National Budget 2012/13 Critical
Critical Review of Outcomes and
Design
Leonard Kamwi
Outline
1.
A Glance
2.
Macroeconomic Assumptions
3.
Fiscal Stance
4.
Spatial Picture of Unemployment
Numbers
5.
How Targeted are the
Investments?
Page
2
Glance
Coming to the details of the budget, it is not an
expansionary budget but simply one that
blotted in size. Size of the budget is N$40.2
billion against N$37.1 billion last year. The biggest
heads of expenditure are as follows:
Education: N$9.2 billion or 23.4% of the total outlay
Health: N$4.0 billion or 9.9%
Defence: N$3.4 billion or 8.5%
Finance: N$3.3 billion or 8.2%
Transport: N$2.5 billion or 6.2%
Police: N$ 2.4 billion or 5.9%
Interest Payments: N$2.2 billion or 8.3%
Against a total outlay of N$40.2 billion, the budget
forecasts total revenue at N$35.4 billion, leaving a
fiscal deficit of N$4.7 billion which is 4.6% of the
gross domestic product (GDP). It will be met
through Cash Reserves of N$2.6 billion, net
external financing of N$860 million, domestic
borrowing of N$2.1 billion.
Coming to the Revenue side, realistically speaking,
though unfortunately, the taxes to be collected are
heavily skewed towards SACU N$13.8 billion.
Key Themes
“Doing more with
less”:
“Gradual withdrawal of
significant fiscal
expansion”
“Fiscal Sustainability”:
Fiscal rules are redefined  “Reorienting TIPEEG”
and an
acknowledgement is
made that we are close
to the limits.
Page
3
Expenditure by Vote
Anti-Corruption Commission
Auditor General
National Planning Commission
Electoral Commission
Home Affairs and Immigration
Lands and Resettlement
President
Prisons and Correctional Services
Foreign Affairs
Environment and Tourism
Trade and Industry
Labour and Social Welfare
Agriculture, Water and Forestry
Transport
Defence
Education
-
Page
4
2,000,000,000
4,000,000,000
6,000,000,000
8,000,000,000
10,000,000,000
Development Budget by Vote
Electoral Commission
Veterans Affairs
Labour and Social Welfare
Auditor General
National Planning Commission
Fisheries and Marine Resources
Youth, National Service, Sport and Culture
Finance
Information and Communication Technology
Foreign Affairs
Lands and Resettlement
Police
Trade and Industry
Regional and Local Government, Housing and Rural Development
Public Safety
Agriculture, Water and Forestry
-
Page
5
400,000,000
800,000,000
1,200,000,000
Macroeconomics Assumptions
Staying conventional, for now
GDP Growth & Inflation

The other macroeconomic assumption of
note in the budget is lower GDP inflation.
The nominal GDP projections imply an
average GDP inflation of around 6.0% over
the MTEF. While this may be conservative,
the strong real growth assumption 4.7%
average in the budget has implications for
monetary policy, with consequence that the
authorities may be understating the debt
servicing costs.
Page
6
2013
2014
Growth 4.4%
4.8%
4.90%
Revenue
Growth
2012
2013
2014
2.00%
31.6%
-0.5%
12.5%
50.0%
40.0%
Realistic!

Real GDP 2012
All in all the macroeconomic assumptions
are realistic. The growth prospects gives a
reassuring view of the future of Namibia’s
public finances than last year’s budget with
nominal spending capped over the coming
three years, progressively smaller deficits
and lower overall debt.
30.0%
20.0%
10.0%
0.0%
1991/92 1994/95 1997/98 2000/01 2003/04 2006/07 2009/10 2012/13
-10.0%
-20.0%
Non-Trade Tax Revenue Growth
Ralf Preusser ·02 March · page 6
Nominal GDP Growth
Fiscal Stance
Gradual withdrawal of fiscal expansion!
Probably Still expansionary!
 If
the execution rate in 2011/12
comes in at less than 90% or
N$33.4 billion of last year’s
proposed outlay, then spending of
N$40.2 billion implies a 20.4%
growth over the previous. By Any
measure that is a huge increase.
Doing more with less?
• The outlays are not less than
anything seen before, the
increase is just less than last
year.
Page
7
Although there is a notable change in
the fiscal priorities as highlighted in the
speech, there is no commensurate
change in the direction of spending.
Spending is still heavily directed towards
the social sectors. The strategy appears
to be, to give the economy a big push in
2012/13 then retrace a little in year two,
perhaps to gather momentum, then
increase spending by a huge margin
again in year three. Although the
rationale for this is not clear, it is indeed
the same pattern we observed in the
prior MTEF. The only other thing we
have observed is that, when the second
year finally arrives, the allocations get
revised upwards again such that an
exponential trend is created.
