries can afford to repay their debts.
"The government will strengthen credit-risk assessment and closely monitor beneficiaries' solvency, cash flow adequacy and debt-servicing capacity to contain fiscal exposure and mitigate the risk of contingent liabilities crystallising into direct sovereign obligations," the ministry says.
Parliament is also considering the public enterprises governance amendment bill, which is intended to improve oversight, financial reporting and accountability among public enterprises.
Shafudah says the proposed legislation was expected to improve the way these entities are managed.
