Na m ibia Mid Yea r Bud get Rev iew 20 17/ 18 Standard Bank presentation by Ms Naufiku Hamunime, Economist, Standard Bank
EMERGING OUT OF RECESSION: THE CASE FOR INDUSTRY MID YEAR BUDGET REVIEW November 2017 Naufiku Hamunime
“ With primary commodities accounting for over 50 percent of exports, the Namibian economy remains at the bottom of the global value chain. ” - Calle Schlettwein, Budget Speech, March 2017
NAMIBIA’S MACROECONOMIC PERFORMANCE Gross Domestic Product (%) 14 Namdeb, 12.3 Skorpion Zinc 12 Fishing & Mining 10 Construction & Consumption 8.1 Boom 8 7.1 7 6.4 6.3 6.1 6 5.6 5.4 6 5.1 5.1 4.8 4.5 4.2 4.1 3.8 3.7 3.5 4 3.2 2.60 2.5 2 2 1.2 Contraction in all 1.1 Primary Sectors 0.3 0 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 CSO -2 Diamond Quota Financial The perfect -1.8 crisis storm -4
DRIVERS OF NAMIBIA’S RECESSION Construction Slowdown Reduced Government Spending
HISTORICAL FISCAL TRENDS: WAGE BILL PERSONNEL EXPENDITURE AS A PERCENTAGE OF TOTAL EXPENDITURE (%) 50 44.9 45 40.4 39.7 38.7 37.7 37.5 37 36.9 40 35.7 35.2 34.3 31.8 35 Filled Staffing Positions by 30 Vote as at 2017 25 20 Works 15 Agriculture, Water &… 3240 10 Environment & Tourism 5 Urban & Rural… 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Health & Social Services 16149 Education, Arts & Culture 38017 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Finance Personnel Defence 22629 Expenditure 6,129 6,725 7,708 8,920 10,693 11,987 14,346 17,535 21,988 24,000 24,442 28,095 (N$ m) Safety & Security 17467 Total Home Affairs &… Expenditure 15,155 17,827 22,464 25,353 28,891 37,672 40,157 47,576 58,846 61,946 61,495 62,541 (N$ m) 0 20000 40000
HISTORICAL FISCAL TRENDS: DEVELOPMENT VS. OPERATIONAL BUDGET Budget Breakdown 2016 Development Budget by Subdivision Operational Development 100% 90% 4% 19% 80% Goods & Services 70% Acquisition of 60% Capital Assets 50% Capital Transfers 40% 77% 30% 20% 10% 0% 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Development (N$ m) 1,876 2,075 2,966 4,472 5,221 8,070 6,715 8,146 8,691 9,812 6,933 6,306 Operational (N$ m) 11,800 14,550 18,167 19,461 22,353 27,771 31,045 37,183 50,154 52,133 54,562 55,427
HISTORICAL FISCAL TRENDS: STATE OWNED ENTERPRISES 2016 Allocations to State Owned Enterprises (N$'000) NTA, 509213 SME, 78000 Transnamib, 312929 NSFAF, 1200727 Namibia Airports Company, 155021 Air Namibia, 695105 NUST, 482480 NBC, 252107 UNAM, 960858
HISTORICAL FISCAL TRENDS: SOCIAL SPENDING Budget Share by Sector Social Sector Economic Sector 100% • Education, Arts and • Finance 7.9 8 8.9 8.8 Culture • Mines & Energy 90% • Gender Equality • Environment & Tourism 9.3 14 • Health& Social Services • Industrialization & Trade 19.8 20 80% • Sport, Youth & National • Agriculture, Water & 13.5 Services Forestry 8 • Veterans Affairs • Fisheries 70% 10.4 12 • Poverty Eradication • Land Reform • Higher Education, • NPC 60% 21 21 Training & Innovation • Public Enterprise 21.1 50% 21.7 Public Safety Administration 40% • Home Affairs • Office of the President • Safety & Security • Office of the Prime • Defence Minister 30% • Justice • National Assembly 48 48.3 • Judiciary • Auditor General 20% 39.7 37.6 • ACC • International Relations • Attorney General • National Council 10% • Labour Relations Infrastructure Sector • Urban & Rural Dev 0% • Electoral Commission • Works 2014 2015 2016 2017 • Transport • ICT Social Public Safety Administrative Economic Infrastructure
