Growth is back, says Calle

21 February 2020 | Economics

I do not foresee any shortfalls in revenue, but also no increases. – Calle Schlettwein, Finance minister

Augetto Graig

Despite the legislative framework for public private partnerships (PPP) being in place, not a single such project is on the finance ministry books.

“Why is it we don't have a single PPP while the legislation is there? A lot of work was done, but we have no project. PPP please,” finance minister Calle Schlettwein said yesterday in his annual address to staff.

The ministry of finance did well during a difficult year in 2019, Schlettwein said.

In its 2019 overall performance review under the auspices of the office of the prime minister, the ministry of finance scored 95%. “We are among the top performers in government,” he said.

“We are beginning a new decade, a new year. Last year was not without its challenges, but also not without its promise,” Schlettwein said.

The promise comes from revised national account figures released by the Namibia ­Statistics Agency in December, which indicate gross domestic product (GDP) growth picking up from negative growth of minus 0.15% in 2016, to contracting only 0.1% in 2017, and growing marginally at 0.3% in 2018. “Growth has returned,” the minister said.

According to Schlettwein, 2016 was the worst year when steep consolidation was implemented in regards to government spending. The trend towards growth shows that “pro-growth consolidation was starting to grip. Policy measures have started to show,” he said and that “we have stabilised the macro-economics on all fronts except debt.”

Debt, tax

Debt remains a growing concern with government having started 2020 with a debt ratio of 49% which has already escalated to 52% he said.

“The issue needs to be management carefully,” he said, particularly since no growth in revenue sources is foreseen.

“I do not foresee any shortfalls in revenue, but also no increases. Taxes need to be collected more efficiently, although there are some taxes that need consideration to help get better value from our raw materials and to incentivise value addition,” he said.

“There are also those taxes we are obliged to implement as members of international organisation and as part of the global trade world,” he said. “Tax matters are global matters,” he said and that neighbouring countries in Africa appreciate Namibia's strong stance against transfer pricing and other ways in which funds are syphoned out of the country. “We joined these organisations to curb illicit outflows, trace and recover,” he said.

“Another important matter is how the tax policy must be leveraged to fight against inequality. It is one tool in our toolbox that we must use to get more taxes from the areas that have the ability to contribute without hampering their ability to make returns on investments.

“We cannot sit still and observe, year in and year out, that a significant part of our population lives in poverty while a few live in wealth that should be shared,” he said.

Namra, tenders

Schlettwein spoke of the ambitious reform programme underway at the finance ministry. He said the new Namibian Revenue Agency (Namra) will only take over tax collection once it is fully staffed.

“Tax collection cannot stop, the handover must be seamless,” he said.

The minister mentioned the Central Procurement Board, where capacity has been beefed up and exemptions used to ease early missteps brought on by capacity gaps. In this regard, “the amended act, regulations and rules are almost ready for tabling,” he said.

He encouraged Namibians to become e-filers by filing tax returns online and warned that procurement will also soon migrate to the World Wide Web. A United Nations procurement system has already been chosen to be tailored to become the domestic system he said.

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