KEYNOTE ADDRESS FOR THE HONORABLE DIRECTOR-GENERAL OF THE NATIONAL PLANNING COMMISSION ON THE OCCASION OF
LAUNCH OF THE DEVELOPMENT FINANCE ASSESSMENT (DFA) 2019 REPORT
Director of Ceremonies;
Honorable Minister of Finance, Mr. Ipumbu Shiimi;
Your Excellency, Mr. Sen Pang, UN Resident Coordinator;
Your Excellency, Dr. Gabriele Geier, Head of Development Cooperation:
Your Excellencies members of diplomatic corps
Senior Government Officials;
Business Leaders and Head of Industries;
Members of the Media;
Ladies and Gentlemen
- In the past week, the country tabled both National Budget and then went on to launch the Harambee Prosperity Plan II. Both these incidences are significant for all citizens of this country including our development partners and our neighbors. I trust that we have all observed and listened with keen interest as these affects all our lives in one way or the other. On the other hand, these occasions symbolize the intricate connection between budgeting and planning.
- Today, in a short while, we are going to witness yet another launch of the Development Finance Assessment (DFA) 2019 which will pave the way for the implementation of the Integrated National Finance Framework (INFF). This explains the presence of the Minister of Finance and the Director-General of the National Planning Commission on this occasion; demonstrating how these institutions both put much value into these two interlinked processes.
- On October 31st, 2019, in a Policy Seminar on the same topic I addressed almost the same audience; except for the fact that back then it was both the predecessors of both the current Minister of Finance and the current UN Resident Coordinator. Allow me to point out that the dawn of the pandemic and circumstances beyond our control could not allow for an earlier launch of this report.
- It is my considered belief that the unfortunate situation then becomes a blessing in disguise now. The importance of the document we are about to launch today is amplified after the global, continental, regional and national economies, Namibia included; have been wrecked by the outbreak of the COVID19 pandemic. The pandemic has exposed the vulnerabilities of our economic growth “engines”; supply channels; employment securities and resilience of our processes and operations; ultimately our financial flow channels just as much.
- Both the launch of the 2021/2022 National Budget and the Harambee
Prosperity Plan II (2021/22 -2024/25) brings to the fore two important aspects:
- the limited fiscal space amidst economic and pandemic crisis;
- the need for public service delivery and the need to spur economic growth, employment creation and poverty reduction.
Director of Proceedings Ladies and Gentlemen
- The purpose of the DFA and consequential implementation of the INFF will not have diminishing returns as soon as we embark upon the review of our long-term perspective plan – Vision 2030 and the development of successive medium-term national development plan NDP6. The review will highlight in a more concrete manner the speed at which we are converging towards our intended goals and divergence at which we are from our desired development path; while the new plan will articulate plausible economic transformational strategy and desired levels of our social development.
- Without hesitation, I am confident that both the review and the new strategy will require more financial resources than currently available; hence both resources mobilization activities and reforms are a necessity.
Director of Ceremonies
Ladies and Gentlemen
- Last month, on February 24th, 2021, the National Planning Commission in collaboration with UNDP – Namibia launched the Namibia National Human Development Report 2019, themed “Addressing Inequality and Disparities: Towards a New Dignified Life for All Namibians”. The observations are such that Namibia has made great strides in her development endeavors. Human Development in Namibia as measured by the Human Development Index (HDI) has improved over the years growing at 41% between 1990 and 2017 to reach a value of 0.647 in 2017 placing the country into a medium human development category. We recall that in 2009, the World Bank classified Namibia as an Upper MiddleIncome country using the per capital income.
- Notwithstanding all these achievements Namibia is still facing major challenges in her developmental quest. The levels of poverty using the multi-dimensional poverty index as revealed in the report cited earlier is stunningly at above 40% of Namibian population. The current economic head winds experienced by the country; the high levels of unemployment in the country; the outbreak of the
COVID19 pandemic; and collapse of private sector investment threatens to reverse the achievements of the three decades and dampens the hope to achieve the promise of Vision 2030 and SDGs.
