Document of The World Bank FOR OFFICIAL USE ONLY Report Number 77748-NA INTERNATIONAL BANK FOR RECONSTRUCTION AND DEVELOPMENT INTERNATIONAL FINANCE CORPORATION AND MULTIALATERAL INVESTMENT GUARANTEE AGENCY COUNTRY PARTNERSHIP STRATEGY FOR THE REPUBLIC OF NAMIBIA FOR THE PERIOD FY2014–FY2017 June 26, 2013 Southern Africa Country Department 1 Africa Region International Finance Corporation Africa Region Multilateral Investment Guarantee Agency This document has a restricted distribution and may be used by recipients only in the perfor- mance of their official duties. Its contents may not otherwise be disclosed without World Bank Group authorization. THE DATE OF LAST INTERIM STRATEGY NOTE WAS APRIL 25, 2007 CURRENCY EQUIVALENTS Unit of Currency: Namibian Dollar (N$) N$10.2660 = US$ 1 (as of June 24, 2013) WEIGHTS AND MEASURES Metric System FISCAL YEAR April 1 – March 31 ABBREVIATIONS AND ACRONYMS AIDS Acquired Immune Deficiency Syndrome ISN Interim Strategy Note BLNS Botswana, Namibia, Lesotho and Swazi- MDG Millennium Development goal land MET Ministry of Environment and Tourism BMI Body Mass Index MIGA Multilateral Investment Guarantee Agency BON Bank of Namibia MOF Ministry of Finance CBNRM Community-Based Natural Resource MTEF Medium-Term Expenditure Framework Management MTI Ministry of Trade and Industry CMA Common Monetary Area MWT Ministry of Works and Transport CPS Country Partnership Strategy NaCC Namibia Competition Commission DHS Demographic and Health Survey NACOMA Namibia Coastal Management Project DPL Development Policy Loan NACSO Namibia CBNRM Support Organizations EFTA European Free Trade Agreement NAMFISA Namibia Financial Institutions Supervisory ETSIP Education and Training Sector Improve- Authority ment Program NDP National Development Plan EU European Union NDP4 Fourth National Development Plan FDI Foreign Direct Investment NHIES Namibia Household Income and Expendi- FSAP Financial Sector Assessment Program ture Survey FY Fiscal Year NLFS Namibia Labor Force Survey GDP Gross Domestic Product NPC National Planning Commission GEF Global Environmental Facility NSA Namibia Statistics Agency GNI Gross National Income ODA Official Development Assistance GRN Government of the Republic of Namibia OECD Organization of Economic Cooperation and HIV Human Immuno-Deficiency Virus Development IBRD International Bank for Reconstruction and PDNA Post-Disaster Needs Assessment Development PPP Public-Private Partnership ICA Investment Climate Assessment RAS Reimbursable Advisory Services ICEMA Integrated Community-Based Ecosystem SACMEC Southern and Eastern Africa Consortium Management for Monitoring Education Quality IFC International Finance Corporation SACU Southern Africa Customs Union ii SADC Southern Africa Development Community UNICEF United Nations Children Fund SAIS Southern Africa Innovation Support Pro- USAID United States Agency for International gramme Development SME Small or Medium Enterprise WBI World Bank Institute SOE State-Owned Enterprise WDI World Development Indicators SWAPO South West Africa People's Organization WEF World Economic Forum TA Technical Assistance WHO World Health Organization UN United Nations yoy year-on-year UNDP United Nations Development Program IBRD IFC MIGA Vice President: Makhtar Diop Jean Philippe Prosper Izumi Kobayashi Director: Asad Alam Cheikh Seydi Ravi Vish Task Team Leader: Philip Schuler Saleem Karimjee Stephan Dreyhaupt iii Table of Contents Abbreviations and Acronyms ......................................................................................................... ii Executive Summary ....................................................................................................................... vi I. Introduction ................................................................................................................................1 II. Country Context and Development Agenda ..............................................................................1 A. Political context ...............................................................................................................1 B. Macroeconomic Stability .................................................................................................2 C. Unemployment .................................................................................................................5 D. Composition of Production and Trade .............................................................................5 E. Business Climate and Regulations ...................................................................................7 F. Social and Poverty Context ..............................................................................................7 G. Ecosystem Management and Climate Change ...............................................................11 III. Summing up: Key Challenges and the Government’s Development Plan ..............................13 A. Challenges facing Namibia ............................................................................................13 B. The Government’s Strategy: The Fourth National Development Plan ..........................14 IV. The World Bank Group Partnership ........................................................................................16 A. Evolution of World Bank Group Activities in Namibia ................................................16 B. Framework for Future Engagement ...............................................................................20 V. Partnerships ..............................................................................................................................27 VI. Risk Assessment ......................................................................................................................28 A. Country Risks.................................................................................................................28 B. Financing Risks ..............................................................................................................29 C. Program Implementation, Alignment and Coordination Risks......................................29 VII. CPS Annexes .....................................................................................................................30 Annex 1. CPS Results Matrix ................................................................................................30 Annex 2. Namibia at a Glance ...............................................................................................36 Annex 3. Bank Portfolio Performance ..................................................................................39 Annex 4. IFC Investment Operations Program .....................................................................40 Annex 5. Knowledge Activities Recently Completed or Underway .....................................41 Annex 6. Social Indicators.....................................................................................................42 Annex 7. Key Economic Indicators .......................................................................................43 Annex 8. Key Exposure Indicators ........................................................................................45 Annex 9. Statement of IFC and IDA/IBRD Investment Portfolio ........................................46 Annex 10. Trust Fund Mobilzation .........................................................................................48 Annex 11. Stakeholder Consultations .....................................................................................49 Annex 12. Map of Namibia .....................................................................................................51 iv Figures Figure 1. GDP Growth and Inflation ...............................................................................................2 Figure 2. Revenue, Spending, and Debt, FY1996/97–2015/16 .......................................................4 Figure 3. Unemployment in Namibia, 1991–2012 ..........................................................................5 Figure 4. Structure of GDP, 1990–2012 ..........................................................................................6 Figure 5. Moving Downward in Doing Business Rankings, 2006–2013 ........................................7 Figure 6. Gains in Poverty Reduction, 1993/94 to 2009/10 ............................................................8 Figure 7. Poverty Incidence by Characteristics of Head of Household ...........................................8 Figure 8. Area under Conservation has tripled since Independence ..............................................11 Figure 9. Growing, but Lagging behind other Countries ...............................................................13 Figure 10. National Development Plan IV Priorities .....................................................................15 Figure 11. Proposed Namibia CPS Pillars .....................................................................................21 Tables Table 1. Selected Economic Indicators, 2007–2013 ........................................................................3 Table 2. Labor Force Participation and Unemployment, 2012 ........................................................5 Table 3. Poverty-oriented Spending in Namibia, FY2010/11–FY2013/14 .....................................9 Table 4. FY2008–2009 Interim Strategy Note: Expected Outcomes and Results .........................19 Table 5. Active Trust Fund Grants ................................................................................................48 Boxes Box 1. Namibia’s Experience with Communal Conservancies .....................................................12 Box 2. Official Development Assistance to Namibia ....................................................................28 v EXECUTIVE SUMMARY Namibia is one of the youngest countries in Africa, having gained its independence from South Africa in 1990. Over the past 23 years, Namibia has established an enviable track record of polit- ical stability, prudent macroeconomic policies, moderate growth, and natural resource conserva- tion. It is a poverty reduction success story: the share of people living on US$1.25/day has declined by almost 60 percent—to 21 percent in 2009 from 49 percent in 1993. Per capita in- come has grown sufficiently to place the country in the World Bank’s upper-middle income classification. The country has achieved these gains while facing constraints imposed by geogra- phy and legacies of apartheid and colonialism. Daunting challenges remain. Namibia suffers from chronic high unemployment, HIV/AIDS, and a distribution of income that is among the world’s most unequal—only a minority of the popula- tion lives in conditions one expects of a middle-income country. Economic growth has not gen- erated jobs as the structure of economic production and trade has remained essentially unchanged, tied closely to metals, minerals, and other natural resources. In addition, the country faces new risks stemming from global climate change, a growing number of unemployed and poorly educated youth, increased debt exposure and diminished fiscal space. The government has exercised leadership in developing and financing policies to address development challenges, but implementation has often lagged, and outcomes from delivery of public services remain disap- pointing in many cases. Recognizing that past approaches have not succeeded in overcoming these development chal- lenges, the Government of the Republic of Namibia’s (GRN) latest five-year strategy—the Fourth National Development Plan (NDP4), launched in July 2012—features greater selectivity and more proactive measures than employed in past plans. Where NDP3 encompassed the entire public policy agenda (including, for example, international peace and security), NDP4 has three goals—faster growth, more employment, and greater income equality. NDP4 provides a strategy for realizing Namibia’s vision of becoming “a prosperous and industrialized nation, developed by her human resources, and enjoying peace, harmony, and political stability.� NDP4 is built on the premise that Namibia has been losing its relative economic position as other countries move up. Moving off the current trajectory of jobless growth will require the govern- ment to pursue more nimble policies and improve its delivery of public services, supported by enhanced state capacity. It will also require a stronger government partnership with the private sector, with greater emphasis on the mobilization of private resources, especially in infrastructure development. The launch of the new NDP also provides a foundation to recalibrate and expand the Bank Group’s engagement with Namibia, which has been very limited. Since Independence, there has been one development policy loan (DPL) series, two operations financed by the Global Envi- ronmental Facility (GEF), and three IFC investments. A number of analytical and technical assis- tance activities addressing a range of issues and supported in large part through donor trust funds have accompanied these operations. An Interim Strategy Note (ISN) was prepared in 2007 in response to growing government interest in Bank support for the development agenda. A limited program delivered under the ISN supported positive outcomes in sustainable natural resource vi management and access to education, and it has stimulated new requests for technical assistance and policy analysis. Despite its small size, this program has been somewhat unfocused, with limited Bank resources spread thinly over many small activities. The education loan was not followed by further borrower interest. Mutual unfamiliarity with each other’s systems also kept the program from realizing its full potential. This Country Partnership Strategy (CPS)—the first to be prepared for Namibia—aims to move the engagement a step forward. During the past three years, the Bank has invested in strengthen- ing its relationship with Namibia, placing a staff person in Namibia and stepping up its analysis of the challenges facing the country. The program envisioned by the CPS will remain relatively limited—no lending is planned, for example, reflecting the government’s preferences. The CPS nevertheless aims to move the engagement to a new level. The Bank is exploring the use of new funding modalities, for example reimbursable arrangements¸ that can support delivery of an expanded range of knowledge services to Namibia. The IFC will pursue opportunities to make investments that increase the private sector’s capacity to generate jobs and growth. MIGA will also seek opportunities to support cross-border investment both into and from Namibia. The CPS supports NDP4 in selected areas where demand is strong, where the Bank Group has a comparative advantage and on strategic issues where there is the potential for large spillovers. The proposed program constructed around two pillars: enhancing state capacity and developing the private sector. It continues the engagement in areas of past success, such as economic man- agement and environmental protection. Through more selective focus, greater strategic alignment, and use of new instruments, this CPS aims to help Namibia achieve greater benefits from its membership in the World Bank Group. vii I. INTRODUCTION 1. This document presents the World Bank Group’s first Country Partnership Strategy (CPS) with Namibia, covering fiscal years 2014 through 2017. The goals of this CPS are to sup- port implementation of Namibia’s National Development Plan (NDP) and to deepen the Bank Group’s engagement with Namibia. This CPS aims to respond to the special needs of a country whose per capita income places it in the middle-income country (MIC) category and that enjoys good access to international capital markets, but that in many ways is a MIC in name only. The high average income obscures a highly skewed distribution of income, wealth, and human re- source capacity. Education, health, and poverty indicators resemble those of low-income coun- tries (LICs). In many ways Namibia is better described as a poor country with pockets of prosperity. 