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Business / Economics

Budget 2024-25 expectations: empowering youth, essential services, agriculture and tax reform

todayFebruary 6, 2024 5

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By Josef Kefas Sheehama

 

The Minister of Finance Hon. Iipumbu Shiimi is set to table the 2024-25 budget in February 2024. The upcoming budget is seen not just as an annual financial statement but a critical opportunity for the government to lay out a roadmap for sustained growth and equality.

The Budget 2024-25 should focus on protecting and driving the recovery of lives and livelihoods of Namibians, rebuilding resilience of the economy and catalyzing socio-economic reforms. With this in mind, we expect a change in policy direction focusing more on youth empowerment, essential services, and agriculture and tax reform to address unemployment. Furthermore, the human capital development programme, that covers key sectors of education, health and green hydrogen technologies are projected to take the largest share amounting, followed by security, integrated transport infrastructure, services and agriculture. Recognizing and correctly valuing the performance, critical importance and increasing role of agriculture in economic development have important implications for public sector budgetary allocations and actual expenditures in agriculture, which continue to be low and inadequate. It needs to be recognized, however, that as Namibia moves from a stage of agriculture-based development, either the percentage share of primary agriculture or the percentage share of expanded agriculture to GDP will decrease significantly.

This is because other sectors of the economy, especially the service sector, become much more dynamic, therefore growing faster especially in countries entering higher stages of development. It does not mean, though, that the agriculture or agribusiness sectors, become less important.

At the same time, more needs to be done to increase rural living standards, reduce regional income differentials and lower the rate of rural-urban migration, while concomitantly increasing

agricultural production and enhancing Namibia’s food and nutrition security. The Government of Namibia should implementing a rural development strategy with focuses on large modern farms and family farming. To make this shift, regulatory reforms which defines the principles of public investment, lays out a framework for attracting private investment to the agricultural sector while enhancing access to finance, and enhance responsiveness. Agricultural production must increase accordingly in order to meet socio-economic and food and nutrition security issues.

The adverse effects on land resources and climate change must be countered with continued efforts to increase inputs and sustainable climate smart practices; protecting agricultural land against fragmentation, erosion, and degradation; and shifting production toward higher-value products and introducing land-saving technologies.

Furthermore, Budget 2024-25 must focus on youth empowerment. Positive youth development programs provide young people with the skills needed to adapt to future economic trends. The young people must be well-prepared with information, skills and mindsets so that they can take advantage of the changing world of work. Positive youth development programs have the potential to unleash economic participation of young people and their families and communities. Namibia should develop national action plans specifically targeting youth employment. This could involve establishing enterprise incubation programs and infrastructure projects that train young individuals. Encouraging private operators and educational institutions to participate is also essential. Furthermore, fostering entrepreneurship and encouraging entrepreneurship among young people can lead to job creation and economic growth. Therefore, the government, educational institutions, and private organizations should collaborate to support aspiring entrepreneurs through mentoring, access to resources, and funding opportunities.

Moreover, the upcoming budget should address green hydrogen and oil discoveries. These are biggest challenges and opportunities which Namibia will facing to develop and demonstrate competencies. Leveraging Namibia’s significant renewable energy potential to position Namibia as a top producer and potential exporter of green hydrogen should be a priority. An increase in investment in the sectors will ultimately lead to better development and more jobs. It is also crucial for the government to support the sectors to enable to promote hydrogen economic. By building strong institutional capacity and promoting local content development, Namibia can lay the foundations for an oil industry that benefits its people and contributes to long-term national prosperity. These sectors can potentially play a key role in the overall economic development agenda as well as initiatives geared at employment creation and effective reduction of poverty.

In addition to the other focus areas that the government had maintained and prioritized. The tax reform is another area where markets will be hoping for a change. Currently, businesses pays

taxes on their profits, but at the same time, the shareholders are also taxed on their dividends, resulting in double taxation. Changes to rectify this anomaly can be awaited, with reforms to make dividends tax-free for shareholders. Furthermore, pension payout tax percentage must be revisited. The tax reforms would, create resilience against uncertainty and higher inflation, and increase the global competitiveness of Namibia by attracting investment. In the current global climate, many countries are increasing taxes, or asking their citizens to carry greater burdens. Hence, Namibia can cut taxes to encourage investment, or at the very least not raise them. Therefore, a lot more good jobs could be created if Namibia simply did a better job of not excessively taxing, spending, or regulating.

Improving governance and enacting policies will help safeguard limited resources. Accelerating structural reforms to build tax administration capacity and investments in digitalization, enhance transparency, reduce illicit financial flows, and scale up domestic resource mobilization.

Hence, in order to achieve this, all sectors of the economy need to get due attention and resources to ensure the delivery of essential services to the people and stimulate growth. The industry as well as people of the country have high expectations from this budget in terms of focus areas. It is expected that budget 2024/2025 would talk about the policies and measures towards sustainable development, boosting exports and promoting green economy. We cannot oversight digital transformation. The focus on these sectors is expected to help drive economic growth and create employment opportunities, while also reinforcing the government’s commitment to providing a better quality of life for all citizens.

To this end, the Budget 2024-25 should ensure that reform measures are implemented, focusing on the attainment of the V2030.

The budget is seen as an instrument to drive change and ensure that no one is left behind in the nation’s march towards progress. As we move closer to the Budget sitting, the nation awaits a comprehensive strategy that provides a clear path towards their welfare and development.

Therefore, to sustained poverty reduction, cost of living, volatility and growth over the next few years is possible if the government makes good its intentions to the focus areas.

Written by: Staff Writer

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