Government wage bill impacting investments
Concerns expressed over size
The Bertelsmann Stiftung says Namibia's wage bill is high above international best practices
The Bertelsmann Stiftung says Namibia's expenditure on salaries, relative to its gross domestic product (GDP), will limit the government's ability to build wealth. The findings are contained in the Bertelsmann Stiftung's Transformation Index 2024.
"Despite ongoing warnings since the late 1990s about the urgent need for public sector reform, progress has been limited. A significant portion of the annual budget, more than 40%, is allocated to current expenditure, primarily for public sector salaries," the Bertelsmann Stiftung said in the report.
The Bertelsmann Stiftung said the allocation was not in line with international best practices.
"This allocation is unsustainable by any standard and restricts the government's ability to make necessary investments in the economy. In response to fiscal constraints that have emerged since 2016, the government has adopted a borrowing strategy, resulting in a worrisome accumulation of state debt," the report said.
Debt
The foundation also sounded a warning about Namibia's increasing public debt, saying it hindered the prospects of economic recovery.
"This debt burden further diminishes the incentives for economic recovery, especially in the wake of a recession and the pandemic. The state budget is formulated with little transparency and minimal consultation with non-governmental parties in politics and civil society," the report said.
The government's decentralisation policy also fell short in the Bertelsmann Stiftung's findings into Namibia.
"Although a policy of decentralization has been outlined, it has not been implemented to a degree that would significantly enhance regional performance.
“While stricter tender rules have been established, adherence to them is inconsistent. Exceptions are granted and sometimes abused, leading to the allocation of public funds to bidders who may not offer the best value for money, or any value at all," it said.
"The coordination of policies into a cohesive governance strategy is severely limited in Namibia. Policy coherence is often undermined by blurred lines of authority among ministries, overlapping competencies, and conflicting decision-making powers," it added.
Oversight
The foundation further questioned the lack of oversight the National Planning Commission (NPC) had in driving the government's development agenda.
"While the National Planning Commission is responsible for the National Development Plan and is considered the most competent of all strategic blueprints, it lacks oversight authority and cannot enforce measures to ensure adherence to declared goals and strategies," the report said.