Ralf Preusser ·02 March · page 7
Figure : Sectoral Allocations
Source: Ministry of Finance
Page
8
More
specifically, a additional funds are directed towards the interventions outlined in Table
How Targeted are the
expenditures and
Investments?
Page
9
Some Stylized Facts
Unemployment: 51.2% ranks 192
› Highest in predominantly communal
areas of Ohangwena, Omusati,
Oshikoto, Kavango & Caprivi
› Unemployment is also highest
among women, the youth and
unskilled or trained
GDP - composition by sector:
› agriculture: 9.6%
› industry: 34.2%
› services: 56.2% (2010 est.)
Labor force - by occupation:
› agriculture: 16.3%
› industry: 22.4%
› services: 61.3% (2008 est.)
Unemployment Spell: 70% of
unemployed in 2008 were searching
for 2 yrs or more. In 2004, the rate
was 48.7%
Page
10
Unemployment by Region
Erongo
Khomas
Karas
Hardap
Otjozondjupa
Omaheke
Oshana
Kunene
Namibia
Caprivi
Oshikoto
Okavango
Ohangwena
32.60
33.50
36.40
38.60
43.80
48.20
48.80
50.40
51.20
65.60
68.60
70.00
76.40
Omusati
78.60
Predominatly communal areas have highest unemployment. Observation is
consistent with declining employment from communal agriculture
Participation rate by region? Oshana has a slitely high urban population compared
to other "O" regions
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11
EMPLOYMENT Cont.
Employment status
Employment in some occupations
› Employees 269,602 (81.3%)
› Elementary occupation 77,571 (23.4%)
› Other own account workers (without paid
employees) 34,402 (10.4%)
› Service, shops & market sales workers 61,144
(18.4%)
› Other employers (with paid employees) 10,965
(3.3%)
› Craft & Trade workers 52,617 (15.9%)
› Subsistence farmers (without paid employees)
6,824 (2.1%)
› Skilled agricultural & fishery workers 29,185
(8.8%)
› Subsistence farmers (with paid employee) 4,541
(1.4%)
› Professionals 28,692 (8.7%)
› Unpaid family workers (subsistence/communal
farms) 3,211 (1.0%)
Some Constraints
› Clerks 22,877 (6.9%)
› Technicians & Associate professionals 21,639
(6.5%)
› Skills Mismatch due to Low Education Attainment
› Structure of the Economy: Growth emanates
or high school drop out rates. This decreases
from Capital Intensive Sectors. GDP is produced
probability of being Employed even by self but also
by machines not much by people. New Growth
leads to a lack of Innovation and entrepreneurship.
Path that is Labor Absorptive requires a focus on
Educational system Reform is Key. Poor
manufacturing, infrastructure development, rural
Entrepreneurship!!!
development and agro-processing, and the "green"
› Size of Domestic Market: 2 m people of which
economy.
55% survive on less than US$2 per day. The need
to focus on Labour Intensive export oriented
› Low productivity in Agriculture (People still use
sectors (Agriculture, Construction) vs Capital
ox and donkeys to plough). Invest in machines
Intensive Export oriented sectors (Mining,
Manufacturing)
Page 12
To what extent does allocation resemble
region poverty / unemployment profile?
Development Budget by
Region
Agric Development Budget by
Region
Otjozondjupa
Otjozondjupa
Oshikoto
Oshikoto
Oshana
Oshana
Omusati
Omusati
Omaheke
Omaheke
Ohangwena
Ohangwena
Kunene
Kunene
Khomas
Khomas
Kavango
Karas
Kavango
Hardap
Karas
Erongo
Hardap
Caprivi
Erongo
Abroad
Caprivi
0
Page
13
2,000,000
4,000,000
6,000,000
8,000,000
0
500,000
1,000,000
1,500,000
2,000,000
2,500,000
To what extent does allocation resemble
region poverty / unemployment profile?
Transport Development
Budget by Region
Otjozondjupa
Enviro & Tourism
Development Budget by
Region
Oshikoto
Otjozondjupa
Oshana
Oshikoto
Omusati
Oshana
Omaheke
Omusati
Ohangwena
Omaheke
Ohangwena
Kunene
Kunene
Khomas
Khomas
Kavango
Kavango
Karas
Karas
Hardap
Hardap
Erongo
Erongo
Caprivi
Caprivi
0
Page
14
20,000 40,000 60,000 80,000 100,000 120,000
N$'000
0
10,000
20,000 30,000
N$'000
40,000
50,000
Questions and Discussions