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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

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Na m ibia Mid Yea r Bud get Rev iew 20 17/ 18

Standard Bank presentation by Ms Naufiku Hamunime, Economist, Standard Bank

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EMERGING OUT OF RECESSION: THE CASE FOR INDUSTRY

MID YEAR BUDGET REVIEW

November 2017

Naufiku Hamunime
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“ ”

With primary commodities accounting for

  • ver 50 percent of exports, the Namibian

economy remains at the bottom of the global value chain.

  • Calle Schlettwein,

Budget Speech, March 2017

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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 4.8 4.2 12.3 2.5 7.1 5.4 2.60 0.3 6 5.1 5.1 5.6 6.3 6.1 1.1
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  • 2
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
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Construction Slowdown Reduced Government Spending

DRIVERS OF NAMIBIA’S RECESSION

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HISTORICAL FISCAL TRENDS:

WAGE BILL

40.4 37.7 34.3 35.2 37 31.8 35.7 36.9 37.5 38.7 39.7 44.9 5 10 15 20 25 30 35 40 45 50 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 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
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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 Breakdown

Operational Development 4% 77% 19%

2016 Development Budget by Subdivision

Goods & Services Acquisition of Capital 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
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HISTORICAL FISCAL TRENDS:

STATE OWNED ENTERPRISES

SME, 78000 Transnamib, 312929 Namibia Airports Company, 155021 Air Namibia, 695105 NBC, 252107 UNAM, 960858 NUST, 482480 NSFAF, 1200727 NTA, 509213

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

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HISTORICAL FISCAL TRENDS:

SOCIAL SPENDING

37.6 39.7 48.3 48 21.7 21.1 21 21 12 10.4 13.5 8 19.8 20 9.3 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
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Construction Slowdown Reduced Government Spending

DRIVERS OF NAMIBIA’S RECESSION

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Improve Allocative Efficiency

Opportunity to Restructure Increase Productive Efficiency

Reduce Expenditure

MANAGING UNDER RECESSION

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REDUCE EXPENDITURE

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)

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IMPROVE ALLOCATIVE EFFICIENCY

40.4 37.7 34.3 35.2 37 31.8 35.7 36.9 37.5 35.2 39.7 44.9 45.9 46 44.9 45.9 46 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 21.1 21 21 21 22 12 10.4 13.5 8 14 14 19.8 20 9.3 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
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Improve Allocative Efficiency

Opportunity to Restructure Increase Productive Efficiency

Reduce Expenditure

MANAGING UNDER RECESSION

Prioritize Industrial Dev

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VISION 2030

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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 5.5 22.2 23.4 8.6

2016 TOTAL EXPORTS (%)

Minerals Food and Live Animals Manufactured Products Re-exports Other Commodities 12.4 14.4 13.6 11.4 13 12.5 13.7 12.2 11 10 9.9 11 9.2 12.3 12.7 17.2 10.9 10.4 8.7 12.7 13.2 12.2 11.4 11.3 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
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BUDGETING FOR INDUSTRIALISATION

0.71 0.71 0.82 1.44 1.7 1.43 1.81 1.58 1.6 1.2 0.86 1.01 5.17 5.48 5.74 5.96 6.55 5.58 5.89 6.78 8.58 9.01 8.12 8.02 8.8 9.4 10.6 10.8 10.5 8.4 8.5 8.3 11 10.6 10.3 9.08 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
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“ ”

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

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NAMIBIA’S INDUSTRIAL POTENTIAL

2016 GDP contribution of Agriculture, manufactured food and beverages Total workforce employed in Agriculture & Fishing 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 Transfers Acquisition of Capital Assets Subsidies & Current Transfers Goods & Other Services Construction & Renovations Personnel Expenditure
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Improve Allocative Efficiency

Opportunity to Restructure Increase Productive Efficiency

Reduce Expenditure

MANAGING UNDER RECESSION

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SLIDE 20 5 Simmonds Street Johannesburg 2001 / P O Box 7725 Johannesburg 2000 Tel +27 (0)11 636 9112 / Fax +27 (0)11 636 6299 / Mobile +27 (0)00 000 000 standardbank.com

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