2. The CPS begins with an analysis of socio-economic conditions in Namibia and challeng- es facing the country (Section II), followed by a discussion of the government’s program for addressing these challenges (Section IVIII). It then reviews Bank Group activities to date, with particularly attention to lessons learned from the Bank’s FY2008–09 Interim Strategy Note (ISN). 3. Section IV presents priorities for Bank Group activities arranged around the pillars of building state capacity and developing the private sector. The CPS was developed through exten- sive consultations with government, civil society and private sector stakeholders, as well as with development partners.1 The programs presented in the CPS are calibrated to Namibia’s needs, ongoing development partner activities, and Bank Group comparative advantage. 4. This CPS presents a joint strategy of all Bank Group institutions. IBRD activities are centered on knowledge and technical cooperation, and many of these will be delivered by joint IBRD-IFC global practices. IFC will build on past investments in the private sector and will continue to pursue requests to assist with public-private partnerships (PPPs). MIGA will explore opportunities to catalyze investment into Namibia and by Namibian firms into the region. The CPS concludes with a risk assessment, results-monitoring framework, and statistical annexes. II. COUNTRY CONTEXT AND DEVELOPMENT AGENDA A. Political context 5. Namibia is a multi-party democracy with party-list proportional representation. The South West Africa People’s Organization (SWAPO) enjoys a commanding electoral majority, winning 75 percent of the vote in the 2009 general election, earning it 54 out of 72 elected seats in the National Assembly.2 In the 2010 elections for Namibia’s 50 local authorities, SWAPO won 226 out of 327 total seats. The next general election will be held in November 2014 and will elect the successor to President Hifikepunye Pohamba, who concludes the second of his constitu- tionally allowable two terms in March 2015. 1 A brief summary of consultations can be found on page 50. 2 Six members are appointed by the president, bringing SWAPO’s share to 60 out of 78 total seats. 1 6. Namibia scores well in cross-country political comparisons. The World Governance Indicators ranks Namibia in the 76th percentile on the Political Stability/Absence of Violence indicator, the second best position in Africa. The 2012 Ibrahim Index of African Governance ranks Namibia sixth on rule of law with a score of 84, out of 52 countries, well above the South- ern African (63) countries average and the continental average (48). B. Macroeconomic Stability 7. In addition to political stability, Namibia has achieved a stable macroeconomic environ- ment. As shown in Figure 1 below, Namibia has generally enjoyed moderate economic growth of 4.2 percent per year since Independence. Consumer price inflation closely tracks that of South Africa, reflecting the peg to the rand and close economic integration with South Africa. Figure 1. GDP Growth and Inflation Annual GDP Growth, 1990–2012 CPI Inflation, 2005-2013 12% 14% Namibia Annual Real GDP Growth 12% South… Annual Inflation 10% 10% 8% 8% 6% average = 4.2% 6% 4% 4% 2% 2% 0% Jan 2005 Jan 2006 Jan 2007 Jan 2008 Jan 2009 Jan 2010 Jan 2011 Jan 2012 Jan 2013 Jul 2005 Jul 2006 Jul 2007 Jul 2008 Jul 2009 Jul 2010 Jul 2011 Jul 2012 0% 1990 1995 2000 2005 2010 -2% Sources: Namibia Statistics Agency, Bank of Namibia, Statistics South Africa Note: 2012 GDP is a preliminary estimate 8. The economy rebounded quickly in 2010 from the global economic crisis. Nevertheless, the outlook for the next few years remains uncertain, as spillovers from OECD countries’ debt and fiscal problems are dampening demand for Namibia’s exports.3 In its latest economic out- look, the Bank of Namibia’s (BON) projects 4.4 percent real growth in 2013.4 Consumer price inflation has been fluctuating between 6.0 and 7.0 percent since the end of 2011. The inflation rate is currently 6.3 percent (as of March 2013). Analysts expect inflation to fall to around 5.7– 6.0 percent by the end of 2013. 9. Gross national savings have historically exceeded investment in Namibia, enabling the country to be a net lender. The savings rate declined after the onset of the global crisis when the fiscal position moved into deficit in 2009 and central bank interest rate cuts stimulated greater private sector borrowing. Namibia typically runs a trade deficit, but transfers from the Southern Africa Customs Union (SACU) common revenue pool are generally sufficient to push the cur- rent account into surplus.5 In October 2011 Namibia issued its first foreign-currency denominat- 3 Major exports include metals, minerals, fish, beef, grapes, and tourism. 4 Bank of Namibia, “Economic Outlook,� (December 2012). 5 Customs and excise revenue collected by SACU members is redistributed using a formula that allocates funds disproportionately to the smaller members. Transfers to Namibia have been 25–40 percent of total government 2 ed bond, a 10-year, US$500 million Eurobond. It followed this in November 2012 with a ZAR850 million issue on the Johannesburg Stock Exchange.6 Table 1. Selected Economic Indicators, 2007–2013 2007 2008 2009 2010 2011 2012 2013 Income and Economic Growth GDP growth (annual %) 5.4 3.4 -1.1 6.0 4.9 5.0 4.8 GDP per capita growth (annual %) 3.5 1.5 -2.9 4.0 3.2 3.4 3.1 GDP per capita (US$) 4,079 4,017 3,983 4,876 5,293 5,425 5,593 GDP per capita, PPP (current US$) 6,010 6,231 6,153 6,515 6,826 .. .. Gross national savings (% of GDP) 31.3 32.4 24.7 18.9 24.6 30.5 .. Gross fixed investment (% of GDP) 22.3 21.2 19.8 21.1 21.1 20.6 20.1 Public 5.5 7.4 8.6 7.7 7.1 6.4 5.8 Private 16.9 13.9 11.2 13.4 14.0 14.2 14.3 Money and Prices Inflation, consumer prices (annual %, end of year) 7.1 10.9 7.0 3.1 7.2 6.3 5.7 Inflation, consumer prices (annual %, period average) 6.7 10.4 8.7 4.5 5.1 6.5 6.0 Treasury bill rate (%) 8.0 9.6 8.5 6.6 5.5 5.9 .. Nominal exchange rate (end of period) 6.8 9.9 7.5 6.8 8.2 8.6 .. Real exchange rate index (2004=100) 100.4 96.5 108.2 125.7 127.0 122.0 .. Fiscal Revenues (% of GDP) 31.9 29.5 31.4 28.0 32.0 35.5 34.5 o/w transfers from SACU 12.5 11.9 11.2 7.2 7.6 13.2 12.6 Expenditures (% of GDP) 34.6 30.1 32.5 32.6 39.3 38.3 40.9 Current (% of GDP) 31.8 23.7 25.4 26.5 29.6 30.5 33.2 Capital (% of GDP) 2.8 6.4 7.8 7.2 10.7 7.9 7.6 Overall balance (% of GDP) -2.7 -0.7 -1.1 -4.6 -7.2 -2.8 -6.4 Total Public Debt (% of GDP) 18.4 18.1 15.9 16.6 26.4 26.3 27.8 External Accounts Export real growth (%, yoy) 9.9 8.7 -1.7 28.8 8.9 1.5 8.5 Import real growth (%, yoy) 20.7 24.8 12.6 12.9 14.4 3.7 7.0 Current account balance before SACU (% of GDP) -5.1 -10.1 -11.1 -6.9 -9.3 -13.8 -15.1 Current account balance after SACU (% of GDP) 9.1 2.8 -0.4 0.3 -1.7 -0.6 -2.5 Foreign direct investment (current US$ mil- lions) 729.2 716.1 521.3 851.4 987.6 1,028.2 1,130.4 External debt, total (% of GDP) 25.7 22.7 28.3 31.4 33.5 35.5 34.4 Debt service ratio (% of goods and nfs) .. 13.1 12.1 5.5 11.6 9.8 .. Other Doing Business rank (year of publication) 42 48 51 69 78 87 Human Development Index rank 125 125 128 105 120 128 128 Global Competitiveness Index rank 89 80 74 74 83 92 Sources: IMF, Ministry of Finance, Bank of Namibia, Namibia Statistics Agency, UNDP, World Bank Notes: 2013 data are projections revenue in recent years. Members are negotiating changes to the formula that are likely to result in smaller budget transfers. 6 This is the first of several issues planned in the coming years. The total issuance is expected to be ZAR3 billion. 3 Fiscal Policies 10. Namibia has followed prudent fiscal policies since Independence. Until the recent global economic crisis, fiscal deficits rarely rose above 4 percent of GDP, and in a number of years the budget achieved overall surplus. Total central government debt has been low. Namibia relies primarily on the domestic bond market to finance deficits. International ratings agencies have given Namibian government debt investment-grade ratings since 2005.7 11. Namibia launched an ambitious spending program in 2011 aimed at stimulating growth and employment. This significantly increased the size of fiscal deficits and public debt, as shown in Figure 2. The medium-term expenditure framework released in 2013 envisions a gradual re- duction of the spending program that aims to bring the budget close to balance by 2017. Figure 2. Revenue, Spending, and Debt, FY1996/97–2015/16 45% 35% 25% Share of GDP 15% 5% -5% -15% 1996/97 1998/99 2000/01 2002/03 2004/05 2006/07 2008/09 2010/11 2012/13 2014/15 Domestic debt External debt Revenue Spending Overall Balance Source: Ministry of Finance Notes: FY2012/13 and onwards are forecasts based on the February 2013 budget. 12. The government allocates relatively large shares of the budget to education, health, and other social sectors in an effort to address the severe inequities and poverty inherited from the apartheid regime. During the current MTEF, pro-poor spending programs account for 44 percent of total central government spending.8 7 Fitch gave ratings of BBB- for foreign-currency debt and BBB for domestic debt in 2005, which it has reaffirmed annually since 2010. Moody’s assigned local- and foreign-currency debt ratings of Baa3 in 2011, which it reaf- firmed in January 2013. 8 See Table 3 on page 9. The government’s pro-poor spending priorities are discussed in more detail below in sec- tion II.F. 4 C. Unemployment Figure 3. Unemployment in Namibia, 1991–2012 13. Chronic high unemployment is 60% Strict Definition the dark spot on this otherwise bright 50% macroeconomic record. Although sur- Broad (incl. Unemployment Rate veys that gather employment data are discouraged workers) 40% conducted rather infrequently, there is a striking continuity across these surveys, 30% as shown below in Figure 3. 20% 14. Namibia’s labor force participa- 10% tion rate of 60 percent falls below aver- ages for Sub-Saharan Africa, low- 0% income countries, and middle-income countries (71, 77 and 68 percent, respec- Sources: Namibia Labor Force Surveys, Household Income tively). 9 There are large groups of dis- and Expenditure Surveys, and Census of Population couraged workers in younger cohorts (ages 20–29 years) of the population, particularly among women, which poses a risk for the country’s long-term growth prospects. 15. Women accounted for 48 percent of total non-agricultural workers in 2012, approaching the MDG 3 target of gender parity in wage employment. Nevertheless, women face higher un- employment and lower labor force participation rates than men (see Table 2), and migration of men from rural communities in the North to urban areas in search of employment has altered family structures. A recent UN analysis argues that gender equality in labor market force is chal- lenged by negative gender stereotypes and norms, lack of control over family resources, adoles- cent pregnancy and school drop-out, and lack of access to public services.10 Table 2. Labor Force Participation and Unemployment, 2012 Female Male Total Rural Urban Total Rural Urban Total Rural Urban Total Labor force participation rate (strict) 49% 61% 56% 55% 71% 64% 52% 66% 60% Unemployment rate (strict) 12% 24% 19% 10% 17% 15% 11% 20% 17% Unemployment rate (broad) 30% 34% 32% 22% 23% 23% 26% 28% 27% Source: Namibia Labor Force Survey 2012. D. Composition of Production and Trade 16. A striking feature of the economy is the absence of economic transformation—the struc- ture of production and trade has changed very little since 1990. Figure 4 shows that services dominate the economy with around 60 percent of GDP. Minerals and metals dominate exports. When meat and processed fish are included with the primary sector, the residual secondary sec- tor (i.e., non-food manufacturing plus construction and electricity) accounted for 12 percent of 9 Namibia Labor Force Survey 2012; World Development Indicators comparator country data from 2011. 10 United Nations Country Team Namibia, “A Country Analysis,� August 2011. 5 GDP in 1990 and 13 percent in 2011. Labor-intensive manufacturing—which in many countries has absorbed unskilled labor exiting traditional agriculture—has not developed in Namibia. 17. Little data is collected at the firm level making it difficult to analyze productivity, factor- intensity, effects of firm size, value-added, industry concentration, etc., systematically across industries or over time. The available information reveals an economy with a small number of medium- to large-sized, technologically sophisticated firms, and a large number of informal micro-enterprises.11 Competition in many markets is constrained by firms with market power.12 Figure 4. Structure of GDP, 1990–2012 0.7 0.6 Services Share of GDP 0.5 0.4 Primary plus 0.3 manufactured food 0.2 0.1 Secondary minus 0 manufactured food 1990 1993 1996 1999 2002 2005 2008 2011 Source: Namibia Statistics Agency; World Bank staff calculations Notes: 2012 GDP is a preliminary estimate 18. The Namibian economy is generally open to international trade. Mining, metals, fish, grapes, and commercial livestock industries are heavily—if not exclusively—oriented towards export markets. Namibia imports financial services and certain professional (e.g., accounting) and technical services via sizeable commercial presence of foreign firms. Except for metals pro- cessing and beer, manufacturing firms generally restrict their scope to the domestic market.13 19. Namibia’s trade flows are highly concentrated: 76 percent of goods were imported from South Africa in 2011 (down slightly from 86 percent in 2000–2010), and exports are concentrat- ed in and tied to the primary sector, exposing the economy to volatile commodity prices.14 Na- mibia’s export basket has ecological implications as well, since major export industries—e.g., mining, tourism, livestock and meat, and fishing—rely on or impinge on Namibia’s fragile eco- system and are vulnerable to climate change. 11 The 2009 National Enterprise/Establishment Census recorded 56,185 firms, of which 43,553 were unregistered. 12 Brewing, cement, dairy, meat processing, milling (including animal feeds), and poultry production markets are each dominated by single firms. Large state-owned commercial firms operate in road construction and lodging markets. 13 One-third of firms surveyed in the 2007 ICA report that they export, and of these, exports account for 14 percent of sales on average. By comparison, 60 percent or more of firms in South Africa, Malaysia, Mauritius and Lesotho sell to foreign markets, and exports account for more than 40 percent of these firms’ sales in Malaysia, Mauritius, and Lesotho. World Bank, “An Assessment of the Investment Climate in Namibia.� Washington, September 2007. 