Capricorn Group co-hosts national pre-budget public discussion

The Capricorn Group, in collaboration with the Economic Association of Namibia, GIZ and the High Economic Intelligence (HEI) on 20 February 2024, hosted a lively national pre-budget public discussion ahead of Finance Minister Ipumbu Shiimi’s tabling of the national budget in the National Assembly on 28 February 2024. Held under the theme: The National Budget in an Election Year: Fiscal Expansion and Strategic Priorities, the event received an overwhelming response.

The discussion delved into 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.

“Our gratitude is particularly directed towards the Economic Association of Namibia and the High Economic Intelligence, with whom Capricorn Group shares a significant partnership.

We recognise and value the indispensable role played by the Economic Association of Namibia as a think tank and catalyst for socio-economic discussions. Equally, we appreciate the valuable insights and opinions contributed by the High Economic Intelligence, considering them essential to our understanding of the economic landscape,” said Capricorn Group CEO-Designate David Nuyoma.

Managing Director of the High Economic Intelligence Salomo Hei gave a comprehensive economic outlook, which included a global and regional overview, in what has been dubbed as the year of elections. 2024 is a massive year on the election front, with over 60 countries, including the United States and Russia, going to the polls.

Regionally, Namibia is only expected to hold its general elections in November this year, while South Africa has announced 29 May as the day of its election. Botswana and Mozambique are also expected to follow suit in October this year. Turning to the national budget, Hei expects an increase in spending, especially in the areas of education and healthcare.

“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. Chief Economist at Capricorn Asset Management Floris Bergh advised the government 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’s Integrated Tax Administration System (ITAS) but believes the agency can do more, especially when it comes to the timely processing of VAT refunds.

“We are trying to compete in a region. We have the highest corporate tax rate. Our 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’s wheels are not turning smoothly. As an exporter, I can’t get my refund within the two months the law prescribes. Sometimes people wait a year to get their refunds back,” Kotze commented.

On her part, FirstRand Namibia Group Economist Ruusa Nandago said the government should consider coming up with structural reforms to help boost employment, particularly among the youth. “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. The Youth Credit Scheme, the Youth Employment Tax Incentive and National Internship, as well as the Green Hydrogen Scholarship initiatives, have been rolled out, but these are not the kind of things that change the structural problems,” she said during the panel discussion, which was moderated by Professor Teresia Kaulihowa, Associate Dean: School of Commerce and Management Sciences at the Namibia University of Science and Technology.