THE year 2016, has been a roller coaster ride for Namibia and as a country primed for rapid economic growth despite current fiscal challenges, it is imperative that responsible authorities learn from the past and calibrate sound decisions.
This stems from the realities of the past not only in Namibia that Government interference in private sector funds, particularly pension funds, as well as tapping into reserves of state-owned enterprises would transition a nation from a promising position into a highly indebted and economically weak one.
In the past week, Cabinet resolutions announced present an argumentative position that Government is not learning from the economic errors of yesteryear and further presents worrying prospects for the near future.
Of concern is the narrative that the Namibia Post and Telecom Holdings (NPTH), which is in the process of being disbanded, has received Cabinet approval to spearhead the process of acquiring the 34 percent foreign-owned shares in Mobile Telecommunications Limited (MTC) and the Government Institutions Pension Fund (GIPF) will fund the deal.
It has been further reported that of late, Government has been turning to GIPF for cash injections by tapping into the pension fund’s reserves, which are over N$80 billion. Cabinet decision to give NPTH that mandate came as a surprise to many seeing that last year Government announced that the NPTH, which is the holding company of Telecom Namibia, MTC Namibia and NamPost, would be dismantled.
In yet another Cabinet resolution announced this past week and in a bid to allay any fears that Government will not honour its financial commitments, Finance Minister Calle Schlettwein announced that the Road Fund Administration which is a state-owned enterprise has already started paying invoices of up to N$318 million from its accumulated cash reserves. This amount would rise to as much as N$450 million with appropriate adjustment on the non-priority or uncommitted expenditure on Roads Authority budget that is financed by RFA.
From other struggling economies such as Angola and Zimbabwe we have learnt that making pension funds plough their assets into any government initiatives could very well mean poor returns for workers in the pension scheme. Funds should not have to risk gambling away their members’ retirement incomes by subsidising a project that should be funded from government coffers. The local Government pension scheme should not be a sovereign wealth fund for the Government to spend as it sees fit.
Equally so and as much as the private sector should be left to operate freely without Government intervention, reserve funds for state-owned enterprises should not be extracted to cover debts. This opens doors to crippling the Government entity and acerbates that risk at which such an entity like RFA will operate.
The current and the future Government will be under pressure to increase services in the public sector and to restore spending in the country’s damaged welfare system. The challenge will be to find a way to follow through on its promises to the native voters while also achieving a more balanced budget. In short, signs of recovery hint at a hopeful future ahead for the land of the brave. But a hope is not a promise; Namibia will have to find a way to maintain its economic growth without repeating its past mistakes.
Confidente. Lifting the Lid. Copyright © 2015