14 UN Comtrade database. 6 E. Business Climate and Regulations Figure 5. Moving Downward in Doing 20. The government is committed to a regulatory Business Rankings, 2006–2013 environment that facilitates competitiveness and -33 private investment. Its record, as measured by global -42 -43 -51 Namibia's Positions behind the leader competitiveness surveys, is somewhat mixed, how- -66 -69 -78 -87 ever. In the World Bank Group’s ease of doing busi- ness survey, Namibia ranks most favorably in areas of getting credit (40th) and enforcing contracts (41st). Namibia ranks very unfavorably in areas of registering property (169th) and starting a business (133rd). 2006 2007 2008 2009 2010 2011 2012 2013 21. Namibia has been moving steadily down- Source: Doing Business wards in global rankings, falling by 18 positions in Notes: Length of columns represents the number of the Global Competitiveness Index between 2010 and economies included in the year’s survey. 2012 (see Table 1) and slipping to 87th place in the 2013 Doing Business ranking from 33rd place in 2006 (see Figure 5). This decline is explained largely by the absence of improvements rather than worsening policies. Other countries have been making their regulations and policies more conducive to investment, while there has been little change in Namibia’s investment climate. F. Social and Poverty Context Poverty profile 22. Poverty has declined substantially since Independence. The share of the population living below the national poverty line fell by more than half between 1993/94 and 2009/10, as shown in Figure 6 on page 8, and the share in extreme poverty fell by 75 percent. Namibia has experienced similar declines in the poverty gap and the severity of poverty. MDG 1’s target for poverty re- duction has been attained. Female-headed households have enjoyed slightly greater gains in poverty reduction than households headed by men, although they remain more likely to be situ- ated below the poverty line.15 Access to housing, water and other basic needs correlates with income. Almost half of households in the bottom income decile must travel one or more kilome- ters to obtain drinking water, compared to 8.6 and 2.1 percent of households in the top quintile. Twenty-seven percent of households with incomes in the bottom eight deciles live in improvised housing, compared to 15.4 and 3.4 percent in the top quintile. 23. Inequality in Namibia is among the highest in the world, even though there has been some progress since Independence. According to the latest calculations, income inequality as measured by the Gini coefficient has declined to 59.71 in 2009/10 from 60.03 in 2003/04 and 64.55 in 1993/94.16 Vision 2030 calls for reducing this measure to 30 by 2030. One puzzle that 15 Per capita income in female-headed households is 56 percent of per capita income in male-headed households in urban areas and 62 percent of that in rural areas (NHIES 2009/10). 16 Namibia Statistics Agency, “Poverty Dynamics in Namibia: A comparative study using the 1993/94, 2003/04 and the 2009/10 NHIES surveys,� November 2012. Many earlier government publications have reported the estimate for 2003/04 as 63 and the estimate for 1993/94 as 70. 7 requires further investigation is how poverty fell so sharply despite high inequality, only modest GDP growth, and chronically high unemployment.17 Figure 6. Gains in Poverty Reduction, 1993/94 to 2009/10 70% 69% 70% Poverty Severe Poverty Percentage of Population Percentage of Population 60% 60% 59% Poverty Incidence Poverty Incidence Poverty gap Poverty gap 50% 50% Poverty severity Poverty severity 40% 40% 38% 30% 29% 30% 28% 24% 20% 20% 17% 15% 10% 9% 10% 4% 4% 2% 0% 0% 1993 1998 2003 2008 1993 1998 2003 2008 Source: Namibia Statistics Agency, 2012, based on the 1993/94,. 2003/04 and 2009/10 household income and expenditure surveys. Notes: Poverty incidence is the share of the population below the national poverty line. Poverty gap measures the consumption shortfall relative to the poverty line across the whole population. Poverty severity looks both at how far the poor are from the poverty line and at inequality of the poor Figure 7. Poverty Incidence by Characteristics of Head of Household Namibia Female head Male head Afrikaans Caprivi Khoisan Nama/Damara Oshiwambo Otjiherero Rukavango Setsana Other languages Severely Poor Tertiary Education Secondary Education Poor Primary Education No Formal Education Pensions Subsistence Farming Other Income Sources Household Business Salaries and Wages 0% 10% 20% 30% 40% 50% 60% Share of Households below Poverty Line Source: Namibia Household Income and Expenditure Survey, 2009/10 17 Namibia’s system of non-contributory social grants discussed below may offer one explanation. 8 24. Education and salary- or wage-paying jobs may prove to be paths out of poverty. The incidence of poverty falls sharply with educational attainment of the head of household—to 1 percent where the head of household has a tertiary education from 26 percent where she/he has only a primary education. Households whose main source of income is a wage or salary have a poverty incidence that is half of the national average and one-third that of households relying on pensions or subsistence agriculture as Figure 7 illustrates. 25. The GRN devotes around 44 percent of the central government budget to anti-poverty programs, broadly defined (see Table 3). This figure includes programs designed to increase human capital, basic health, and food security. Also included are several social safety net pro- grams, such as the disability pension, universal old-age grant, grants to support 155,000 orphans and 95,000 vulnerable children, and school feeding programs.18 Table 3. Poverty-oriented Spending in Namibia, FY2010/11–FY2013/14 Share of Cumulative Ministry/Sector 2010/11 2011/12 2012/13 2013/14 Spending Education 6,476 8,305 8,657 9,241 23% Health and Social Services 2,593 3,333 3,537 3,231 9% Labour and Social Welfare 1,140 1,196 1,265 1,412 4% Gender Equality and Child Welfare 522 550 541 733 2% Agriculture Water and Forestry 1,519 2,269 1,971 2,722 6% Total Poverty-oriented Expenditure 12,250 15,653 15,971 17,339 44% Total Government Expenditure 27,575 35,869 35,013 41,657 Poverty-oriented spending as share of total budget 44% 44% 46% 42% Source: Ministry of Finance, “Macroeconomic Framework for the 2012/13–2014/15 Medium-term Expenditure Framework,� February 2012 Notes: Values are in millions of current Namibian dollars 26. Gender equity has been mainstreamed into many policies and programs (notably agricul- tural and other policies aimed at rural communities, where traditional social attitudes often mar- ginalize women), and the GRN has emphasized women’s and reproductive health in its programs.19 Namibia has updated and aligned national policies and action plans to align them with SADC Gender Protocol.20 Education and skills 27. Expanding access to education is one of the government’s highest priorities, and educa- tion has generally received around one-quarter of the central government budget. The net prima- ry enrollment rate is 85 percent, falling somewhat short of realizing MDG 2 of universal primary education.21 Access continues to be a problem at secondary and tertiary levels, although enroll- ment rates have increased considerably since Independence. The net secondary enrollment rate has risen to 56 percent in 2010 from 32 percent in 1995 (approaching the middle-income country 18 World Bank, “Safety Nets and HIV/AIDS in Botswana, Namibia, and Swaziland,� September 2012. Namibia is one of the few countries in sub-Saharan Africa that provides non-contributory social grants to all elderly citizens. 19 Ministry of Gender Equality and Child Welfare, “National Gender Policy: 2010–2012, March 2010. 20 USAID, “Namibia Gender Assessment,� May 2012. This assessment argues that Namibia “…in many ways is setting in the pace for gender integration for countries…� in SADC (page 14). 21 All statistics from World Development Indicators. 9 average of 64 percent). Gross tertiary education enrollment rates have tripled—to 9.0 percent in 2008 from 2.9 percent in 1991—which puts Namibia slightly above the average for all sub- Saharan African countries (6.3 percent), but well below the average for middle-income countries (24 percent). Namibia has made good progress in achieving the MDG 3 gender equality target for participation of girls and women in education. Female school enrollment rates match or ex- ceed those of males. 28. Outcomes are disappointing despite the high priority accorded education in the national budget. For example, Namibian learners scored below the regional average as measured by the Southern and Eastern Africa Consortium for Monitoring Education Quality (SACMEC) in 2007, and also below those in countries at lower levels of income (e.g. Kenya, Swaziland, Tanzania, and Uganda)—most of which devote smaller shares of public resources to education than does Namibia. Internal efficiency is a problem at the secondary level, with high repetition and school- leaving rates.22 29. One important result of the low efficiency of the education system is that youth leave school poorly prepared for the labor market.23 Employers routinely cite low availability of ade- quately trained workers as a constraint. Health 30. Namibia has enjoyed progress in improving health in a number of areas, but serious chal- lenges remain. The good news is that Namibia appears to be on track to eliminate malaria. It exceeded targets set through the 2000 Abuja Declaration to cut malaria deaths in half by 2010.24 Infant and child mortality are low by regional standards and have declined: infant mortality by 41 percent between 1990 and 2010 to 29 per 100,000 births; child mortality by 45 percent to 40 per 100,000. The decline in mortality may not be sufficient to reach the two-thirds reduction called for under Millennium Development Goal 4, however. 31. Namibia has made less progress in improving maternal health and is not on track to achieve MDGs 4 and 5 on reducing maternal and child mortality.25 The maternal mortality rate in 2010 stood at 200 maternal deaths per 100,000 live births—the same as in 1990, although this is an improvement over the 2005 rate of 310. Child under-nutrition, which is intimately related to both maternal health and infant and child mortality, is surprising prevalent in Namibia. Stunting is high at 29 percent of children under five, and the incidence is higher in poor households.26 Poor nutrition in children hinders their cognitive development and educational achievement, with harmful consequences for future job market performance. 22 School leaving rates rise throughout secondary levels: 4.1 percent at grade 5; 5.3 percent at grade 7; 8.3 percent at grade 8; and 32.6 percent at grade 10. Repetition rates are 12.1 percent for grade 5, 26.4 percent for grade 8, 20.6 percent for grade 9, and 10.3 percent for grade 10. Ministry of Education data from 2010 as reported in Yves Ten- calla, “Mid Term Technical Review of ETSIP First Phase 2006–2011,� October 2011. 23 See Mmantsetsa Toka Marope, “Namibia Human Capital and Knowledge Development for Economic Growth with Equity,� Africa Region Human Development, Working Paper Series No. 84, World Bank, 2005. 24 Reported malaria cases fell to 16,000 in 2011 from 80,000 in 2005. Malaria deaths fell to 36 in 2011 from 1,700 in 2001. 25 United Nations Country Team Namibia, “A Country Analysis,� August 2011. 26 Namibia data from the Namibia Demographic Health Survey 2006/07. Stunting is prevalent at all income levels in Namibia: 13 percent of children in the richest quintile are stunted, which is more than double the national average of 6 percent in Costa Rica or Jamaica. Data for Jamaica and Costa Rica reported by UNICEF. 10 32. Namibia has one of the highest HIV/AIDS prevalence in the world, estimated by UNAIDS to be 13.1 percent of its adult population, and tuberculosis has spread alongside HIV and AIDS. Women and girls are particularly vulnerable to HIV due to gender inequality and gender-based violence. Intensive provision of anti-retrovirals has brought down prevalence. 33. Non-communicable diseases are rising as leading causes of ill health in the country. For example, hypertension and diabetes are already the leading causes of morbidity among adults. Substance abuse and mental, neurological and psychosocial disorders, as well as increasing overweight and obesity rates are of concern.27 34. Poor health outcomes do not reflect lack of political commitment to allocate financial resources. The GRN is allocating 9 percent of the budget to the Ministry of Health in the current MTEF (see Table 3 on page 9). Namibia spends 4.0 percent of GDP on public health services.28 Organizational structures undermine performance—directorates of the Ministry of Health and Social Services have overlapping functions, and vertical programs for service delivery are weak- ly coordinated.29 These are compounded by difficulties in recruiting, training, and retaining pro- fessional staff, as well as by the country’s low population density. Obtaining better health outcomes will require reform of financing and delivery of health care services, anchored on a well-performing primary healthcare system. Improving cross-sectoral coordination is especially important for improving nutrition, which Namibia aims to achieve through school feeding initia- tives and by integrating nutrition education into agriculture extension and maternal health pro- grams. G. Ecosystem Management and Climate Change 35. Most sources of employment and Figure 8. Area under Conservation has tripled economic growth depend on Namibia’s since Independence fragile ecosystem and are vulnerable to global climate change. Reflecting this, Na- 45% Other mibia has long been a leader in natural re- 40% Freehold source conservation. Forty-three percent of Share of Land Area 35% Conservancies the area of Namibia is under protection by 30% Communal either the state, communal conservancies, or 25% Conservancies private conservancies Figure 8 shows the 20% State Protected Areas extent and locations of protected areas in 15% Namibia). Namibia’s successes with com- 10% munal conservancies (see Box 1 below on 5% page 12) provides a powerful example of 0% community-based natural resource man- 1975 1980 1985 1990 1995 2000 2005 2010 agement (CBNRM) for other countries. Source: Ministry of Environment and Tourism 27 According to the 2006/07 Namibia Demographic Health Survey, among women aged 15–49 years that gave birth in the previous five years, close to 30 percent were overweight or obese (with a body mass index (BMI) index of >25) and 12 percent were obese (BMI >30). 28 This is 35 percent higher than the average for all sub-Saharan African countries (2.9 percent of GDP) and above the average for low- and middle-income countries (2.1 and 3.0 percent of GDP, respectively). World Development Indicators data for 2010. 29 World Bank, “Health Sector Note,� May 2010. 