Making sense of NDP5

With the launch of NDP 5 in May, it is hoped that the government would have created at least 50 000 jobs annually when the ambitious development plan finally runs its course in 2022. But questions linger as to whether the ambitious plan will prove successful in its implementation. Digging into NDP 5, PSG Konsult equity analyst Eloise Du Plessis does not think that it will be smooth sailing all the way as the government sets to raise the economic profile of Namibia in line with Vision 2030. Taking stock of NDP 4, she says that plan fell short of its outcomes. “Although the NDP4 coincided with the highest average annual growth rate compared to any of the previous five-year plans since independence in 1990, the outcomes of the plan fell well short of its goals to ameliorate unemployment and promote prosperity – in addition to missing a host of other ambitious targets,” says Du Plessis. Applauding the thinking behind NDP 5, she says it provides more detail on the attainment of goals. “The NDP5 is a step in the right direction compared to previous five-year plans in terms of generally setting more realistic targets, providing more detail about strategies to achieve the desired outcomes and increasing efforts to monitor and evaluate the progress in reaching targets.” She warns, though, that its successful implementation would not be easy, making reference to the SME Bank investment scandal. “Some desired outcomes will be challenging to achieve because they require current trends to be reversed. For example, the government hopes to increase micro, small and medium enterprises' contribution to Gross Domestic Product, but Namibia has dropped four places in the latest Ease of Doing Business rankings and this suggests that it is harder for new MSMEs to enter the market and the state-owned SME Bank, which should help finance MSMEs, is currently embroiled in a scandal over N$200 million worth of 'investments' made in suspicious South African financial companies. “Some targets are overambitious while some are rather unambitious. For example, the government hopes to add about 50 000 jobs to the economy per annum over the NDP5 period, while our forecast suggests closer to 20 000 per annum is likely. About 5 000 of these 50 000 jobs would have to be in industries related to sports and arts to reach the NDP5's desired outcomes.” According to her, this is not a realistic target. “We think it is highly unlikely that the Namibian economy would be able to deliver the rapid increase in employment in these sectors as envisaged by the NDP5.” She also cast doubt on the government's grandiose plans for the manufacturing sector. “The desired outcome of manufacturing production increasing to N$20.6 billion by 2022, implies a rather unambitious nominal growth rate of 2.4% per annum which means that manufacturing prices would have to increase by less than 2.4% per annum for the sector to record real growth. “While the NDP5 is more detailed than previous plans, which could help with the implementation of the plan, the government should be careful not to overload departments with targets and should prioritise targets according to their realistic potential to improve growth and employment,” Du Plessis says. In light of the government's liquidity crunch, she questions how the government will finance the ambitious plan. “Perhaps the biggest question is whether the government can finance the NDP5 in its entirety. Mr Geingob has said that the government will commit N$164 billion towards the plan, although the current allocation to the development budget over the medium-term expenditure framework (from 2017/18 to 2019/20) is only N$24.2 billion,” Du Plessis says. She also alludes to concerns raised by economic planning minister Tom Alweendo, who admitted that if the government missed its revenue forecasts, it would have to scale down some the NDP5's targets. “Despite an expected rebound in economic growth on the back of improved mining and agricultural output in 2017, we see a moderate risk of significant fiscal slippages over the medium term given the size of the required budget cuts and risks to the global economic outlook that may adversely affect the local economy and tax collections,” Du Plessis concludes.OGONE TLHAGE

Making sense of NDP5

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Namibian Sun 2025-05-06

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Making sense of NDP5

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Namibian Sun 2025-05-06

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