Economists anticipate that education might dominate the national budget

Martin Endjala

Economists are anticipating that education will dominate the national budget that is set to be tabled in the National Assembly next week

Some of the economists during a pre-budget public discussion in Windhoek this week said they are, however, doubtful of the continuous budgetary allocation to education because of its lacklustre performance.

The event was organised by Capricorn Group in collaboration with its partners Economic Association of Namibia, and High Economic Intelligence among others, under the theme the National Budget in an Election Year: Fiscal Expansion and Strategic Priorities.

The discussion centred around the implications of the expected fiscal expansion in the annual national budget on the economy while examining the alignment of such spending and related fiscal reforms with the nation’s development priorities.

Managing Director of the High Economic Intelligence Salomo Hei, said he expects an increase in spending, especially in the areas of education and healthcare.

He said that from 1990 to 2023, the national budget has been hugely dominated by the education sector at a steady 18 percent followed by the health sector. 

He, therefore, foresees similar trends in the slated budget with very little change in terms of the budget revenue estimated to be at N$70 billion.

“We see a lot of money in education but do not see the impact. Where is the money going? We want a return on investment, and currently, that is not what we see,” he said.

In terms of the global and regional overview, of what has been dubbed the year of elections. He said 2024 is a massive year on the election front, with over 60 countries, including the United States and Russia, going to the polls.

He said the changes in this governance will have a huge impact on the global landscape in terms of economic trends.

Chief Economist at Capricorn Asset Management Floris Bergh, stated that for the past decades, the education sector has been underperforming yet it continues to be allocated most of the budget revenue.

He said the education system needs to be reformed to start yielding results because, in its current state, it is a recipe for disaster.

Berg also touched on the civil servant wage bill, suggesting that the government needs to consider capping the public sector wage bill, which currently stands at an astronomical N$33 billion and use part of the savings to invest in social welfare spending, with the ultimate view to creating micro-economies.

“I would say let us cap the wage bill and reduce it over time. Use the savings from the wage bill to add to the social grants and welfare spending. Spread the spending power among the people.

You need to get the money to people where they are, “he said.

Tax expert Cameron Kotze praised the Namibia Revenue Agency (NamRA) Integrated Tax Administration System (ITAS) but believes the agency can do more, especially when it comes to the timely processing of VAT refunds.

He said Namibia is trying to compete in a region with the highest corporate tax rate, arguing that tax tables for individuals have not been amended for a number of years now, and there is a lot of money caught up in the tax system.

“I don’t think NamRA is as efficient as it potentially could be. I think the ITAS system is very good but has not been used to its full potential.

The delay in processing VAT refunds is a big reason our economy wheels are not turning smoothly. As an exporter, I can get my refund within the two months the law prescribes. Sometimes people wait a year to get their refunds back,” Kotze commented.

Meanwhile, FirstRand Namibia Group Economist Ruusa Nandago, said the government should consider coming up with structural reforms to help boost employment, particularly among the youth.

She highlighted that Namibia has a problem of jobless growth, and one, two or three budgets cannot fix that.

“I don’t think budget pronouncements would solve the unemployment issue. In previous budget speeches, the ministers always spoke of unemployment as an issue,” she said.

The Youth Credit Scheme, the Youth Employment Tax Incentive and National Internship, as well as the Green Hydrogen Scholarship initiatives, have been rolled out.

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