Paying pensioners N$3 000 to cost N$720m a month

Taxpayers would have to fork out about N$723 million per month if the treasury is to fulfil president Hage Geingob’s wish of increasing the country’s pension and disability grants from N$1 400 to N$3 000.

Should the treasury increase these grants to at least N$2 000, Namibia’s taxpayers would have to pay N$482 million monthly.

Some 241 016 pensioners and people with disabilities are currently benefiting from social grants.

During his New Year’s message this year, Geingob said: “Before I leave office, I hope that the old-age pension grant would be increased to N$2 000, or maybe N$3 000.”

This has been widely celebrated and anticipated by pensioners, who expected Geingob to realise this before his death on 4 February.

The minister of finance and public enterprises, Iipumbu Shiimi, is expected to table the 2024/25 national budget today.

A pensioner who spoke to The Namibian on condition of anonymity this week said president Nangolo Mbumba should fulfil Geingob’s wish.

“His death pained many of us, because he loved us as old people. We will be disappointed if the government turns his wish down,” she said.

However, experts are casting doubt on whether the government can afford to increase the pension grant by that much.

Economist Omu Kakujaha-Matundu says increasing the pension grant is plausible, but not feasible.

“I don’t think the government has that much fiscal space to accommodate such an increase,” he says.

Political analyst Henning Melber says such a move would add much more to the government’s expenditure.

He says the ruling Swapo government may be tempted to do so, considering it is an election year.

“But they would risk financial stability and reduce the scope for other social expenditure, as well as capital expenditure, which is among the most relevant tools for strengthening economic performance,” Melber says.

He says it remains to be seen whether Shiimi would give preference to fiscal stability over an election year budget.

Arney Tjaronda, a researcher at Simonis Storm Securities, says the potential economic impact of such an increase should be carefully evaluated.

He says while an increase to the pension grant could stimulate consumer spending by providing senior citizens with more disposable income, there is a risk of inflationary pressure if the economy cannot absorb the increased demand without price hikes.

“The decision should also consider the social welfare aspect, particularly the cost of living for senior citizens and the role of the pension in providing a safety net,” Tjaronda says.

Rinaani Musutua from the Economic and Social Justice Trust says Geingob’s remark about wanting to increase the pension grant was an election ploy to appeal to the older generation.

“But I would not be surprised if Swapo decided to increase the grant to use it as a political tool to pocket votes from the elderly,” she says.

Increasing the grant should, however, be considered, since N$1 400 is very little to survive on.

“Why do they expect anyone to live on N$1 400 a month […] many people depend on pensioners,” Musutua says.

Shiimi is equally under pressure to deal with a ballooning wage bill and to revamp the country’s taxation regime.

Economist Ruusa Nandago says it is unlikely to see any increases in social grants, although the minister could surprise the nation.

“Typically what you see in an election year, even with other countries, is that the government tends to spend a little more in that area,” she says.

Political analyst Ndumba Kamwanyah says the public already expects the old-age grant to be increased.

He says if Mbumba does not go ahead with Geingob’s wish, it would backfire on a party level.

“It is also important to note that we need to know where it is going to come from in terms of public policies of the government,” he says.

Kamwanyah says an increase would depend on whether the budget allows it.

“It would be good if he does implement it for the sake of our pensioners.That money helps a lot – not only for pensioners, but it pays for school fees, healthcare and other necessities at household level,” he says.

Kamwanya calls for the implementation of a basic income grant to alleviate the burden of pensioners having to share their grants with their relatives.ent (PDM) parliamentarian Maximalliant Katjimune says the government must honour Geingob’s wish to increase the pension grant.

“That money does not only go to our elderly, it also goes to their grandchildren […] It also funds our small and medium enterprises and contributes to our general economy. It is crucial that we increase that money,” he says.

Namibia Economic Freedom Fighters deputy leader Kalimbo Iipumbu says when someone has died and has given instructions, from a cultural perspective it cannot be reversed.

“But then as per the state of the country’s economy now, the economy is not growing and we were recently greylisted. Now it is a question of getting clarity as to what our position as a country and its economic state is,” he says.

Iipumbu says Namibia is not a poor state, but needs to generate more revenue to cater for such projects.

“He [Geingob] was the head of state and he probably already had some plans for where he would get this money from,” he says.

BUDGET EXPECTATIONS

Melber expresses sympathy for Shiimi, acknowledging the challenging balancing act he must navigate.

He says with soaring government debt and significant expenditure, particularly credit payments consuming roughly one tenth of the budget, fiscal caution is paramount.

Melber says urgency is further highlighted by the recent setback of being greylisted by the Financial Action Task Force due to incomplete compliance with anti-money laundering measures.

“While this remains hopefully only a short-term, temporary punishment, it will negatively impact the economy,” Melber says.
Meanwhile, Nandago says the nation should expect the implementation of two new tax policies.

“The first is that they are increasing the current tax threshold from N$50 000 to N$100 000,” she says.

“This means individuals will only pay tax if they earn a minimum of N$100 000, which is a great relief, especially for lower-income households.On the corporate side, there was a discussion around decreasing the current tax rate to 31%, which is a good step towards making Namibia more competitive for investments”.

Kakujaha-Matundu says he does not expect the 2024/25 budget to deviate much from the 2023/24 budget.

“However, one would expect the budget to go up by appropriations that would allow the running of the national elections in November. The ongoing devastating drought could also demand money towards the emergency fund,” he says.

Musutua says the social sector, specifically social grants, such as a universal basic income grant of N$500 per person per month should be prioritised.

“It is a good thing that the government invests in the education and health sectors. But without making those services accessible to the people . . . no positive results would come from those investments.”

She says housing should be prioritised as well, adding that a lack of decent housing has caused chaos in the country, and will continue to do so unless it is solved.

“We are expecting the number of people living in squatter camps to increase if nothing is done. The government has declared the lack of decent housing a humanitarian crisis. Money should immediately be put aside to solve the housing crisis,” Musutua says.

‘FOR THE YOUTH’

Namibia National Students Organisation spokesperson Dorthea Nangolo says the organisation expects an update on a student village, which was tabled in the 2022 budget.

“Until today, the student village was not constructed,” she says.

Nangolo says more money needs to be pumped into funding opportunities for young entrepreneurs.

“Young business owners right now don’t qualify for funding, and it becomes very difficult to receive funding for start-up capital,” she says.

Nangolo says she also hopes for financial support in the budget to incentivise private sector participation in education.