11 36. Global climate change is expected to lead to increased rainfall, higher average tempera- tures, and increased water evaporation.30 These will undermine both commercial livestock pro- duction and traditional subsistence agriculture, with serious implications for employment, food security, and export revenue. Furthermore, Namibia’s tourism and agricultural exports are vul- nerable to other countries’ climate change mitigation policies, if these take the form of taxing international transportation. Box 1. Namibia’s Experience with Communal Conservancies Namibia’s innovative contribution to global practice on conservation has been the rise of communal conservan- cies. The Nature Conservation Amendment Act of 1996 provided for the devolution of rights over wildlife to people living in communal areas. To register as a communal conservancy, a community must first establish a legally constituted governance arrangement, prepare systems for natural resource management, and develop a plan for equitable distribution of benefits. The community in return receives property rights over consumptive and non-consumptive use of wildlife in the conservancy. These arrangements provide the legal and organization- al foundation for conservancies to operate tourism, trophy-hunting and other commercial activities or to enter into joint ventures with companies to conduct these activities. Number of Registered Conservancies Income Received by Conservancies 16 80 50 Millions of current Namibian 14 70 Number of Registered 40 12 60 Conservancies 10 50 30 dollars 8 40 6 30 20 4 20 10 2 10 0 0 0 1998 2000 2002 2004 2006 2008 2010 2012 1998 2000 2002 2004 2006 2008 2010 New Conservancies Non-cash income from conservancies Cumulative Total Cash income from conservancies The first four conservancies were gazetted in 1998. By mid-2013, the number had grown to 79, covering over 160,000 square kilometers. Total income (cash and in-kind) received by conservancies from concession fees, salaries, sales of game and crafts, meat distributions, etc. was N$46.7 million. Tourism and trophy hunting generate the lion’s share of this income: 24 tourism joint ventures contributed N$18.9 million and 33 trophy hunting concessions produced N$14.1 in fees and salaries and N$5.0 million in meat distribution. Hunting by conservancy members of game for their own consumption has also been important. Source: NACSO, “Namibia’s Communal Conservancies: A Review of Progress and Challenges in 2011,� (Windhoek, 2013). 30 Ministry of Environment and Tourism, “Climate Change Vulnerability and Adaptation Assessment Namibia,� March 2008. 12 III. SUMMING UP: KEY CHALLENGES AND THE GOVERNMENT’S DEVELOPMENT PLAN A. Challenges facing Namibia 37. The analysis above suggests two major challenges facing Namibia: transforming the economy to put it on a trajectory of faster and more inclusive growth, and improving policy implementation and public service delivery. Namibia’s growth rates over the past decade have lagged behind those of other developing countries. In 1990 income per person in Namibia was almost US$900 higher than the average across all middle-income countries. By 2009, however, middle-income countries as a group had surpassed Namibia (see Figure 9). The National Plan- ning Commission estimates that annual growth rates will need to average 6 percent through Figure 9. Growing, but Lagging behind other 2017 to achieve the objectives of NDP4. Per Countries capita income will need to grow by 9.7 percent $8,000 Namibia $7,277 annually during NDPs5–7 to realize Vision $7,000 Income per person 2030’s ambition of Namibia becoming a high- Middle income $6,000 income country by 2030. average $6,520 $5,000 Low income 38. Growth and job creation will require $4,000 average transforming the structure of production. More $3,000 investment is needed in production (for exam- ple in tourism or light manufacturing) that can $2,000 $1,372 absorb Namibia’s growing pool of unskilled $1,000 labor. Namibia’s slide in Doing Business, the $0 WEF Global Competitiveness Index, and simi- 1980 1985 1990 1995 2000 2005 2010 lar rankings reflect a business regulatory envi- Source: World Development Indicators ronment that is becoming relatively less Notes: Gross national income in current PPP-adjusted U.S. dollars attractive than other countries to investors and less competitive in producing for global markets. 39. As a small country, Namibia should in principle boast more nimble public policies than larger countries, and be able to respond rapidly to new challenges and opportunities. A theme voiced repeatedly during CPS stakeholder consultations is weak public sector capacity to imple- ment policies. 40. The quantitative evidence base needed to inform and monitor public policies is thin. For example, although unemployment has always been at the top of the policy agenda, the GRN has conducted labor force surveys only every four years, making it difficult to design or evaluate jobs policies. The 1994/95 agricultural census released was the last one completed. No industrial census has been released. Establishing a comprehensive baseline measurement of jobs generated through tourism also remains to be done. 41. During CPS consultations, many private sector and civil society stakeholders pointed to deficiencies in public-private dialogue as a source of problems in developing and implementing policies in Namibia. Consultative processes for new laws, policies, and regulations tend to be ad hoc. Public dissemination of government information is inconsistent across ministries. Mistrust sometimes plagues discussions between the government and business leaders. 13 42. Extensive access to quality roads, power, water, and ICT infrastructure have historically distinguished Namibia from many other African countries. NDP4 identifies a number of short- comings, however, and highlights the need to increase investment in maintenance, upgrading, and expansion of the country’s infrastructure. Electricity tariffs are expected to double in the coming years, challenging the achievement of Vision 2030’s goal of becoming an industrialized economy unless there are significant gains in productivity and energy efficiency. Improvements in all transport modes are needed to realize NDP4’s ambition of Namibia becoming a regional logistics hub. 43. Public service delivery tends to be weak. Namibia spends more on social programs than many of its neighbors, but often enjoys poorer results. Even though Namibia devotes a higher share of the budget to education than most countries in eastern and southern Africa, reading scores are lower than most of its neighbors—including least developed countries. B. The Government’s Strategy: The Fourth National Development Plan 44. The GRN launched the Fourth National Development Plan in July 2012. NDP4 repre- sents a significant departure from previous NDPs that the National Planning Commission (NPC) has prepared, in terms of substance, style, preparation and implementation. NDP4 emphasizes just three high-level goals: faster growth, more jobs, and less income inequality. In contrast, previous plans encompassed the full spectrum of public policies, including human rights, peace and security, regional integration, and participatory democracy, as well as the economic growth agenda. Recognizing that Namibia is losing ground as other countries improve their competitive- ness, NDP4 calls for proactive policies to stimulate growth and job creation in targeted economic sectors, in addition to improving what it terms “basic enablers� of the regulatory environment, health, education, and public infrastructure. Boost growth in targeted industries, driven by respect for the sustainability of the envi- ronment: NDP4 calls for policy reforms and increased spending in manufacturing, inter- nationally traded services, and agribusinesses, supported by public-private investments in backbone infrastructure (e.g., energy, transport, water, ICT). Interventions will be guided by the industrial policy and the green economy strategy at a high level, and by sectoral strategies at the industry level. Strengthen the business enabling environment: Ensuring continued macroeconomic stability is the first priority. NDP4 calls for policy reforms to increase firms’ access to land, labor, and capital, as well as for streamlining a range of regulations that affect firms’ competitiveness. In addition, NDP4 proposes reforming the SOE sector and in- creasing research and development. Enhance the skills and health of the Namibian people: NDP4 emphasizes the contribu- tions of health and education to human capital, labor markets, and worker productivity, while at the same time acknowledging their intrinsic value. Besides measures to improve the quality and operation of core health and education programs, NDP4 highlights the need to improve vocational training centers and increase funding allocated to health. 14 Figure 10. National Development Plan IV Priorities Source: National Planning Commission Reduce extreme poverty: NDP4 proposes strengthening operation of Namibia’s social grants and expanding their scope to serve more beneficiaries. NDP4 also recognizes the contribution of improving productivity of subsistence agriculture towards reducing mal- nutrition in Namibia. Improve development plan execution: Finally, NDP4 includes initiatives to improve ex- ecution of development plans. Strategic initiatives include strengthening the national sta- tistics system to enhance statistical quality, tightening linkages between budgets and NDPs, and improving systems for reporting, monitoring, and evaluation of NDP4 per- formance. NDP4 presents ten “desired outcomes� spanning the priority areas, each with a quantitative and easily measured performance indicator. 45. NDP4 sets a target of reducing the incidence of extreme poverty to below 10 percent of the population by 2017 from 15.8 percent in 2009/10. Although NDP4 does not set a target for inequality, it notes that reaching Vision 2030’s ambitious target reducing the Gini coefficient to 30 will require average annual reductions of 3 percent. This implies bringing the Gini coefficient down to 45.53 by the end of NDP4 from its level of 59.71 in 2000/10. The program presented in 15 NDP4 aims to reduce poverty and income inequality primarily by expanding economic opportu- nities for the poor. These will be achieved through diversification of the economy into export- oriented industries that are more labor-intensive than mining and other traditional exports, as well as through improved human capital and an investment climate that is more conducive to starting new businesses. In addition, NDP4 aims to strengthen safety nets for the most vulnerable IV. THE WORLD BANK GROUP PARTNERSHIP 46. Namibia joined the IBRD, IFC and MIGA in 1990. The Minister of Finance is Namibia’s governor of the World Bank Group; the Bank of Namibia Governor is Namibia’s alternate gov- ernor.31 Support to Namibia since Independence has primarily taken the form of research, policy analysis, technical assistance and capacity building, rather than loans or other financial services. The engagement has developed gradually over time. A. Evolution of World Bank Group Activities in Namibia 47. During the 1990s and early 2000s the Bank delivered a public expenditure review (PER) and other analytical or technical assistance activities on topics including HIV/AIDS, pension reform, the water sector, and the inheritance tax. MIGA had an in-country presence during the 1990s and provided support for investment promotion activities. The IFC provided a R80 million loan in the late-1990s to finance the Cresta Lodge (now Protea Hotel) in Ondangwa, filling an important gap in the hospitality and tourism sector in northern Namibia. It made a series of three loans, totaling US$19 million, to a fishing company between 1994 and 2003. 48. The overall relationship had difficulties getting established however. Ten Institutional Development Fund (IDF) grants were approved in the 1990s; five were cancelled with no dis- bursements by grant recipients. The Bank’s 2007 Interim Strategy Note (ISN) for Namibia ar- gued that the program of analytical work did not always lead to tangible outcomes (e.g., new policy initiatives) in part because it addressed an agenda not driven by the government’s priori- ties and, in part, because there was insufficient follow up on the side of the Bank. Attempts were made to prepare IBRD investment loans in to support family health, industrial and urban devel- opment, and water management projects, but none was finalized for Board submission. The scope for IFC investments is limited in part by Namibia’s economic integration with South Afri- ca: South African banks aggressively cover the Namibian market, and South African firms raise funds from their house banks. 49. The engagement took a significant step forward in the mid-2000s. In 2004 the Board of Executive Directors approved a US$7.1 million GEF grant for the Integrated Community-based Ecosystem Management (ICEMA) Project, followed in 2005 by a US$4.9 million from the GEF to support the Namibian Coast Conservation and Management (NACOMA) Project.32 Analysis 31 NPC also plays an important institutional role in the World Bank Group’s engagement with Namibia because NPC is the lead agency for development partner coordination and is responsible for signing grant agreements with the World Bank and other external partners. 32 The ICEMA project was completed in March 2011. It exceeded its targets for land under CBRNM regime (38,595 km2 versus the target of 25,000 km2), the number of committees in operation (100 versus target of 80), and the populations of six of the seven key species targeted. The ICR rated the project’s outcomes as satisfactory. In De- cember 2012 the Board approved US$1.9 million in additional GEF financing for NACOMA. 16 published in 2005 of human capital and education informed the development of the GRN’s 15- year education program—the Education and Training Sector Improvement Program (ETSIP), which the Bank subsequently supported through a DPL series.33 The 2007 Interim Strategy Note and Current Activities 50. In line with the expanding engagement, in April 2007 the Board of Executive Directors discussed the first-ever strategy paper for Namibia, an ISN covering FY2008–2009. The ISN proposed a three-level framework for developing activities in Namibia. First, the Bank commit- ted to continue working in the established areas of education and environmental management, where there was clear government interest and the Bank enjoyed a good track record. Second, the Bank would undertake standard diagnostics and work with counterparts to incorporate find- ings into follow-up activities. Finally, the Bank would respond to requests for assistance in other areas through regular business planning meetings. Three priorities have guided the IFC’s recent efforts to build its engagement in Namibia: reaching the underserved in banking, education, health, and housing; investing in infrastructure, particularly water and power; and supporting Namibian companies expanding into the rest of Africa. 51. The first of two Education DPLs, each for US$7.5 million, was signed in 2007. The se- cond was approved by the Board in 2008, but not signed until 2010.34 The Bank launched several diagnostics during the ISN period: an Investment Climate Assessment (ICA), a Financial Sector Assessment Program (FSAP) review (joint with the IMF), a Country Economic Report, and a comprehensive policy note on the health sector. The Bank also initiated a multi-year series of training courses on economic modeling and provided technical support to the BON to implement regulations to prevent money laundering and terrorism financing. 