Corruption cannot be stamped out by one institution – it requires a national and global effort – HON. CALLE SCHLETTWEIN, MINISTER OF FINANCE, NAMIBIA
Corruption always has a negative impact on economic growth thereby causing decay in the cultural values of the system. In this exclusive interview with African Leadership Magazine, Namibian Minister of Finance, Honorable Calle Schlettwein extensively discusses the challenges faced in the financial sector as well as the country’s general anti-corruption efforts. Excerpts:
Limited access to finance is one of the greatest challenges faced by small businesses and firms in Namibia. In what ways do you think this problem can be solved?
Limited access to finance is indeed a challenge faced by small and larger businesses and firms in Namibia. Although we have made very good progress in providing wider and more affordable access to financial services in Namibia [cite recent ratings by FinScope, IMF, World Bank], much still needs to be done to expand access to finance for consumers, micro, small and medium enterprises (MSMEs) and agriculture. Our financial inclusion agenda is driven by our Financial Sector Strategy, in terms of which we strive to achieve full financial inclusion whereby all people can gain access to a full suite of quality financial services, provided at affordable prices, in a convenient manner, and with dignity for the clients. This includes a venture capital fund, a loan guarantee scheme coupled with a mentoring and training programme to upcoming small and medium-sized entities. These baskets of instruments are tailored to target Small and Medium-sized Enterprises where youths and women are the majority stakeholders.
Progress to achieve financial inclusion was made through reforms, as envisaged in our Financial Sector Strategy. These reforms were directed at the following four areas, namely regulatory framework and consumer protection, consumer literacy, access to financial services and local ownership of commercial banks. We have always advocated for fairness, in favour of both the financial service providers and consumers of such services. The reforms that were initiated include Guidelines for Lodging Complaints, a Code of Good Banking Practices, institutionalizing Credit Bureaus, drafting the Financial Services Adjudicator Bill and the Consumer Credit Bill and empowering our consumers of financial services with the knowledge in order for them to make informed financial decisions through the financial literacy initiative.
You recently tabled the mid-term budget for 2018/2019 and there has been an increase of about 44% in the projected debt level. What strategies are being implemented to resolve this issue?
We concede that our public debt burden is unsustainable in the long term, but we have adopted a fiscal consolidation strategy and initiated austerity measures to lessen our dependence on funding public spending through debt. I am convinced that our efforts will bring relief in the medium and long term. We have to ensure that each public spending outlay is feasible and each capital project can be justified and is sustainable in the future.
In the 2018 Mid-Year Budget Review, I stressed that the enabling adjustments that were introduced are necessary to correct for rigidities experienced in the roll-out of the fiscal consolidation program. This policy response was indispensable to rebalance the macro-fiscal framework with a view of achieving close alignment between public expenditure and revenue outlay on the one hand, and the macroeconomic framework on the other hand. Even the IMF after a working mission earlier this month welcomed the government’s commitment to delivering this year’s fiscal deficit target and further deficit reductions over the next years.
A cyclical downswing in the economy presents us with an opportunity to reboot our toolkits and strategy for more sustainable outcomes. The triple challenges of inequality, poverty and unemployment are the enduring macro-critical challenges which we must overcome to achieve shared prosperity with the Gini coefficient ratio of 0.56, Namibia is the second-highest unequal society in Sub-Saharan Africa. While we have progressed on this front, starting from high levels of inequality in the order of 0.71 in early 1990, this progress is not good enough. A lot needs to be done for us to achieve shared prosperity and equitable distribution of income, as at the last count, absolute poverty stands at 17.4 percent of the population, with extreme poverty measuring at 10.7 percent of the population, unemployment is high at 34 percent and youth unemployment, in broad terms, higher at 45.5 percent.
To these triple challenges shall be added the limited industrial and productive capacity, with the paucity of technical skills posing binding constraints in the economy.
This is not to discount the progress we have made to date. It is not to discount the distance which lies ahead. To go far, and reach greater heights we must traverse the road ahead together in unison.
The aura, passion and common consensus from the successful conclusion of Second Land Conference in an independent Namibia, has demonstrated once again that Namibians from all walks of life can hold hands and traverse together for a common end. We have resolved to address this perennial national issue, which holds promise to empower our people and realize value from their natural resources for the betterment of their living standards.
