Lunch Budget Statement: Development Budget

Presented by Honourable Minister of Finance

Ms. Saara Kuugongelwa-Amadhila

31st March 2010

Mr Tom Alweendo; Director General of the National Planning Commission

Honourable Ministers present

Your Excellencies, Members of the Diplomatic Corps

Distinguished Development Partners

Captains of the Industry,

Members of the Media,

Ladies and Gentlemen

1. I am delighted to have been invited here today to address you on the

Budget that I presented to Parliament today. Today’s occasion is to zero-

in on the development budget, its core focus and scope. The development

budget plays a critical role in stimulating economic growth, which

translates into employment creation and poverty reduction. I invite you to

join me in applauding Prime Focus and Namibia Chamber of Commerce

and Industry for hosting this event. This platform affords us the

opportunity to interrogate the budget and its policy interventions.

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 The Development Budget remains expansionary

2. The 2010 development budget is expansionary and its thrust is in accord

with the national priorities. Total capital development budget is increased

by 17% in real terms from N$4.8 billion in 2009/10 to N$5.2 billion in

2010/11.

3. The total allocation inside the state revenue fund over the MTEF amounts

to an unprecedented N$14.6 billion, to finance infrastructure

development. This is augmented by off-budget loan financing amounting

to N$2.3 billion and off-budget donor grants amounting to N$1.1 billion,

capital transfers to SOEs and operational expenditures of a capital nature

this amount increases to N$20.67 billion.

4. Total allocation weights lay emphasis on economic sector, in line with the

development priorities. As such, allocation to economic sector amounts to

42 percent, social sector 33 percent, security sector 17 percent and

administration sector 8 percent. A total of 583 development projects will

be implemented during the MTEF.

5. In order to give impetus to the countercyclical drive of the budget, capital

expenditure expansion is directed at priority development programs and

infrastructure projects with high economic growth and job creation

potential. The following priority programmes have been identified during

the MTEF:-

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 • Infrastructure development, including construction, upgrading and

maintenance of roads, sanitation, rural electrification and rail

network.

• Agriculture, with emphasis on the expansion of the Green scheme

projects, provision of clean water and integrated forestry

management.

• Trade and industry, focusing on entrepreneurship development

construction of industrial parks and establishment of the Namibia

Standards Institute.

• Human resources development which entails provision of facilities

and construction of health and education facilities and new schools

of medicine and engineering.

• Law and order to improve facilities and services.

6. Government is cognizant that project implement ion is important to

realise welfare gains. I should also hasten to state that wealth creation is

optimised when local content is maximized in development project

undertakings. In this regard, we should be proud that budget execution

rate has been on the rise in recent years. During the 2006/7 – 2008/9

MTEF, capital budget execution rate stood at 91 percent. For 2009/10

budget year, an implementation rate of 93 percent is estimated.. We thus

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 have a paradigm shift, which emphasizes timeliness of fiscal activity and

programme implementation.

Development Aid

7. I commend our development partners for teaming up with Government

and the Namibian people in a formidable front against the vicissitudes of

poverty, unemployment, hunger, disease and vulnerability. Total

assistance from development partners “outside” the budget amounts to

N$1.1 billion over the MTEF.

8. I am gratified to note that some of our partners have agreed to channel

their support “inside “ the state revenue fund with the amount totalling

.N$265 million. However, I am concerned that up to N$1.1 billion of

donor support is to be provided outside the budget, contrary to the spirit

of the Paris Declaration which commit donors to untie budget support and

promote country ownership of the programmes.

9. Project funding also presents problems in financial planning and

accountability. I would therefore like to encourage our development

partners to make use of the country systems to ensure proper targeting of

these resources to national priorities and to ensure national ownership of

the programmes.

10.The spectre of poverty, unemployment and vulnerability which continue

to bite into the social fabric of our society calls for renewed focus.

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 Government is committed to stay the cause of poverty reduction and

strengthen transparency and accountability of donor aid. I call on our

partners to deliver on their aid commitments in a timely manner in order

to optimise development outcomes. In this connection, Government

would continue to engage our development partners.

Reform initiatives and opportunities

11.The substantial expansion of the development budget expenditure

presents opportunity for increased uptake of tenders. This is

complemented by ensuing reforms of Tender Board procurement rules to

promote local content including SMEs and BEEs participation in public

procurement, streamline procedures to optimize efficiency and realise

significant time gains in awarding tenders.

12.Government has already started with the pilot implementation of

programme-based budget management, which links resource allocation to

activities and outcomes. This would contribute greatly to improvement in

the quality of expenditure and value for money.

13.The National Planning Commission is developing a computerized

monitoring and evaluation system which would strengthen project

monitoring and evaluation process.

14.While capital expenditure is one of the critical elements through which

economic growth can be stimulated, the operational budget expansion is

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 equally important because of its impact on consumption and service

delivery. Government consumption plays a key role in sustaining

domestic demand through procurement of goods and services from

domestic contractors.

15.We thus have a budget which embodies the Government resolve to

address the social and economic aspiration of the nation. The 2010 budget

summons collective will of ordinary Namibians, entrepreneurs and

corporate citizens to engage in productive economic activities for wealth

creation and betterment of living standards within the limits of available

resources.

16.The policy interventions underpinning the development budget, seen in

conjunction with initiatives to improve monitoring and quality of

expenditure, emphasize the Government resolve to spur economic

development and create jobs. The private sector is invited to seize

manifold investment and financing opportunities.

17.With that, I now look forward to hearing what others have to say and to

the panel discussion.

18.Thank you.