52. World Bank activities since 2009 have continued in the spirit of the ISN by seeking entry points and building on these wherever feasible to advance the dialogue. Building on the GEF operations, the Bank delivered a country environmental analysis and public expenditure review of the Ministry of Environment and Tourism. Additional financing for NACOMA was approved in 2012. A joint Bank-IFC-WWF analysis of commercial joint ventures with communal conserv- ancies will be delivered in October 2013. Discussions to include Namibia in a global initiative on natural capital accounting are underway. 53. In 2010 the IFC extended a US$10 million loan to Trustco, a financial services firm, to expand Trustco’s line of education loans. During the past year, Trustco has approached the IFC to support its expansion with an equity investment and a guarantee for its bond issue to finance its expansion program. IFC has been engaging with Bank Windhoek, is exploring support for renewable energy and water desalination projects, and is discussing a possible investment in an agricultural services company. 33 Mmantsetsa Toka Marope, “Namibia Human Capital and Knowledge Development for Economic Growth with Equity,� Africa Region Human Development Working Paper Series, No 84, 2005. 34 The two DPLs have been fully disbursed and repaid. DPL1 closed December 2008; DPL2 closed June 2011. The program achieved or exceeded targets for the share of new grade 11 places in the poorest areas and increased grade 11 intake, increased pre-entry enrollment in math and science, increased grade 10 graduates who secured VET places, and increased VET intake. It did not meet targets for the budget allocation for books, the percentage entering primary school with adequate preparation, and the increase in OVCs completing grade 12. The ICR rated the loan series’ outcomes as moderately satisfactory. 17 54. Among the standard diagnostics identified in the ISN, the FSAP has arguably generated the greatest momentum for follow-up. The Bank has been supporting BON with TA to strength- en the financial sector’s regulatory framework, including on crisis management and regulations for micro-lenders. New activities are being launched to assess insolvency and creditor/debtor regime and to establish a central securities depository. The BON has requested that the Bank and IMF conduct a new FSAP in 2014. 55. Requests for new assistance on a range of issues have emerged through the business planning meetings and other consultations. Thirteen analytical and technical assistance activities are underway in FY2013, including two recipient-executed grants.35 In responding to requests, the country team has emphasized activities with potential for long-term impact or broad spillo- vers. These include support for developing major national strategies, such as NDP4, the Namibia Integrated Resource Plan (a 20-year energy investment plan), the Tourism Growth and Devel- opment Strategy, and the piloting of Cities Development Strategies in five municipalities. The IFC and Bank are jointly conducting advisory work on tourism, business regulatory reform, and energy. Many of these activities are delivered by joint FPD-IFC global practice units. The cur- rent knowledge portfolio also includes assistance to build critical capacities in strategic areas, namely data and statistics, performance monitoring and evaluation, public debt management, and disaster risk management. 56. Although MIGA currently does not have an active portfolio in Namibia, there have been some expressions of interest in MIGA’s services from GRN officials and both prospective inves- tors and lenders. MIGA’s credit-enhancement products could help SOEs extend the tenors and diversify funding sources for loans for projects investments (such as infrastructure and health sectors) indicated in NDP4. MIGA’s political risk insurance, in particular through its Small In- vestment Program, could be attractive to Namibian firms investing in neighboring countries (e.g., Angola). 57. Namibia also benefits from regional activities conducted by the World Bank. Two re- gional trade facilitation activities include Namibia (a SACU trade facilitation assessment and a project to pilot logistics observatories on African transit corridors), and as does a GEF-financed regional tourism project. The Namibian government has hosted or participated in a number of recent knowledge-sharing activities on challenges including climate change, diamond pro- cessing, illicit tobacco trade, and an infoDEV innovation roadshow on mobile ICT innovation. GRN officials and staff of Parliament are active in SADC-wide fora on PPPs and parliamentary committees that the World Bank Institute (WBI) supports. Parliamentary staff benefit from WBI’s executive parliamentary staff training program and are active participants in e-Institute courses. IFC has over the years made proposals to provide advisory services for PPP transactions (e.g., on student housing, a container terminal at Walvis Bay, a water project, a national trauma center), but until recently these have not been met with interest. 58. To deliver this program, the country team has been seeking to use its modest budget allo- cation to attract external resources. The knowledge program for Namibia has been supported by mobilizing grants from external trust funds. These add up to over US$2.6 million at present.36 In 35 World Bank Group knowledge services activities underway in FY2013 are listed in Annex 5 on page 42. 36 A list of trust fund grants active or under preparation in FY2013 appears in Annex 10 on page 49. 18 December 2012 IFC received MOF’s approval for a Namibian dollar-denominated bond issuance as part of IFC’s Pan-Africa Medium-Term Note Program.37 Lessons from the ISN and recent activities38 59. A fundamental lesson from the Bank Group’s engagement in Namibia is the need for the client to be in the driver’s seat. Activities tailored to the specific needs of government counter- parts have enjoyed success (e.g., the statistical capacity building TA, which the Statistician Gen- eral has been directing to tackle the NSA’s most pressing challenges). In contrast, the education DPL program fell short of initial expectations for enhancing the Bank’s engagement in Namibia. Although there was demonstrated country ownership in the reform program supported by the DPL series—a program that has succeeded in improving learning outcomes as measured by SACMEQ—the Bank’s dialogue with the government was insufficient, and the lending operation went forward without full support of all relevant government stakeholders. This was compound- ed by the lack of a Bank presence in the country and the government’s unfamiliarity with IBRD procedures, leading to delays in Bank supervision and stalling the momentum of dialogue be- tween the Bank and the government on education reforms. Table 4. FY2008–2009 Interim Strategy Note: Expected Outcomes and Results ISN Expected Outcomes Results Expanded access to post-basic The education loan supported the following: education and training  Introduction of competency-based education and training in the Improved quality of education Vocational Training Centers (ETSIP goals)  16% increase in math and science enrollment in 2011 (exceeding target of 7%)  56% increase in vocational and education intake in 2011 (exceed- ing target of 14%) Improved national and local natural GEF grants to ICEMA and NACOMA supported the following: resource management  Increase in area of country under communal conservancies to 19% in 2012 from 5% in 2002  National Coastal Management Policy and multi-stakeholder institu- tional structure developed;  Dorob National Park gazetted Deepened policy dialogue for build-  New policy analysis on growth and employment ing a long-term knowledge partner-  Technical advisory work on reserve asset management, debt man- ship agement, financial sector policies  Energy-sector TA to support Namibia Integrated Resource Plan Sources: Namibia ISN for FY2008–2009; ICRs for ICEMA and Education DPL 37 MOF approved IFC’s request to issue up to US$500 million over the next 5 years or US$1 billion over the next 10 years. The request was a preparatory move to enable IFC to provide local currency solutions to investment clients should demand reach a sufficient level. If the IFC moves forward with this program, funds raised would finance new IFC investments in Namibia. 38 A CAS Completion Report was not required for the Namibia ISN. The analysis in this section draws on govern- ment input into and IEG feedback on ICRs and on consultations held with the GRN, private sector, civil society and international partners. A Client Feedback Survey was fielded in April 2013. 19 60. A second lesson is the need to focus assistance. The work program has arguably become too diffuse, with staff and financial resources spread too thinly for any activity to have a trans- formational impact. Selectivity is needed to ensure that the Bank Group concentrates its efforts on the country’s most important priorities. 61. Third, limited administrative budget resources have constrained the Bank Group’s ca- pacity to respond quickly and effectively to high-priority requests. In the coming years staff will seek to scale up knowledge transfers through the use of new modalities that mobilize more fi- nancial resources for tackling development challenges and delivering assistance quickly, and also ensure that activities are closely aligned with client needs. 62. Finally, there is a need to exploit synergies between the Bank, IFC and MIGA. All have considerable expertise in areas highlighted by NDP4 (e.g., infrastructure, financial sector, PPPs, investment climate, natural resource management) that can be brought to bear to provide com- plementary solutions to development problems. B. Framework for Future Engagement 63. This section presents a partnership between the Bank Group and Namibia that is rooted in NDP4’s goals of growth, job creation, and income equality. The 2013–17 CPS provides a framework for collaboration to find solutions for Namibia’s development challenges. It also aims to build a solid foundation for possible future expansion of the Bank Group’s engagement. 64. The preceding analysis suggests that the World Bank Group can best help Namibia meet its development challenges by concentrating on the following objectives:  Improve the state’s capacity to design, implement, and monitor policies on strategic issues. Policy outcomes often fall below expectations due to shortcomings in analysis, data, staff skills, or organizational structures and processes. NDP4 places new de- mands on existing capacity.  Increase the private sector’s ability to generate jobs and incomes. Namibia cannot move onto a trajectory of faster and more inclusive growth without transformative in- vestments in new productive capacities and infrastructure. 65. Nested within each pillar of the CPS are several programs of proposed activities. These reflect the priorities identified in NDP4 and other national strategies, and stakeholder consulta- tions, the strength of demands expressed by the government, the comparative advantage of the Bank Group given existing resource constraints, the potential for activities to have large spillover effects, and the scope for follow-up activities. 66. This collaboration will take place primarily through the transfer and exchange of knowledge. The Bank Group will work to bring the best of global experience to Namibia to find solutions to the country’s problems and to facilitate peer learning through South-South knowledge exchanges, including those that are part of WBI’s global and regional programs. In addition, the Bank’s convening power can provide a global platform for Namibia to export its accomplishments to the rest of the world, for example about its experiences with natural resource conservation. 20 Figure 11. Proposed Namibia CPS Pillars Build State Capacity Private Sector Development Economic management Institutional environment for a Environment and natural competitive private sector resource management Statisical capacity Investments in productive capacity and Health and nutrition infrastructure 67. Although Namibia has access to IBRD financing, the government does not anticipate borrowing in the current economic environment. Should the need arise, the government would be able to access up to US$200 million of IBRD resources to support the financing of investment projects during the CPS period. Possibilities using various mix of instruments could be evaluated when needs arise. The size of IBRD flows would be subject to considerations regarding how government performance evolves during the CPS period, IBRD lending capacity, and demand from other borrowers. 68. This CPS will be adaptive to changing circumstances—this is particularly important given the nature of the Bank Group’s engagement in Namibia. The country team will take stock of progress during the CPS period. Programs will be recalibrated as needed or phased out if they no longer show promise. The country team is continually seeking new entry points to strengthen our engagement. Where these lead to sufficient counterpart demand and resources are available, new programs may be added. 69. It is hoped that the 2014–17 CPS period will serve as a transition to more ambitious pro- grams in future CPSs. This CPS aims to build mutual trust through intensive collaboration in a few areas and gain experience with new funding modalities. Both will help to establish a solid foundation on which to construct a more far-reaching engagement in future CPSs, if the govern- ment so desires. Pillar 1: Build State Capacity 70. The first pillar emphasizes strengthening government institutions’ ability to more effec- tively design, execute, and monitor public policies needed to realize NDP4. As discussed in sections 2–3 above, policy outcomes have not matched the level of government spending histori- cally, and in the wake of the global crisis the government faces an even greater need to raise its game. Four planks are envisioned for this pillar. Economic management 71. Urgent spending priorities, NDP4, and the continued volatility in global markets are plac- ing greater demands on the economic management capacity of government institutions. The treasury, central bank, and municipalities will need to strengthen their core economic manage- 21 ment systems to meet these challenges. To help meet these needs, the Bank is developing a pro- gram of technical advisory and knowledge sharing services to respond to requests for support. Four activities are under discussion or have already been initiated under the program on econom- ic management.  Ministry of Finance TA: The Bank launched technical assistance in 2012 to help MOF improve debt management. A proposed reimbursable advisory services (RAS) agreement would enable the program to be scaled up beyond what would be possible using the Bank’s administrative budget and available trust funds to include tools for public expenditure reviews, assistance with implementing the new PPP policy, and technical advice on a policy on financing of subnational entities.  Reserve Asset Advisory: BON has asked the World Bank Treasury for additional as- sistance from the Reserves Advisory and Management Program to help the central bank mitigate risks of current account shocks.  Knowledge-Sharing with Parliamentarians: Through a partnership with the SADC Secretariat, WBI has been working through Knowledge Exchanges to strengthen ca- pacity of parliamentary committees, including in Namibia, to exercise better oversight over budgets and other economic policies. Development partners have asked WBI to build on this activity through enhanced delivery of courses on fiscal policy, growth, and monitoring of development plans provided by WBI’s e-Institute’s Structured Learning, as well as South-South knowledge sharing activities.  