Namibia Mid Year Budget Review 2017/18Standard 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

2

8.1

7

-1.8

6.4

4.1

3.2

4.5

3.5 3.8 3.7

1.2

4.84.2

12.3

2.5

7.1

5.4

2.60

0.3

6

5.1 5.15.6

6.3 6.1

1.1

-4

-2

0

2

4

6

8

10

12

14

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

Gross Domestic Product (%)

CSO Diamond

Quota

Fishing & Mining

Contraction in all Primary Sectors

Namdeb, Skorpion Zinc

Financial crisis

The perfect storm

Construction & Consumption Boom

Construction Slowdown

Reduced Government

Spending

DRIVERS OF NAMIBIA’S RECESSION

HISTORICAL FISCAL TRENDS: WAGE BILL

40.437.7

34.3 35.2 3731.8

35.7 36.9 37.5 38.7 39.744.9

05

101520253035404550

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

PERSONNEL EXPENDITURE AS A PERCENTAGE OF TOTAL EXPENDITURE (%)

17467

22629

38017

16149

3240

0 20000 40000

Home Affairs &…

Safety & Security

Defence

Finance

Education, Arts & Culture

Health & Social Services

Urban & Rural…

Environment & Tourism

Agriculture, Water &…

Works

Filled Staffing Positions by Vote as at 2017

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Personnel Expenditure

(N$ m)6,129 6,725 7,708 8,920 10,693 11,987 14,346 17,535 21,988 24,000 24,442 28,095

Total Expenditure

(N$ m)15,155 17,827 22,464 25,353 28,891 37,672 40,157 47,576 58,846 61,946 61,495 62,541

HISTORICAL FISCAL TRENDS: DEVELOPMENT VS. OPERATIONAL BUDGET

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

Budget BreakdownOperational Development

4%

77%

19%

2016 Development Budget by Subdivision

Goods &Services

Acquisition ofCapital Assets

Capital Transfers

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

SME, 78000

Transnamib, 312929

Namibia Airports Company, 155021

Air Namibia, 695105

NBC, 252107UNAM, 960858

NUST, 482480

NSFAF, 1200727

NTA, 509213

2016 Allocations to State Owned Enterprises (N$'000)

HISTORICAL FISCAL TRENDS: SOCIAL SPENDING

37.6 39.748.3 48

21.7 21.1

21 2112 10.4

13.5 8

19.8 209.3 14

8.9 8.8 7.9 8

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017

Budget Share by Sector

Social Public Safety Administrative Economic Infrastructure

Social Sector• Education, Arts and

Culture• Gender Equality• Health& Social Services• Sport, Youth & National

Services• Veterans Affairs• Poverty Eradication• Higher Education,

Training & Innovation

Public Safety• Home Affairs• Safety & Security• Defence• Justice• Judiciary• ACC• Attorney General

Infrastructure Sector• Works • Transport• ICT

Economic Sector• Finance• Mines & Energy• Environment & Tourism• Industrialization & Trade• Agriculture, Water &

Forestry• Fisheries• Land Reform• NPC• Public Enterprise

Administration• Office of the President• Office of the Prime

Minister• National Assembly• Auditor General• International Relations• National Council• Labour Relations• Urban & Rural Dev• Electoral Commission

Construction Slowdown

Reduced Government

Spending

DRIVERS OF NAMIBIA’S RECESSION

Improve Allocative

Efficiency

Opportunity to Restructure

Increase Productive Efficiency

Reduce Expenditure

MANAGING UNDER RECESSION

REDUCE EXPENDITURE

0

10000

20000

30000

40000

50000

60000

70000

80000

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018

Total Expenditure (N$ m)

IMPROVE ALLOCATIVE EFFICIENCY

40.4 37.734.3 35.2 37

31.835.7 36.9 37.5 35.2

39.744.9 45.9 4644.9 45.9 46

0

10

20

30

40

50

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

PERSONNEL EXPENDITURE AS A PERCENTAGE OF TOTAL EXPENDITURE (%)

75%

25%

2017/18 Share of Downward Revisions (N$, %)

Development

Operational

37.6 39.7 48.3 48 48 48

21.7 21.121 21 21 22

12 10.413.5 8 14 1419.8 209.3 14 9 10

8.9 8.8 7.9 8 8 7

0%

20%

40%

60%

80%

100%

2014 2015 2016 2017 2018 2019

Budget Share by Sector

Social Public Safety Administrative Economic Infrastructure

Allocations to State Owned Enterprises

365,441,000

121,354,000

Improve Allocative

Efficiency

Opportunity to Restructure

Increase Productive Efficiency

Reduce Expenditure

MANAGING UNDER RECESSION

PrioritizeIndustrial Dev

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.

40.2

5.522.2

23.4

8.6

2016 TOTAL EXPORTS (%)

Minerals

Food and Live Animals

ManufacturedProductsRe-exports

Other Commodities

12.4

14.413.6

11.413 12.5

13.7

12.211

10 9.9 119.2

12.3 12.7

17.2

10.910.4

8.7

12.7 13.212.2

11.4 11.3

0

2

4

6

8

10

12

14

16

18

20

2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016

PERCENTAGE CONTRIBUTION TO GDP (%)

Manufacturing Mining & Quarrying

BUDGETING FOR INDUSTRIALISATION

0.71 0.71 0.821.44 1.7 1.43

1.81 1.58 1.61.2

0.86 1.01

5.17 5.48 5.74 5.966.55

5.58 5.89

6.78

8.589.01

8.12 8.02

8.89.4

10.6 10.8 10.5

8.4 8.5 8.3

1110.6 10.3

9.08

0

2

4

6

8

10

12

2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017

BUDGET ALLOCATIONS AS A PERCENTAGE OF TOTAL EXPENDITURE (%)Industrialisation, Trade & SME Development Safety & Security Defence

“

”Lions of the Move II:

Realizing The Potential of Africa’s Economies McKinsey Global Institute, September 2016

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

Page 7, 2015

NAMIBIA’S INDUSTRIAL POTENTIAL

NAMIBIA’S INDUSTRIAL POTENTIAL

2016 GDP contribution of Agriculture, manufactured food and beverages

Total workforce employed in Agriculture & Fishing

0

500000

1000000

1500000

2000000

2500000

3000000

3500000

2010 2011 2012 2013 2014 2015 2016 2017

Agriculture, Water & Forestry Expenditure by Major Category (N$ ‘000)

Capital TransfersAcquisition of Capital AssetsSubsidies & Current TransfersGoods & Other ServicesConstruction & RenovationsPersonnel Expenditure

Improve Allocative

Efficiency

Opportunity to Restructure

Increase Productive Efficiency

Reduce Expenditure

MANAGING UNDER RECESSION

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