Development Spending Delays Now a Recurring Problem for Namibia – Economist

Government had executed only 42% of its development budget by the end of September 2026, raising questions about the government’s ability to turn public funds into infrastructure, jobs and economic activity.

The figure, contained in the 2026/27 Mid-Year Budget Review presented by Finance Minister, Ericah Shafudah on 22 October, contrasts with the 53% execution recorded for operational expenditure over the same period.

While operational spending covers the day-to-day running of government, including salaries and other administrative costs, the development budget finances projects such as roads, schools, water infrastructure and other public investments intended to strengthen the economy.

Economist Almandro Jansen said the difference is not automatically alarming because capital projects often take longer to implement due to procurement processes, tender procedures and the mobilization of contractors.

However, he warns that Namibia’s difficulty with development spending is becoming a recurring problem rather than a temporary delay.

Jansen points to the previous financial year, when development spending ended at approximately 90% of its budget, while operational expenditure slightly exceeded its allocation.

In his assessment, government has consistently managed to meet its operational obligations but has struggled to deliver the investment needed to expand the country’s productive capacity.

A further concern is that the 42% execution figure includes both actual expenditure and commitments. This means the amount of money that has physically been paid into the economy is lower than the headline execution rate suggests.

Jansen says the Mid-Year Review’s explanation for slow implementation points to deeper weaknesses in project planning and selection.

These include projects receiving funding before they are ready for implementation, new projects being introduced during the financial year and limited resources being spread across too many projects.

He argues that these challenges are unlikely to disappear simply because government enters the second half of the financial year.

The timing of implementation is also important. Jansen estimates that approximately N$3.7 billion still needs to be delivered during the second half of the financial year, warning that some activity could be pushed into January to March 2027.

This could mean that economic activity expected during 2026 is delayed, even if projects eventually proceed.

The economist says slow development spending alone is unlikely to derail the government's revised 2026 growth projection of 2.3%. However, it removes an important source of support for an economy already facing pressure from foot-and-mouth disease, possible El Niño-related drought and weaker performance in some sectors.

Jansen places the greater concern on the long-term impact. Roads, water infrastructure, classrooms and electricity connections can improve productivity for years. When these projects are delayed, communities and businesses wait longer for the economic benefits they are intended to deliver.

The consequences also extend beyond government departments. Jansen says the construction and engineering sectors depend heavily on public projects, meaning delays can affect contractors, suppliers, transport operators and businesses providing equipment and materials.

Contractors may employ workers, hire equipment and purchase materials after securing government tenders. When projects stall or payments are delayed, smaller businesses can struggle to meet their financial obligations.

He warns that uncertainty around the public project pipeline can also discourage companies from investing in equipment, skills development and additional staff.

The impact reaches workers, particularly young and low-skilled people who rely on construction for employment.

Jansen notes that Namibia’s unemployment rate stood at 36.9% in 2023, making delays in labor-intensive public projects particularly concerning.

He also warns that businesses in regional towns can experience a second-round effect when construction workers and contractors have less income to spend on local goods and services.

The development spending challenge becomes more significant when considered alongside Namibia’s debt position.

The Mid-Year Budget Review projects public debt at N$201.7 billion, equivalent to 68.7% of gross domestic product, while interest payments are expected to reach N$15.4 billion, or 17.5% of government revenue.

Jansen argues that borrowing to finance development is not necessarily a problem when projects deliver economic and social returns. The risk arises when government borrows at high interest rates, but projects are delayed, leaving taxpayers with the debt without receiving the intended infrastructure on time.

He further cautions that government can end up paying interest on borrowed funds that remain unused while projects are not ready to proceed.

To address the problem, Jansen recommends that projects should only receive funding once feasibility studies, designs and land arrangements are complete. He also advocates concentrating resources on fewer projects that can be completed, instead of spreading funding across numerous unfinished developments.

He calls for quarterly project-level reporting that shows both financial expenditure and physical progress, such as kilometers of roads built, classrooms completed and households connected to electricity.

For contractors, he says government should enforce payment timelines for certified invoices to protect smaller businesses and employment.

The central issue raised by the Mid-Year Review is therefore not only how much government has spent, but whether the money allocated for development is producing completed projects and measurable benefits for the public.