Municipal Public Finance: The Bank Group’s Public-Private Infrastructure Advisory Facility (PPIAF) recently approved a grant to help the City of Windhoek to improve its accounting systems. The country team is exploring the potential for broader reform of Namibia’s public accounting and auditing framework, which could lead to im- provements in how cities and local authorities manage their finances. 72. Desired outcome: These activities aim to build the public sector’s capacity through im- proved organizational structures (e.g., in the debt management office) and through the adoption and routine application of standard tools, practices, guidelines, etc. that enable better manage- ment of the economy. Environment and Natural Resource Management: 73. NDP4 rightly emphasizes that growth and job creation must respect Namibia’s fragile ecosystem and vulnerability to climate change. The Bank Group will support Namibia’s sustain- able use of its environment and natural resources, as well as efforts to manage risks of climate change. For several years the Bank has been providing grant financing for Ministry of Environ- ment and Tourism programs supporting communal conservancies and integrated environmental management in coastal areas. The Bank aims to extend this work during the CPS period with a program of activities on environmental and natural resource management.  NACOMA: The Board of Executive directors approved additional GEF funding for the NACOMA Project in December 2012. This will support implementation of the new Namibia Coastal Management Policy during the CPS period.  Climate change: MET has expressed its interest in obtaining GEF funding for climate change mitigation.  Trans-boundary cooperation: The Bank is working at the regional level to support park infrastructure and tourism development, biodiversity conservation, and local 22 community development, and also to mitigate human-wildlife conflicts and enforce laws on poaching. The country team proposes to promote greater trans-boundary co- operation in addressing conservation threats, sustainable management of forests and other ecosystems, promoting nature-based tourism, and supporting community-based natural resources management. 74. Namibia’s successes with communal conservancies (see Box 1 on page 12) and with integrated natural resource management systems in the coastal zone provide powerful examples for other countries. With the gazetting of Dorob National Park in 2010, the area along Namibia’s entire 1,570 km coastline came under protection—the first African country to do so. Namibia’s coastal protected areas cover 97,600 square kilometers and include three wetlands designated as Ramsar sites plus part of the Succulent Karoo, one of the world’s top biodiversity hotspots. Unique climatic conditions have resulted in specializations of plant and animal species that are seen nowhere else in the world. Managing these resources will require innovative approaches. During the CPS period the Bank will work to help Namibia to maintain its global leadership and share its experiences with the world. 75. Desired outcome: These activities are expected to result in implementation of the new coastal management and other environmental policies, expanded adoption of environmentally sensitive tourism practices, and in increased jobs and incomes from sustainable use of Namibia’s environment. Statistical Capacity 76. A third program in the state capacity building pillar aims to improve the collection and use of statistics for evidence-based policy making. A theme that emerged from stakeholder con- sultations is that the effectiveness of government policies is often hampered by data shortcom- ings. Important statistics are produced infrequently or not at all; quality is sometimes questioned; until recently dissemination fell short of expectations.39 77. During the CPS period, the Bank will work with the GRN to overcome inadequacies in data, statistics, modeling, and monitoring systems that have constrained the government’s ability to design and implement public policies. Several activities are underway:  Monitoring and Evaluation TA: NPC has received an IDF grant to support improve- ments in NPC’s systems for performance monitoring and evaluation of NDP4.  NSA Capacity Building TA: A grant from the Trust Fund for Statistical Capacity Building is financing institutional capacity building at the recently created Namibia Statistics Agency. NSA has approached the Bank for additional assistance in produc- ing statistical information needed for monitoring NDP4 implementation—including data related to tourism, regional trade logistics, and competitiveness—as well as technical support with routine statistical outputs (e.g., international trade reports, in- put-output tables, labor force statistics). 39 Namibia ranked 106th out of 146 countries in 2012 on the World Bank’s statistical capacity index, which measures countries’ adherence to internationally recommended standards and methods, the public availability of key statistics, and the frequency of data collection. Improved reporting of existing data, increased frequency of micro- data collection, rebasing the CPI, and preparation of price indices for export, import, and producer prices could add 20 points to Namibia’s score, which would place Namibia in the top 40 countries. 23  Natural capital accounting: The Bank is exploring ways to include Namibia in the Wealth Accounting and Valuation of Environmental Services (WAVES) global initia- tive. This aims to expand the use of natural capital accounting, which can help direct policies on competing uses of Namibia’s biodiversity and natural resource endow- ment.  Road traffic safety surveillance: In FY2014 the Bank will be supporting a multi- agency effort to improve collection, recording, and reporting of data on injuries in traffic accidents. 78. The Bank also stands ready to collaborate with the GRN in undertaking analysis to in- form policies and programs, if such requests are made. Research into the root causes of extreme poverty, distributional effects of the tax regime, and outcomes from social grants are issues of concern to policy makers and areas where the Bank has considerable global expertise. 79. Desired outcome: These activities are aimed at increasing the frequency, quality, and dissemination of official statistics and policy analysis. The expanded use of data and statistics to develop, implement, monitor, and evaluate public policies directly supports NDP4’s objective of improving NDP execution rates. Health and Nutrition 80. Achieving NDP4 will require the public sector to improve how it delivers governmental services to people. Namibia faces daunting challenges in improving public health, enhancing peoples’ skills, providing access to safe water, and reducing poverty. As discussed above, Na- mibia directs a greater share of its budget to public services than do many other countries in the region, yet outcomes from these programs often lag behind peers. Furthermore, the sizable exter- nal grant funding that has been supporting Namibia’s programs on HIV/AIDS is beginning to decline, which will increase pressure on the MOHSS budget.40 81. The country team is developing relationships with the GRN and international partners that shows promise to develop a new program in the important area of health, where in recent years the Bank has not enjoyed an extensive engagement. The Bank’s assistance on health will be delivered in close collaboration with resident UN agencies and other development partners, whose support to Namibia on health is quite extensive (see Box 2 on page 28), as well as through global and regional knowledge exchanges. Specialized technical assistance will be geared to- wards integrating communicable and non-communicable disease programs. 82. The Bank is providing technical support to the Namibian Alliance for Improved Nutri- tion’s work to implement the National Nutrition Strategic Plan 2011–2015. It is working with the Pink Ribbon/Red Ribbon global partnership to support the Office of the First Lady’s initiatives to integrate women’s cervical cancer control into existing health service delivery platforms for HIV/AIDS. Discussions on possible assistance for tobacco control programs are underway. The IFC has had preliminary discussions with the Ministry of Health and Motor Vehicle Accident Fund on structuring a proposed investment in a trauma center as a public-private partnership. 83. Although there is currently no engagement on social protection or education, the World Bank Group stands ready to provide technical support during this CPS period, and will consider 40 Namibia currently finances only around half of its AIDS response from domestic sources, well below the interna- tional target of 70 percent. Ministry of Health and Social Services, “Global AIDS Response Program Report 2012.� 24 potential activities as they are requested by the government. NDP4 calls for strengthening and expanding social protection systems through consolidation of transfer programs, changes in pro- gram coverage, rationalization of procedures, etc. Efforts are underway to establish a national pension scheme that would cover all Namibians and a national medical benefit fund. NDP4 also calls for improving the quality of education. Assisting MOE with decentralization is one promis- ing area of engagement. 84. In all these areas, the Bank can help with analysis, technical assistance, and connecting Namibia with other countries to exchange experiences with other practitioners on service deliv- ery systems. The IFC will continue to seek opportunities to make investments in health or pro- vide services to help the GRN structure projects as PPPs. Success in transforming these into a program of activities during the CPS period requires mobilizing new financial resources. 85. Desired outcome: Given the limited level of engagement currently, success would be measured first by being able to transform the various expressions of interest into a coherent pro- gram of technical cooperation with the government and development partners and also to mobi- lize funding to sustain such a program. If successfully established, the expected outcome of the program would be reforms that enable the GRN to deliver health, education or social protection services more effectively. Pillar 2: Private Sector Development 86. NDP4’s goals cannot be achieved without increased investment in both physical infra- structure and the private sector’s productive capacity. If new investment in labor-intensive pro- duction is not forthcoming, Namibia will remain on the path of jobless growth. As mentioned earlier, transport, energy, water, and other physical infrastructure requires significant improve- ments to support industrial development. NDP4 emphasizes the importance of encouraging pri- vate investment in infrastructure, citing risks to macroeconomic stability if the government alone tries to shoulder the burden alone. Investment climate diagnostics point to complex business regulations and challenges in accessing credit, skilled labor, and the use of land at acceptable costs as major constraints to investment.41 Increased private investment, enhanced firm capacity, effective public-private dialogue, and regulations to ensure well-functioning markets are prereq- uisites to meeting the growth, job creation, and income equality objectives of NDP4. 87. The World Bank Group will support meeting of these objectives through two programs: one aimed at improving the overall regulatory framework for investment and the other providing assistance with investment transactions. 88. Additional programs under this pillar could be contemplated during the CPS period, should client demand materialize and if resources are mobilized to respond to demand. There are urgent needs to improve workers’ skills, foster entrepreneurship, and stimulate innovation, for example. 41 See for example surveys by the Namibia Chamber of Commerce and Industry, Institute for Public Policy Analysis, and Namibia Manufacturers Association, “Namibian Business and Investment Climate Survey,� 2009–2012; World Bank, “Promoting Entrepreneurship in Namibia: Constraints to Microenterprise Development,� 2011; and World Bank, “An Assessment of the Investment Climate in Namibia,� 2007. 25 Regulatory Framework to Support a Competitive and Resilient Private Sector 89. A country’s regulatory framework plays a vital role in facilitating private investment by ensuring that markets work efficiently and are resilient to shocks. Namibia is taking steps to strengthen this framework, for example by creating a competition authority, launching a 10-year Financial Sector Strategy in 2012, updating the investment act, and preparing new legislation to govern financial institutions and markets. The Bank has been providing support through analysis of constraints facing microenterprises and through technical assistance to BON on micro-credit regulations, financial sector crisis management, and piloting new methods for analyzing risks of money laundering. 90. During the CPS period the Bank will deliver a series of activities in the financial sector building on the strong relationship with BON.  Central securities depository TA: The Bank is launching TA to help BON and NAMFISA develop a central securities depository, which would reduce transaction costs of bond trading and promote development of the domestic capital market.  Insolvency and creditors rights review: A sound insolvency and creditor/debtor re- gime is both a defensive tool against crises, in that it provides a safety valve for wide- spread financial distress, as well as an inducement to investment as it contributes to flexibility and certainty in investment.  FSAP: BON has requested the Bank and IMF to conduct a new FSAP in 2014. 91. Two other TA activities are underway that show promise for future development. First, the Namibia Competition Commission (NaCC) has requested assistance from the Bank Group’s Competition Policy Practice Group to develop measures to prevent anti-competitive practices from undermining growth and job creation. A review of the competition framework is being launched in FY2013. Second, work on a Doing Business Reform Memorandum was initiated in early 2013. An action plan for streamlining business regulations is expected by mid-year. 92. Desired outcome: The expected outcome of this program is that the government intro- duces reforms that reduce transaction costs and increase the resilience of markets, especially financial services and capital markets, and that reduce the costs that firms face in complying with business regulations. Support for private investments in production and infrastructure 93. A second program in this pillar provides more direct support for investments through IFC debt and equity investments in Namibian firms, MIGA credit enhancement and risk insurance products, PPP transaction support, and technical advice on structuring investments. There have been some successes to date in these areas: IFC has made loans to firms in tourism, fisheries, and financial services industries; a Bank-IFC team is providing advice to MOF on structuring the Kudu gas-to-electricity project; PPIAF financed a financial analysis of a railway connecting the Walvis Bay seaport to Botswana’s coalfields. Moreover, there have been expressions of interest from government officials and from firms in IFC and MIGA offerings that will provide addition- al opportunities to support private investments into Namibia, including credit enhancement and risk insurance solutions for the Kudu project. 