Namibia spends large part of budget financing education, health, and social protection

For the past two decades, Namibia has committed substantial resources to inequality reduction through a combination of progressive taxation and high levels of social spending on education, health, and social protection—leading the way for spending the greatest amount on public services in the continent. Revenues from the progressive income tax provide the funds for social spending, which has remained consistently high as a share of its GDP. Social programs and spending on education and health in Namibia account for more than half of government spending, and have proven to reduce poverty and inequality.

Inequality in Namibia is one of the highest in the world, largely due to the legacy of colonialism and apartheid and the resulting concentration of wealth. Women, subsistence farmers, and people in rural areas are disproportionately among the most vulnerable groups in the population.¹

Since the early 2000s, the government of Namibia has sustained a commitment to reducing inequality through the development strategy “Vision 2030” published in 2004. The goal of Vision 2030 is to reduce the Gini coefficient from 0.63 to 0.30 by 2030.² The National Development Plan of 2012-17 proposed the reduction of the Gini coefficient annually by 3 percent.³ Central to Vision 2030 is a commitment to invest in the social sector, including healthcare, education, and social protection supported by revenues from a progressive tax system. Redistributive measures include in-kind transfers in the form of education, health, and social security.  The government also provides a series of targeted cash transfers to its population, for example:

• The Vulnerable Child Grant (VCG): for households with children up to the age of 16 with a monthly  income of less than NAD 1000 (USD 79).
• The Maintenance Grant: for households with at least one child under the age of 18 who have a monthly income of less than NAD 1000, whose parents are unemployed, receive an old age pension, or are disabled.⁴ Both the VCG and the Maintenance Grant total  NAD 250 (USD 20) per child per month.⁵
• The Disability Grant: targeted to people diagnosed with a disability (including the blind and those with AIDS), which totals around NAD 1000 (USD 79).
• The Old Age Grant: a monthly transfer of about NAD 1,000 in 2015 for all residents aged 60 and above. ⁶

Implementation

President Sam Nujoma in 1998 called on his cabinet to develop a vision that would indicate “where we are, where we want to go from here, and over what time frame.”⁷ The National Planning Commission was charged with the development of Vision 2030, based on the National Long-Term Perspective Studies (NLTPS) model promoted by the United Nations Development Programme (UNDP) in Africa during the early 1990s. The National Committee was made up of representatives from the private and public sectors, and civil society, as well as each of the 13 regional governors of the country. Public input was sought through workshops in the country’s regions throughout 2001 and representatives of public bodies, organizations, and agencies were invited to the National Aspirations Conference in 2002 before the process was finalized in 2003.⁸

The strategy is implemented through five-year National Development Plans (NDP) with strategic goals and targets. The coordination of policies and programs under the NDPs and their monitoring and evaluation is undertaken by the National Planning Commission (NPC). The NPC is chaired by a director-general, and includes experts in social and economic development appointed by the president for three-year terms as well as key ministers.⁹

Cost

Namibia is one of six countries in Africa that meet the globally recommended education expenditure target of 20 percent of its budget.¹⁰ For example, Universal Primary Education was implemented in 2013, and free secondary education began in 2016.¹¹ The state is also the main provider of healthcare services, which is highly subsidized,¹² as Namibia spends more of its budget on healthcare than Finland.¹³

Social spending is supported by the revenues from a progressive marginal income tax rate of 0 percent for lowest incomes (NAD 50,000 or USD 2,600 in 2022), and up to 37 percent for highest incomes (NAD 1,500,000 or USD 78,000).¹⁴

Social spending in Namibia has been sustained or even increased as a share of total budget throughout the years, from 36.8 percent in FY 2014-15 to 49 percent in 2018-19 FY.¹⁵ Most of this spending is spent on education and health. In 2015-16, Namibia spent about NAD 2900 (USD 230) per capita on healthcare, and NAD 5525 (USD 430) per capita on education, an increase from NAD 584 and NAD 1009 in 2000.¹⁶

The budget allocated to social assistance programs increased from 1.3 percent of GDP in 2000-01 to 3.5 percent in 2015-16, making up 4 and 8 percent of public spending, respectively.¹⁷ The Old Age Pension accounts for more than half of the spending on direct transfers.

Assessment

In the first two decades since independence, the poverty rate in Namibia (people living under NAD 277 / USD 34 per month) fell from 58.9 percent in 1993 to 15.3 in 2010.¹⁸ Income inequality measured by the Gini coefficient fell from 0.7 in 1993 to 0.56 in 2016.¹⁹ Studies show that the fiscal policy had a direct impact on the change in poverty and inequality levels, with income from in-kind transfers in health and education accounting for about 78.2 percent of the reduction in the Gini coefficient.²⁰ Other important impacts of Namibia’s social spending is a 97 percent decrease in annual malaria cases in the past ten years.²¹

Studies show that transfers are also progressive by benefiting mostly the poorest—33 percent of the poorest quintile received at least one (receiving up to 66.1 of their income from direct transfers), compared to 13.1 percent among the richest quintile (less than 20 percent of their income in direct transfers).²² Namibia’s social spending has also proven to have impacts on lower infant mortality and fertility rates, and on higher adult and youth literacy rates.²³

Social spending in Namibia has remained high throughout global economic downturns, and assistance programs have also scaled up both in terms of coverage and in benefit value. In the 2017-18 fiscal year, beneficiaries of the old age or disability grants doubled from 2000 levels to about 211,000, and child-grant beneficiaries increased from 4,000 in 2001-02 to more than 344,000 in 2017.²⁴

Despite progress made, targeting efficiency remains a considerable challenge to be addressed by the Namibian government, and inequality levels remain high. Some additional reasons for the prevalence of inequality include remaining challenges in the efficiency of public services and a severe lack of employment opportunities.²⁵

Additional Information

Namibia has continued to express its commitment to reduce inequality through other plans, such as the 2016 Harambee Prosperity Plan, and the Blue Print for Wealth Redistribution and Poverty Eradication which protected existing social protection programs and established new ones targeting vulnerable individuals as well as food banks.²⁶ The creation of the Ministry of Poverty Eradication and Social Welfare in March 2015 signaled a renewed commitment to addressing poverty and inequality.²⁷

Photo: “Abandoned Gas Pump in Solitaire / Namibia,” ©Adobe Stock/James_Kerwin

Tags

• Health
• Income & Wealth
• Middle-Income Country
• Namibia
• Older Adults
• People with Disabilities
• Redistribution
• Social Protection
• Universal