- Namibia, thus, cannot afford to spare all efforts in breaking the emerging trend. There is necessity therefore to devise coherent policies and strategies including the integrated financial framework to reinvigorate and sustain economic growth, social cohesion and environmental protection for current and future generations.
- Let me reiterate that the overarching objective of this DFA Study is to provide Government with an overview of current development finance flows; identify ways to fill the financing gap; and assess the institutions as well as policies that align this finance with our national development goals and priorities.
- The DFA Study findings reveals that the financial landscape of Namibia before the crisis was very promising. Namibia was among the top countries who could mobilize a larger chunk of development finance from domestic sources; relatively huge private contractual savings; and the country benefited from direct foreign investment in particular for the extractive sectors.
- Namibia is one of the countries with the highest revenue to GDP ratios (27%) in the world. It is also notable that Namibia currently has one of the highest tax revenues in relation to GDP in the world and ranks among the top five countries in the world. However, of recent the revenue growth has slowed down significantly and the short to medium term prospects are not good. The signals through fiscal indicators such as budget deficit and; debt growth and stock are in the “red”. This calls for new measures to enhance tax collection and administration, but also the identification of new economic growth points.
- Beyond public funds, the largest single source of domestic development funding is the contractual savings pool primarily made up of pension and life insurance assets. As at the end of 2017, the total assets of the Namibian pension funds and life insurance fund assets were valued at N$152.9 billion and N$53.9 billion respectively; which translates into 86.6% and 30.5% of GDP respectively.
- The recent initiatives by GIPF have brought about the creation of a number of investment vehicles and the issuance of several infrastructure investment mandates. The World Bank (WB) in its note on “Leveraging Pension Fund Investment for Domestic Development: Namibia’s Regulation 29 Approach” describes this as an innovative solution for the Namibian problem. In the same note, the WB states that as of December 31st, 2018 investment in unlisted companies stood at N$1.3 billion compared to N$871 million as at December 31st, 2017, an increase of 49.3%.
- One of the important major source of development finance in Namibia is private investment notwithstanding its volatility, on average the annual real Gross Fixed Capital Formation (GFCF) grew by 6%. This investment mainly went into agriculture; fisheries and mining. Both an integrated planning and robust investment strategy as espoused in HPPII, will go a long way in attracting much needed development finance; and thus, create employment, reduce poverty and uplift the standard of living of Namibians.
- Another component of the private sector investment relates to Foreign Direct Investment (FDI) which is an external inflow. Between 2007 and 2015, FDI inflows increased from US$733 million (N$5.3 billion) to US%1.25 billion (NS$15.2 billion). The situation, however, changed as from 2016 as the country experienced a substantial decrease in FDI, mainly due to the completion of major mining outlays, near collapse of commodity prices and persistent drought to some extent.
- The report affirms that despite the fact that Namibia is an Upper Middle Income Country, the country can still leverage Off-shore Development Assistance as a catalyst for other forms of development finance. Furthermore given the uniqueness of Namibia’s topography the country stands to benefit from climate related development finance only if a coherent strategy in this regard is pursued.
- Finally; the report affirms that Namibia is on track with regard to integrating planning and financing. There is, however, a need to especially develop a longterm financial strategy and also improvement in the monitoring and evaluation of such.
Director of Ceremonies Ladies and Gentlemen
- It is with the above context that Cabinet in its wisdom gave the marching orders to the Ministry of Finance in collaboration with National Planning Commission to establish the Integrated National Financial Framework and to mobilize resources from development partners to support the development and implementation of the Road Map for INFF and establishment and implementation of the INFF
- As I close my remarks , I call on all stakeholders: Government Ministries, Offices and Agencies; Development Partner; Private Sector including the financial sector and academia that let us hold hands and bring our part: “We Shall Overcome”
- It is now my distinct honor to launch the Development Finance Assessment Report 2019.
I thank You All