94. The IFC aims to support the NDP4’s goals of faster growth, more employment and great- er income equality through both its investment and advisory services. Several appear to be prom- 26 ising. Currently IFC is appraising an expansion of its investment in Trustco through a US$11 million equity investment and a guarantee of Trustco’s US$40 million maiden bond issuance. An agricultural business recently approached the IFC to invest in the firm’s expansion plan. The Bank, IFC and WWF are collaborating to raise awareness about the financial viability of tourism joint ventures with communal conservancies. 95. The infrastructure investments called for under NDP4 provide potential entry points for the Bank Group to provide support. Some of these investments will be made by SOEs. The Board of Directors recently approved the expansion of the Non-Honoring of Financial Obliga- tions guarantee available through MIGA to include financial obligations of creditworthy SOEs. This guarantee could provide a diversification of long-term funding sources for SOEs in Namibia and would enable the SOEs to borrow on the strength of their own balance sheet without any additional sovereign support. MIGA’s expanded Breach of Contract product could facilitate SOE financing at appropriate tenors. Other investments are expected to be PPPs, MIGA products, IFC advisory services, and PPIAF grants that can help facilitate increased private investment through PPPs. 96. There is also potential demand from IFC and MIGA products by Namibian firms seeking to invest in neighboring countries. MIGA’s Small Investment Program offers political risk insur- ance that would be appealing to medium-sized firms interested in expanding their operations to countries such as Angola. Supporting outward investments by Namibian firms a priority for the IFC as well. 97. Desired outcome: There remains limited awareness in Namibia of opportunities to use Bank Group services to increase private investment. One important measure of success of this program, therefore, is to increase the number of investments made by the IFC or with Bank Group support. V. PARTNERSHIPS 98. Partnerships are an important aspect of the Bank Group’s engagement in Namibia and will be critical for the success of the CPS. The Bank played an integral role in initiating multi- donor support for education, both through the DPL series and the analytical work that accompa- nied it. The GEF-financed ICEMA Project was implemented through close collaboration with the CBNRM community. A number of ongoing activities are being delivered jointly with part- ners: debt management TA with MEFMI, regional training on innovation with the Embassy of Finland and the Southern Africa Innovation Support Program, analysis of tourism with WWF, the FSAP with the IMF, and the regional trade facilitation assessment with the SACU Secretariat, to cite a few examples. Proposed future work on statistical capacity building and poverty analy- sis would be coordinated with the UN and other partners active in Namibia. 27 Box 2. Official Development Assistance to Namibia ODA to Namibia by Sector, 2011 ODA Flows, 1990–2011 8.0% Namibia $250 Sub-Saharan Africa Millions of current U.S. dollars Multi-sectoral and other LMICs Net ODA as a share of GNI $200 Small States 6.0% Production $150 Economic infrastructure 4.0% & services $100 Other social sectors 2.0% $50 Education Health and population 0.0% $0 1990 1993 1996 1999 2002 2005 2008 2011 Receipts 2009 2010 2011 Top Donors 2010–11 avg Net ODA (USD million) $325.5 $256.4 $284.6 United States US$115.1 Bilateral share (gross ODA) 76% 82% 83% Germany $51.4 Net ODA / GNI 3.7% 2.4% 2.4% Japan $35.9 EU Institutions $21.2 Global Fund $18.8 Source: OECD DAC, World Development Indicators 99. Nowhere are partnerships more important in the CPS than in the dialogue to establish a program on health. Namibia has been receiving, on average, around US$290 million in official development assistance (ODA) in recent years (see Box 2).42 Around 60 percent of ODA flows to health, education and other social sectors, and grant funding on health provided by USAID, the Global Fund, makes up the lion’s share of this ODA. WHO, UNICEF, UNAIDS and other members of the UN family enjoy a deep and longstanding relationship with Namibia. The Bank has been working with these partners to develop its engagement in the health sector. The Bank is contributing technical expertise to the international community’s support for work in Namibia on malnutrition, stunting, and cervical cancer, and is also connecting the GRN to a regional com- munity of practice on tobacco control. VI. RISK ASSESSMENT A. Country Risks 100. Both NDP4 and the CPS assume macroeconomic stability, growth, and continued gov- ernment commitment to poverty reduction programs. All three conditions face risks from the external economic environment in the form of market shocks (e.g., trade shocks or exchange rate volatility), reductions in external grants for HIV/AIDS, or declining SACU revenue transfers. 42 It should be noted that less than one-tenth of total ODA flows through the treasury into the GRN budget. The latest MOF budget data show external grants received by the treasury were 0.19 percent of GDP, versus total ODA to Namibia of 2.4 percent of GNI. 28 They face risks from the natural environment. Namibia is prone to both drought and floods, which can cause significant loss of life and economic disruptions that could derail the govern- ment’s growth strategy. 43 They face risks stemming from domestic policy weaknesses. MOF reports that Namibia is close to exhausting its fiscal space.44 Spending obligations seem destined to rise in the near future as NDP4 calls for ambitious spending on infrastructure and targeted productive sectors.45 The GRN is also committed to introduce a national pension scheme and a health insurance benefit. Resources for development programs are being claimed by the rapidly growing public sector wage bill. If NDP4 fails to stimulate growth and employment—and there- by fails to generate increased tax revenue—fiscal deficits could risk becoming unsustainable. B. Financing Risks 101. The CPS assumes that the country team will succeed in mobilizing new financial re- sources: e.g., external trust funds, RAS agreements for the knowledge program, fee-based ar- rangements to support IFC’s PPP transaction support. The inability to catalyze these new resources would necessitate scaling down the overall level of engagement or changing program priorities proposed in the CPS. C. Program Implementation, Alignment and Coordination Risks 102. Weaknesses in state capacity identified above pose risks to effective implementation of the CPS program. Requests for Bank Group support often emerge from ministries or other agen- cies without central coordination. Similarly, programming within the Bank Group has historical- ly been somewhat fragmented across sectors and Bank Group institutions. Opportunistic activities have weakened program coherence. There is a risk that the Bank Group’s work pro- gram may become uncoordinated over time and lose alignment with both the CPS and NPD4. To ensure selectivity based upon government demand, the country team proposes establishing a mechanism of regular reviews with MOF and NPC to review CPS implementation. 43 Government of the Republic of Namibia, “Post-Disaster Needs Assessment: Floods 2009,� notes that Namibia suffered from either floods or droughts every year between 2004 and 2009. The PDNA estimated damage from the 2009 floods to be around 1 percent of 2009 GDP. More widespread flooding occurred in 2011, and the 2013 drought is the most severe in 14 years. 44 Republic of Namibia, “Fiscal Policy Framework 2013/14 to 2015/16,� (February 2013), page 22. 45 NDP4 estimates that needed investments in infrastructure will require N$187 billion, which is roughly twice the size of 2012 GDP. 29 VII. CPS ANNEXES Annex 1. CPS Results Matrix Government Outcomes Supported by Obstacles and Issues CPS Milestones, Outputs, Outcomes Activities, Instruments and Partners the CPS (with sources) Pillar 1. Build State Capacity Economic Management Program Outcomes: Debt management and analysis capacity increased 2014: debt strategy informed by risk-cost The 2005 Sovereign Debt Manage- analysis ment Strategy has expired. Debt and 2015: MOF fiscal framework includes re- AAA Activities macroeconomic policies not fully sults of DSA  MOF Economic Management TA informed by debt analytics. 2015: BON economic outlook includes re-  TA to City of Windhoek on financial NDP4 investments are made without sults of DSA management jeopardizing macroeconomic stability MOF lacks capacity to systematically  Accounting and Auditing ROSC (if through greater use of PPPs. (NDP4) analyze expenditure efficiency. Improved expenditure analysis capacity requested) 2016: PERs underway for 3 ministries Government must improve internal Cabinet has approved a PPP policy, efficiency (2013 budget speech) but no institutional capacity yet exists Capacity to manage PPP created Partners: to implement it. 2015: pipeline of PPPs developed Authorities: MOF, BON, NPC City of Fundamental pillar of FY13/14-15/16 2016: evaluation guidelines adopted Windhoek MTEF is to rebuild fiscal buffers, includ- Public auditing and accounting sys- Outputs: ing stabilizing growth in public debt tems do not fully comply with interna- Training provided in use of IMF-WB debt International: EU, IMF, MEFMI tional standards; SOEs’ and analytical tools (FY14) municipalities’ lack of audited finan- Trust funds: Gates Foundation, PPIAF cial statements hinders their ability to BOOST tool delivered (FY14) obtain financing for infrastructure investments and municipal services Technical support provided for MOF’s sec- toral PERs (FY14–16) Technical advice on PPPs delivered to MOF (FY15–16) 30 Government Outcomes Supported by Obstacles and Issues CPS Milestones, Outputs, Outcomes Activities, Instruments and Partners the CPS (with sources) Pillar 1. Build State Capacity Environmental Management Program Outcomes: National Policy on Coastal Management is implemented and the integrated coastal zone management approach is mainstreamed  The number of plans and strategies in the coastal area that incorporate biodi- versity issues increases to 53 by 2015 Activities: Most sources of economic growth Promote sustainable economic, social and from 47 in 2012  NACOMA 2 GEF project (US$ 1.92 depend on Namibia’s fragile ecosys- cultural opportunities while maintaining million) tems and are vulnerable to climate biodiversity and ecological integrity Expanded economic opportunities in sustaina-  GEF investments in climate change change. There is especially intense (NDP4) ble use activities and trans-boundary conservation, if competition along the coast.  Employment in sustainable use activities requested) Conserve, use sustainably and main- increases to 21,975 by 2015 from 18,795 stream the biodiversity of the Namibian in 2012 Partners: The National Policy on Coastal Man- coast (National Policy on Coastal Man- Outputs: Authorities: GRN: MET, Integrated Coast agement has been approved by the agement) Strategic studies and consultations delivered Zone Management Committee cabinet but still needs to be imple- (FY14–16) mented. Trust Funds: GEF Educational materials and communications and training programs provided for policy makers (FY14–16) Matching grants to finance investments in coastal protected areas (FY14–16) 31 Pillar 1. Build State Capacity Statistical Capacity Program Outcomes: Increased capacity of NSA to gather and release statistics in accordance with interna- Activities: tional standards. Progress indicated by in-  IDF grant to NPC for performance The quality and frequency of produc- creases in score on WB Index of Statistical monitoring ing many official statistics are low by Capacity  TFSCB grant to NSA for institutional Improve NDP execution through im- international standards. Some have 2012: 56 development proved performance monitoring and never been produced. Release of 2015: 67  Regional statistical capacity training evaluation mechanisms, including im- statistics to the public has been slow 2018: 78 (if approved) proving the national statistics system to and incomplete.  ESW/TA on poverty and inequality enhance the quality of data. (NDP4 NPC’s capacity to monitor NDP4 increased analysis (if requested) Desired Outcome 10) Policies often are not developed 2014: sectoral baseline indicators compiled through public debate based on policy 2015: national M&E framework adopted Partners Increase research on the root causes of analysis. Authorities: NSA, NPC, MOF extreme poverty (part of NDP4 Desired Outputs: Outcome 4) Systems for using data to monitor Training in data dissemination and analysis International: OECD/Paris 21, resident UN policy implementation and inform tools (ADP, ADePT, etc.) (FY14) agencies revisions or evaluation are weak. Delivery of technical advice on multi-topic Trust Funds: TFSCB, IDF, household surveys and economic statistics. (FY14–16). 32 Pillar 1. Build State Capacity Health and Nutrition Program Outcomes: Increased integration of systems for addressing communicable and non-communicable diseas- es 2014: national nutrition plan launched Activities: 2015: tobacco control framework strength-  Health Sector Policy Dialogue TA Health service delivery systems are ened  Follow-up TA if requested fragmented (by type of disease). 2015: cervical cancer control measures in- corporated into HIV/AIDS programs Partners: By 2017, Namibians have access to a MOHSS is faced with challenge of Authorities: MOHSS, OPM quality health system (NDP desired financing programs currently funded South-South knowledge sharing through outcome 3) by external grants. Outputs: International: WHO, UNICEF, UNAIDS Advisory work to fully cost the nutrition and other UN agencies; USAID; IMF Child malnutrition and stunting rates strategy delivered (FY14) are very high. Trust Funds: Gates Foundation, Bloomberg Technical support on cervical cancer systems Foundation provided in conjunction with Pink Ribbon/Red Ribbon global partnership (FY14) Namibia included in regional tobacco trade community of practice. (FY14) 33 Pillar 2. Private Sector Development Institutional Environment for a Competitive Private Sector Program Outcome: Financial sector more resilient and supportive of investment 2014: financial sector crisis management plan adopted 2017: central securities depository estab- lished Competition policy framework strengthened Activities: 2015: NaCC incorporates market analysis  TA to NaCC (FY14) into decisions  ICR ROSC (FY14) Namibia is falling behind other coun-  Central Securities Depository TA tries in Doing Business, Global Com- (FY14) GRN proposes regulatory reforms that reduce By 2017, Namibia is the most competi- petitiveness Index and other  FSAP (FY15–16) documents needed to start a business and days tive economy in SADC, as measured by competiveness rankings.  