Over the past three decades or so, we have progressed in quantum and in more than one respect as an aspiring nation:-
Through a decent social wage, which encapsulates the government’s consistent investment in education, health services and social safety net programs, we have been able to make meaningful headway in pushing back the frontiers of inequality and poverty. Inequality is the second-highest in the Sub-region, but it has fallen from 0.71 in 1993/4 to 0.56 by 2015/16, poverty levels are high in the context of average national incomes, but it has been on the downward trajectory, falling from 37.5 percent in 2003/4 to 17.4 percent by 2015/16, unemployment has remained stubbornly high, requiring multifaceted and multi-sectoral approach to make a remarkable dent on this structural challenge,
In addition and against the backdrop of a complex set of external shocks to our economy operating in tandem with domestic structural constraints since 2016, we have been able to adopt a responsive macro-fiscal policy framework to chart the pathway from the precarious economic and fiscal environment.
Since then we have rebalanced the macro-fiscal framework, thus placing public finance on a sustainable path and setting a basis for future sustainable operations. This does not, however, discount the tightness in fiscal operations which requires us to ensure that expenditure remains aligned to public revenue and we must all live within our means. The framework for long-term sustainable fiscal operations is increasingly gaining strength.
As the Namibian Minister of Finance, what are some of your corporate social responsibilities?
I take the view that any public servant has the primary function and responsibility to serve people and that one has to devote all one’s time and ability towards that task, public service. In my 2018 Mid-Year Budget Review and Policy Statement, I reiterated the following interventions to support the local economy and the financial system:
- Promoting inclusive economic growth and job creation.
- Maintaining a pro-growth fiscal consolidation policy stance.
- Giving effect to priority resolutions and urgent needs identified at the 2nd National Land Conference.
- Implementing targeted measures to reduce poverty and vulnerability.
- Implementing industrial development pilot projects.
- Protecting expenditure in the social sectors.
- Advancing our tax policy and tax administration reform agenda.
- Introducing structural reforms to support fiscal consolidation and economic growth objectives by diversifying our narrow economic base, boosting local economic development and advancing industrialization.
I am resolute to forge ahead with these necessary reform responsibilities. In our private capacities, my wife and I are sponsoring students to further their studies at our university in Namibia.
How is the Namibian government looking to address the country’s shortage in investment opportunities?
I do not believe that Namibia has a shortage of investment opportunities. The challenge lies more in how to promote these and how to attract both local and foreign investors to venture into these prospects. We are working hard to improve Namibia’s investment climate and to enhance the ease of doing business in our country. With the adoption of the “Growth at home” Strategy, the establishment of the Business and Intellectual Property Authority (BIPA) and the review of the provisions of the Namibia Investment Promotion Act to provide for a modern investment framework, we are well geared to put Namibia on the where to invest map. Also, our Public-Private Partnership (PPP) regime and our Public Enterprises Reform agenda will capacitate the emergence of new investment opportunities.
In keeping with the overarching priorities of fiscal sustainability and reinvigorating growth as a necessary condition for job creation, per capita incomes and the reduction of public debts, the key budgetary priorities for the medium term are the following:
- Front-load the implementation of announced public sector investment stimulus and the promotion of private-sector-led investments to support domestic economic activity.
- Maintaining a gradual fiscal consolidation policy with strong growth impetus remains a central policy stance to safeguard macroeconomic stability and long-term fiscal sustainability while supporting economic growth and job creation objectives.
- Providing scaled-up resource allocation to implement priority resolutions identified at the Second National Land Conference held early October this year.
These are the priorities for more serviced land in urban and peri-urban areas, delivery of low-cost housing, improving animal health and processing facilities in rural areas and resettlement and post-resettlement support program. Protecting expenditure in the social sectors of education, health and skills development by maintaining expenditure allocation in real terms and implementing measures to improve internal efficiencies, quality of spending and outcomes alongside these measures to strengthen the quality of spending are the ongoing reforms to curb growth in public service personnel and public sector wage bill. Mobilizing domestic resources for development through unlocking domestic savings to plug a perpetual savings-investment gap. The domestic asset requirements for institutional investors have been increased from 35 percent to 45 percent by December 2018 and further partnerships and collaboration with the private sector will seek to enable domestic savings to better serve the economy. Consultation on tax policy proposals will continue to benefit from stakeholder input with the view to enhance progressivity and equity of the tax system and further protect the tax system from base erosion and profit shifting. Implementing supportive policies and structural reforms to broaden the economic base, local economic development and advance the national industrialization and economic diversification agenda.
Kindly share your top five productivity habits with our readers.
Productivity is the most important determinant of the level of achievement and standard for any organisation or nation. To raise productivity, I believe that one has to embrace the following basic principles:
I insist on punctuality. Time is a nonrenewable, non-replaceable commodity and keeping people waiting is tantamount to stealing time;
Honesty, accountability and transparency in all dealings, official as well as private to ensure integrity and trust in the institution; There are shifting paradigms of productivity and the need to pursue simultaneously the three productivities of economic, environmental and social wealth. At all levels, sustained productivity improvement must be built on a foundation of effective governance.
