All eyes on Calle

Experts believe the Namibian government is caught between a rock and a hard place and may not be able to save the country's ailing economy without more pain first being endured by citizens.

Finance minister Calle Schlettwein's budget statement, expected tomorrow in the National Assembly, has already been delayed twice.

Last year Schlettwein tabled a N$65 billion budget. Simonis Storm said Schlettwein would be forced to make some tough calls. “This will be a hard-hitting budget as it will seek to continue with the implementation of the fiscal consolidation framework, amidst the upcoming election and the deterioration of economic conditions. Revenue remains under threat; thus we expect clarity on the proposed tax amendments and tax administration reform,” Simonis Storm said. President Hage Geingob told state newspaper New Era last week that government would undertake bold interventions to inject life into the ailing economy.

Geingob said the country's youth would be placed at the centre of stimulation activities, with the aim to create jobs for this segment of the population. “As a first step I'll soon announce the restructured Presidential Economic Advisory Council. The new structure has been reduced to mostly senior economists on whose advice we would rely insofar as designing these stimulant packages is concerned. “We are looking at agriculture and innovation as some of the sectors that growth would be targeted at,” Geingob said.

He also admitted that his cabinet was “too big” and that Namibia's public service wage bill was “simply not affordable”.





Economic analyst Klaus Shade cautioned that the government was faced with a dilemma and must figure out how to tackle its wage bill without retrenchments.



According to Schade, government's talk of cutting the wage bill to fix the economy was an “inherent contradiction” and would have a downward spiralling effect on the economy.



He also emphasised that creating additional ministries and state-owned-enterprises had indeed hurt the economy.



“Now all that has shot up the costs for government and I am not sure how the president envisions that to be reduced now, without resorting to retirements. And in our economic climate that is the last thing you want to do. I think they are in a very difficult position,” said Schade.



Namibia's civil service wage bill, which stands at about N$30 billion a year, has been a perpetual headache.



Geingob was quoted as saying last week that “the current cabinet is too big and there's reason for it”.



“President Sam Nujoma, being a founding father and a liberation hero, had natural authority. President Pohamba was a bit relaxed. But with me, I am dealing with my peers - where anybody could have taken over as president. The pressure on me to have a bigger cabinet is bigger because all these people are my peers who want to be accommodated. It could have been worse if I didn't do that [appoint them].”



Academic Omu Kakujaha-Matundu says he believes the government has run out of options and may find it difficult to cut spending without hurting the economy further.



He is also not convinced that Geingob has the political muscle to cut his cabinet or even merge some ministries to cut costs.



“I think what we should just try and do is to implement those projects that we are going to budget the money for, so that those projects can generate income as fast as possible. We ought to avoid delaying tenders that should be granted immediately, but take up to a year, and ensure projects do not take too long,” Kakujaha-Matundu advises.



He also warns that the government cannot afford to cut spending on areas such as drought relief and capital projects.



“What we are saying is that if agriculture dies and if we leave those people to themselves to starve and clog our medical burden, it will also be a huge burden.”



The latest data from the labour ministry indicated that during the second half of 2018 close to 2 500 people were retrenched from 128 local companies.



The majority of companies cited economic reasons for letting their workers go, while others mentioned restructuring and business closures as explanations for dismissing their workers, as the domestic economy struggles to recover from a recession.



Towards the end of 2018, it was reported that nearly 1 700 people had been retrenched between October 2017 and March 2018. That was confirmed by labour minister Erkki Nghimtina.

JEMIMA BEUKES