DRIVERS OF NAMIBIA’S RECESSION Construction Slowdown Reduced Government Spending
MANAGING UNDER RECESSION Opportunity to Restructure Improve Allocative Reduce Expenditure Efficiency Increase Productive Efficiency
REDUCE EXPENDITURE Total Expenditure (N$ m) 80000 70000 60000 50000 40000 30000 20000 10000 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
IMPROVE ALLOCATIVE EFFICIENCY 2017/18 Share of Downward PERSONNEL EXPENDITURE AS A Revisions (N$, %) PERCENTAGE OF TOTAL EXPENDITURE (%) 44.9 45.9 44.9 45.9 46 46 50 40.4 37.7 34.3 35.2 39.7 35.7 36.9 37.5 35.2 37 40 25% 31.8 121,354,000 30 Development 20 Operational 365,441,000 10 75% 0 2 0 0 6 2 0 0 7 2 0 0 8 2 0 0 9 2 0 1 0 2 0 1 1 2 0 1 2 2 0 1 3 2 0 1 4 2 0 1 5 2 0 1 6 2 0 1 7 2 0 1 8 2 0 1 9 Budget Share by Sector Allocations to State Owned Enterprises 100% 7 7.9 8 8 8.9 8.8 10 9.3 9 14 19.8 20 80% 13.5 14 14 8 10.4 12 60% 21 21 21 22 21.1 21.7 40% 48.3 48 48 48 20% 39.7 37.6 0% 2014 2015 2016 2017 2018 2019 Social Public Safety Administrative Economic Infrastructure
MANAGING UNDER RECESSION Opportunity to Restructure Prioritize Improve Allocative Reduce Expenditure Industrial Dev Efficiency Increase Productive Efficiency
VISION 2030 “ Namibia aims to be a knowledge-based industrialized country where manufactured goods and services constitute 80% of GDP, and processed goods account for at least 70% of total exports. ” PERCENTAGE CONTRIBUTION TO 2016 TOTAL EXPORTS (%) GDP (%) Manufacturing Mining & Quarrying 20 8.6 17.2 18 Minerals 16 14.4 Food and Live Animals 13.7 13.6 12.7 13.2 13 40.2 14 12.5 12.4 23.4 12.2 11.4 11.4 11.3 Manufactured 12 12.7 12.3 12.2 Products 9.2 11 10 10.9 8.7 11 Re-exports 9.9 10 10.4 8 Other Commodities 6 22.2 5.5 4 2 0 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016
BUDGETING FOR INDUSTRIALISATION BUDGET ALLOCATIONS AS A PERCENTAGE OF TOTAL EXPENDITURE (%) Industrialisation, Trade & SME Development Safety & Security Defence 12 11 10.8 10.6 10.6 10.5 10.3 10 9.4 9.08 9.01 8.8 8.58 8.5 8.4 8.3 8.12 8.02 8 6.78 6.55 5.96 5.89 5.74 5.58 6 5.48 5.17 4 1.81 1.7 1.6 1.58 2 1.44 1.43 1.2 1.01 0.86 0.82 0.71 0.71 0 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
NAMIBIA’S INDUSTRIAL POTENTIAL “ In line with Namibia’s industrial policy, Growth at home advocates a targeted approach towards industrialization. In the first phase, sectors in which Namibia already has some sort of comparative advantage will be targeted. These sectors include agriculture and agro-processing, chemical industries, mineral processing and automotive ” industry. - Growth at Home Industrial Strategy Lions of the Move II: Realizing The Potential of Africa’s Economies Page 7, 2015 McKinsey Global Institute, September 2016
NAMIBIA’S INDUSTRIAL POTENTIAL 2016 GDP contribution of Agriculture, Total workforce employed in manufactured food and beverages Agriculture & Fishing Agriculture, Water & Forestry Expenditure by Major Category (N$ ‘000) 3500000 3000000 2500000 Capital Transfers Acquisition of Capital Assets 2000000 Subsidies & Current Transfers Goods & Other Services 1500000 Construction & Renovations Personnel Expenditure 1000000 500000 0 2010 2011 2012 2013 2014 2015 2016 2017
MANAGING UNDER RECESSION Opportunity to Restructure Improve Allocative Reduce Expenditure Efficiency Increase Productive Efficiency
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