Reading and information gathering, keeping abreast of new and innovative ways to improve outcomes. We must take charge of our own productivity destiny through our own innovation and ingenuity assisted by partnerships, technology transfer, and peer-to-peer networking relationships. On the other hand, we must continue to use tested and reliable methods. Fear no change but avoid change for the sake of change.
Inclusivity and broad sharing of knowledge, we must close the ICT gap between us and the rest of the world and role it out to all corners of the country in order to make our businesses and public institutions more competitive.
Set outcome targets and measure your achievements against them, we must create a greater focus on improving the productivity of manufacturing, tourism and the agricultural sectors. Engagement of all stakeholder through honest and comprehensive policy dialogue to remain in touch with the needs and aspirations of the real economy;
Corruption is one of the deadliest hindrances to African development. How where you able to have such a record of integrity and have contributed immensely to your country’s economic development?
It is my personal mission to combat corruption in all its diverse forms wherever it occurs or is likely to occur. This is because I know that corruption has a devastating effect on economic growth and stability. Essentially, corruption impairs the ability of the government to do its job. It undermines the ability to raise needed revenue, and it also distorts spending quality and decisions. Moreover, corruption can weaken the foundations of a healthy economy by degrading social norms and undermining civic virtues. Consequent and consistent zero tolerance for any type of corruption in one’s official life, but equally in one’s private life are my ways to maintain and build integrity.
Namibia has adopted its National Anti-Corruption Strategy and Action Plan for implementation by the stakeholders. Corruption cannot be stamped out by one institution or one individual – it requires a national and global effort. I followed My President, HE Hage Geingob and the First Lady, Madame Monica Geingos in publicly declaring my personal assets and how I attained them. This act of transparency and accountability set an example and shielded us from any suspicion of hidden deals because everyone knew, and there was no room for doubting the correctness of my worth. As far as I am aware I am the only Minister of Finance on the African continent having done so. The full implementation of this Strategy will bear Namibia significant dividends in terms of increased public service delivery, corruption prevention, economic growth and employment opportunities.
The Ministry of Finance plays a key role in implementing this Strategy. Amongst others, we are required to carry out the following actions:
Combat illicit enrichment, inclusive of enabling tax authorities to conduct lifestyle audits.
Develop legislation on public procurement to make provision for a register of business entities and individuals who are barred from undertaking government-related work due to previous irregularities and dishonesty or corruption convictions.
Conduct a lifestyle tax audit.
Develop and enact an Audit Bill to ensure Auditor-General reports are followed by rectified accounts and actions to hold officials accountable.
Reduce the diversion of resources into non-budgetary accounts.
Corruption always has a negative impact on sustainable economic development while endangering society. From your viewpoint, what anti-corruption efforts should be explored by African leaders to yield results?
Basically, all countries and regions have to comply with their obligations under the following treaties:
Southern African Development Community (SADC) Protocol against Corruption.
African Union (AU) Convention on Preventing and Combating Corruption.
United Nations (UN) Convention against Transnational Organised Crime.
United Nations (UN) Convention against Corruption.
These are important existing legal instruments and all member states are required to strengthen the development of anti-corruption mechanisms; facilitate and regulate cooperation among governments; develop and harmonize policies and domestic legislation relating to cooperation. Moreover, all member states are reviewed regularly to determine the compliance of member states with their obligations. Above all, the political will to meaningfully fight corruption and fully comply and implement domestic, regional, continental and global legislation must be there.
We were successful in fighting corruption by stopping projects and or the flow of money to projects that were suspected of corrupt activities. Drying out suspect operators and exposing the wrongdoing are effective tools.
How do you feel about your emergence as a recipient of the Transparency Excellence Award and Leadership Medal of Honor in Public Service conferment?
I am deeply honoured and humbled to be the recipient of the Award. It proves that my philosophy and conviction of rooting out corruption is being recognised. To receive such an award also fills me with pride for what we have achieved in Namibia and therefore I do accept the award on behalf of all Namibians who joined the fight against corruption. It is a fight that can only be won through concerted, persistent collective actions and I am grateful that my efforts were supported and enhanced by HE President Geingob and most importantly the people of Namibia.
If we turn a blind eye to corruption, we can forget about ever achieving the goals of own National Development Plans and the United Nations’ Sustainable Development Goals. Corruption impacts directly on the integrity and functioning of financial systems, good governance, financial stability, and economic development. It is my duty to contribute towards preventing this from happening, and I appeal to all people to join me in the combat of all the different kinds of criminal, illegal, and unethical activities.