TA to implement Doing Business needed to import a container the WEF CGI (NDP4 desired outcome 1) Reform Memorandum recommenda- 2012: 10 documents to start a business; 25 High transaction costs, unclear insol- tions (if requested, FY14) days to import a container (DB2013) By 2021, Namibia has an effective, vency regime, vulnerability to shocks, 2017: 5 documents to start a business; 16 efficient, stable, competitive, resilient and and weak price discovery discourage Partners: days to import a container (RSA lev- inclusive financial system. (Financial financial sector deepening. Authorities: BON, NAMFISA, MOF, els in DB2013) Sector Strategy goals) MOJ/Law Reform and Development Com- Outputs: Firms and SOEs with market power mission, NaCC, MTI Analysis of price competition in key markets dampen competition. delivered (FY14) International: IMF, GIZ, Insolvency and Creditor/Debtor Regime Trust Funds: FIRST ROSC delivered (FY14) Technical advice provided on central securities depository (FY14–15) Policy note on anti-trust legal framework delivered (FY15) FSAP delivered (FY16) 34 Pillar 2. Private Sector Development Investments in Production and Infrastructure Program NDP4 Desired Outcomes relevant to possible WBG activities:  Namibia shall have a well- functioning, high quality transport infrastructure connected to major local and regional markets as well as linked to Walvis Bay (DO 5.1) The scale of investment needed in  Namibia will have in place ade- public infrastructure exceeds GRN and quate base load energy to support SOE’s capacity. Private sector financ- industry development, with genera- ing must be mobilized, but: tion capacity increased to 750 meg- Outputs: Activities  Many potential investments awatts (DO 5.2) Case study on communal conservancy tourism  FPD-IFC study on joint ventures with require complex government-  Increased access to water for hu- joint ventures presented at Adventure Travel communal conservancies parastatal-private sector arrange- man consumption to 100% of the World Summit (FY14).  IFC investment in Trustco (proposed) ments that can be difficult to or- population (from 85%) as well as ganize. sufficient water reserves for indus- GRN concludes agreement with IFC to organ- Partners  Lenders are reluctant to lend to trialization (DO 5.3) ize at least one PPP investment. (by FY17) Authorities: MET, MTI, MOF, MME, SOEs even with sovereign guar-  The Port of Walvis Bay has be- MWT antees. come the preferred African West MIGA services used by at least one investor. coast port and logistics corridor for (by FY17) NGOs: WWF, Walvis Bay Corridor Group, Potential investors in tourism joint southern and central African logis- NACSO ventures with communal conservan- tics operations. (DO 6) IFC makes at least one new investment. cies lack information about the sector.  Namibia is the most competitive (FY14) Trust funds: Umbrella Trade Facility tourist destination in Africa by New livestock producers lack exper- 2017, as measured by the WEF. tise, information about auctions and (DO 7) marketing arrangements.  The contribution of general manu- facturing in constant Namibian dol- lar terms has increased by 50 percent over 2010. (DO 8)  Agriculture experiences average real growth of 4 percent per annum over the NDP4 period (DO 9) 35 Annex 2. Namibia at a Glance 5/20/13 Sub- Upper Ke y D e v e lo pm e nt Indic a t o rs Saharan middle Namibia A frica inco me Age distribution, 2010 ( 2 0 11) Male Female P o pulatio n, mid-year (millio ns) 2.3 875 2,490 75- 79 Surface area (tho usand sq. km) 824 24,243 59,328 60- 64 P o pulatio n gro wth (%) 1.7 2.5 0.7 Urban po pulatio n (% o f to tal po pulatio n) 42 37 57 45- 49 30- 34 GNI (A tlas metho d, US$ billio ns) 11.4 1,004 14,429 15- 19 GNI per capita (A tlas metho d, US$ ) 4,890 1,176 5,884 GNI per capita (P P P , internatio nal $ ) 6,801 2,363 10,957 0-4 10 5 0 5 10 GDP gro wth (%) 4.9 4.8 7.8 percent of total population GDP per capita gro wth (%) 3.2 2.3 7.1 ( m o s t re c e nt e s t im a t e , 2 0 0 5 – 2 0 11) P o verty headco unt ratio at $ 1 .25 a day (P P P , %) 32 48 .. Under-5 mortality rate (per 1,000) P o verty headco unt ratio at $ 2.00 a day (P P P , %) 51 69 .. Life expectancy at birth (years) 65 54 73 200 Infant mo rtality (per 1,000 live births) 46 76 17 180 Child malnutritio n (% o f children under 5) .. 22 3 160 140 A dult literacy, male (% o f ages 15 and o lder) 89 71 96 120 A dult literacy, female (% o f ages 15 and o lder) 88 54 91 100 80 Gro ss primary enro llment, male (% o f age gro up) 99 104 111 60 Gro ss primary enro llment, female (% o f age gro up) 100 95 111 40 20 0 A ccess to an impro ved water so urce (% o f po pulatio n) 84 61 93 1990 1995 2000 2010 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) 40 31 73 Namibia Sub-Saharan Af rica N e t A id F lo ws 19 8 0 19 9 0 2000 2 0 11 a (US$ millio ns) Net ODA and o fficial aid – 120 152 259 Growth of GDP and GDP per capita (%) To p 3 do no rs (in 2010): – United States – 0 10 117 14 Japan – 0 5 41 12 10 Germany – 10 24 24 8 6 A id (% o f GNI) – 5.0 3.9 2.4 4 2 A id per capita (US$ ) – 84 80 113 0 -2 -4 Lo ng- T e rm E c o no m ic T re nds -6 95 05 Co nsumer prices (annual % change) – 12.0 9.0 5.1 GDP implicit deflato r (annual % change) – 4.2 10.7 6.8 GDP GDP per c apita Exchange rate (annual average, lo cal per US$ ) – 2.6 6.9 7.3 Terms o f trade index (2000 = 100) – 91 100 115 19 8 0 – 9 0 19 9 0 – 2 0 0 0 2 0 0 0 – 11 (average annual gro wth %) P o pulatio n, mid-year (millio ns) 1.0 1.4 1.9 2.3 3.6 2.9 1.8 GDP (US$ millio ns) – 2,348 3,909 12,511 – 5.2 11.2 (% o f GDP ) A griculture – 7.5 6.7 4.8 – 0.7 1.6 Industry – 15.5 28.0 19.7 – 5.5 5.3 M anufacturing – 11.2 12.8 12.9 – 5.8 5.2 Services – 58.7 60.2 64.5 – 5.1 5.0 Ho useho ld final co nsumptio n expenditure – 50.6 60.8 63.1 – 5.6 5.6 General go v't final co nsumptio n expenditure – 27.7 23.5 24.7 – 4.0 4.4 Gro ss capital fo rmatio n – 33.7 17.1 19.8 – 9.4 7.2 Expo rts o f go o ds and services – 46.9 40.9 44.7 – 7.2 5.4 Impo rts o f go o ds and services – 55.5 44.5 52.4 – 8.0 7.9 Gro ss savings – 34.8 27.7 24.6 .. .. No te: Figures in italics are fo r years o ther than tho se specified. 201 a. A id data are fo r 2010. 36 1data are preliminary. .. indicates data are no t available. Namibia Namibia B a la nc e o f P a ym e nt s a nd T ra de 2000 2 0 11 B a la nc e o f P a ym e nt s a nd T ra de 2000 2 0 11 Governance indicators, 2000 and 2010 Governance indicators, 2000 and 2010 (US$ millio ns) (US$ millio ns) To tal merchandise expo rts (fo To tal merchandise b)rts (fo b) expo 1,328 1,3284,655 4,655 To tal merchandise impo rts (cif) 1 ,414 1,415,837 5,837 Voice and and Voice accountability accountability To tal merchandise impo rts (cif) 4 in go Net trade Net o ds in trade go services and o ds and services -1 43 -1 43-1,196 -1,196 Polit ical stability andand Political stability absence of violence absence of violence Current acco unt balance Current acco unt balance 323 323 -41 6 -416 Regulatquality Regulatory ory quality GDP as a % o f as a % o f GDP 8.3 8.3 -3.3 -3.3 Rule Rule of law of law Wo rkers' remittances Wo rkers' remittances and and co mpensatio co mpensatio no n o f emplo f emplo yees yees (receipts) (receipts) 9 9 15 15 Control Control of corruption of corruption including including Reserves, Reserves, go ld go ld 268 268 1,811 1,811 0 0 25 25 50 50 75 75 100 100 C e nt ra l G o v e rnm e nt F ina nc e Country's percentile rank (0-100) C e nt ra l G o v e rnm e nt F ina nc e 2010 2010 2000 2000 Country's values implyrank higherpercentile better(0-100) ratings higher values imply better ratings (% o f GDP ) (% o f GDP ) Current revenue (including grants) 33.4 32.9 Source: Worldw ide Governance Indicators (w w w .govindicators.org) Source: Worldw ide Governance Indicators (w w w .govindicators.org) Current revenue (including grants) Tax revenue 33.4 30.0 32.9 29.4 Tax revenue Current expenditure 30.0 33.129.4 30.5 Current expenditure 33.1 30.5 T e c hno lo gy a nd Inf ra s t ruc t ure 2000 2 0 10 Overall surplus/deficit -3.5 -8.6 T e c hno lo gy a nd Inf ra s t ruc t ure 2000 2 0 10 Overall surplus/deficit -3.5 -7.2 P aved ro ads (% o f to tal) 13.6 14.7 Highest marginal tax rate (%) P aved line (% ro ads Fixed and f tobile omo tal)pho ne 13.6 14.7 Individual Highest marginal tax rate (%) 36 37 line and mo (per Fixed subscribers 100 peo bile pho ne ple) 10 74 Individual Co rpo rate 36 35 37 35 High techno subscribers lo gy (per 1 expo 00 peo rts ple) 10 74 Co rpo rate 35 35 (% o f manufactured High techno lo gy expo rts expo rts) 1.8 0.9 E xt e rna l D e bt a nd R e s o urc e F lo ws (% o f manufactured expo rts) 1.8 0.9 E xt e rna l D e bt a nd R e s o urc e F lo ws E nv iro nm e nt (US$ millio ns) E nv iro nm e nt To tal debt o utstanding and disbursed 85 4,248 A gricultural land (% o f land area) 47 47 (US$ millio ns) To tal debt service 5 511 Fo rest area (% o f land area) 9.8 9.3 To tal debt o utstanding and disbursed 85 4,248 A gricultural land (% o f land area) 47 47 Debt relief (HIP C, M DRI) – – Terrestrial pro tected areas (% o f land area) 14.5 14.9 To tal debt service 5 511 Fo rest area (% o f land area) 9.8 9.3 Debt relief To(HIP DRI) C, M(% tal debt o f GDP ) – 2.2 – 34.0 Terrestrial pro tected Freshwater areas reso urces (% per o f land capita area) (cu. meters) 14.5 3,122 14.9 2,747 To tal debt service (% o f expo rts) 0.2 9.6 Freshwater withdrawal (billio n cubic meters) .. .. To tal debt (% o f GDP ) 2.2 34.0 Freshwater reso urces per capita (cu. meters) 3,122 2,747 To tal debt Foservice (% o f reign direct expo rts) (net inflo ws) investment 0.2 184 9.6 1,052 Freshwater withdrawal CO2 emissio ns per(billio capita cubic meters) n (mt) .. 0.93 1.8.. P o rtfo lio equity (net inflo ws) -139 -321 Fo reign direct investment (net inflo ws) 184 1,052 emissio CO2GDP ns per per unit (mt) capita use o f energy 0.93 1.8 P o rtfo lio equity (net inflo ws) -139 -321 (2005 P P P $ per kg o f o il equivalent) 8.4 7.4 Composition of total external debt, 2011 GDP per unit o f energy use Energy (2005 PPP use per capita $ per (kg kg o f o o f o il equivalent) il equivalent) 537 8.4 764 7.4 Composition of total external debt, IMF, 0 2011 IBRD, 0 Other multi- lateral, 2,839 Eurobond, Energy use per capita (kg o f o il equivalent) 537 764 4,075 Bilateral, 1,294 Wo rld B a nk G ro up po rt f o lio 2000 2 0 10 IMF, 0 IBRD, 0 Other multi- lateral, 2,839 Eurobond, (US$ millio ns) 4,075 Bilateral, 1,294 Wo rld B a nk G ro up po rt f o lio 2000 2 0 10 IB RD (US$ Tomillio ns) o utstanding and disbursed tal debt 0 0 Disbursements 0 0 IB RDP rincipal repayments 0 0 To tal utstanding and disbursed debt opayments Interest 00 0 0 Private, 25,538 Disbursements 0 0 N$ millions IDA repayments P rincipal 0 0 To tal Interest debt o utstanding and disbursed payments 0– – 0 Private, 25,538 Disbursements – – P riv a t e S e c t o r D e v e lo pm e nt N$ millions 2000 2 0 11 IDA To tal debt service – – To tal debt o utstanding and disbursed – – Time required to start a business (days) – 66 IFC (fiscal year) Disbursements – – Co st to start a business (% o f GNI per capita) – 18.5 To tal disbursed and o utstanding po rtfo lio 9 0 P riv a t e S e c t o r D e v e lo pm e nt 2000 2 0 11 To tal debt service – – Time required to register pro perty (days) – 39 o f which IFC o wn acco unt 9 0 Disbursements fo r IFC o wn acco unt 1 0 Time required to start a business (days) – 66 IFC (fiscal year) Ranked as a majo r co nstraint to business 2000 2 0 10 P o rtfo lio sales, prepayments and Co st to start a business (% o f GNI per capita) (% o f managers surveyed who agreed) – 18.5 disbursed and To tal repayments o utstanding po rtfo lio fo r IFC o wn acco unt 91 01 Time required to register pro perty (days) Crime – .. 39 20.6 o f which IFC o wn acco unt 9 0 Tax rates .. 17.2 Disbursements M IGA fo r IFC o wn acco unt 1 0 Ranked as a majo r co nstraint to business 2000 2 0 10 P o rtfo Grolio sssales, prepayments and expo sure – – (% o f managers surveyed Sto ck market who agreed) capitalizatio n (% o f GDP ) 8.0 10.6 repayments fo r IFC o wn acco unt New guarantees 1 – 1 – Crime B ank capital to asset ratio (%) .. 8.7 20.6 8.4 Tax rates .. 17.2 M IGA Gro ss expo sure – – No te: Figures in italics are fo r years o ther than tho se specified. 2011data are preliminary. 5/16/13 Sto ck market capitalizatio n (% o f GDP ) 8.0 10.6 New guarantees – – .. indicates data are no t available. – indicates o bservatio n is no t applicable. B ank capital to asset ratio (%) 8.7 8.4 No te: Figures in italics are fo r years o ther than tho se specified. 2011data are preliminary. 37 6/12/13 .. indicates data are no t available. – indicates o bservatio n is no t applicable. Millennium Development Goals Namibia With selected targets to achieve b etween 1990 and 2015 (estimate clo sest to date sho wn, +/- 2 years) N a m ibia G o a l 1: ha lv e t he ra t e s f o r e xt re m e po v e rt y a nd m a lnut rit io n 19 9 0 19 9 5 2000 2 0 10 P o verty headco unt ratio at $ 1 .25 a day (P P P , % o f po pulatio n) .. 49.1 31.9 20.6 P o verty headco unt ratio at natio nal po verty line (% o f po pulatio n) .. 69.3 37.7 28.7 Share o f inco me o r co nsumptio n to the po o rest quintile (%) .. 1.4 3.5 3.5 P revalence o f malnutritio n (% o f children under 5) 26.2 .. 24.0 .. G o a l 2 : e ns ure t ha t c hildre n a re a ble t o c o m ple t e prim a ry s c ho o ling P rimary scho o l enro llment (net, %) 79 86 88 85 P rimary co mpletio n rate (% o f relevant age gro up) 74 69 91 81 Seco ndary scho o l enro llment (gro ss, %) 38 56 60 64 Yo uth literacy rate (% o f peo ple ages 1 5-24) 87 90 92 93 G o a l 3 : e lim ina t e ge nde r dis pa rit y in e duc a t io n a nd e m po we r wo m e n Ratio o f girls to bo ys in primary and seco ndary educatio n (%) 108 .. 105 101 Wo men emplo yed in the no nagricultural secto r (% o f no nagricultural emplo yment) .. .. 49 48 P ro po rtio n o f seats held by wo men in natio nal parliament (%) 7 18 22 27 G o a l 4 : re duc e unde r- 5 m o rt a lit y by t wo - t hirds Under-5 mo rtality rate (per 1 ,000) 86 77 69 62 Infant mo rtality rate (per 1,000 live births) 60 55 50 46 M easles immunizatio n (pro po rtio n o f o ne-year o lds immunized, %) 57 68 69 73 G o a l 5 : re duc e m a t e rna l m o rt a lit y by t hre e - f o urt hs M aternal mo rtality ratio (mo deled estimate, per 1 00,000 live births) 200 200 280 200 B irths attended by skilled health staff (% o f to tal) 68 .. 76 81 Co ntraceptive prevalence (% o f wo men ages 1 5-49) 29 .. 44 55 G o a l 6 : ha lt a nd be gin t o re v e rs e t he s pre a d o f H IV / A ID S a nd o t he r m a jo r dis e a s e s P revalence o f HIV (% o f po pulatio n ages 1 5-49) 1.6 7.1 15.3 13.1 Incidence o f tuberculo sis (per 100,000 peo ple) 260 456 623 697 Tuberculo sis case detectio n rate (%, all fo rms) 27 11 53 82 G o a l 7 : ha lv e t he pro po rt io n o f pe o ple wit ho ut s us t a ina ble a c c e s s t o ba s ic ne e ds A ccess to an impro ved water so urce (% o f po pulatio n) 57 69 80 84 A ccess to impro ved sanitatio n facilities (% o f po pulatio n) 24 25 24 40 Fo rest area (% o f land area) 10.6 .. 9.8 9.3 Terrestrial pro tected areas (% o f land area) 14.4 14.4 14.5 14.9 CO2 emissio ns (metric to ns per capita) 0.0 1.1 0.9 1.8 GDP per unit o f energy use (co nstant 2005 P P P $ per kg o f o il equivalent) 9.4 7.9 8.4 7.4 G o a l 8 : de v e lo p a glo ba l pa rt ne rs hip f o r de v e lo pm e nt Telepho ne mainlines (per 1 00 peo ple) 3.7 4.8 5.8 6.7 M o bile pho ne subscribers (per 1 00 peo ple) 0.0 0.2 4.3 67.2 Internet users (per 1 00 peo ple) 0.0 0.0 1.6 6.5 Co mputer users (per 1 00 peo ple) .. .. .. .. Education indicators (%) Measles immunization (% of 1-year ICT indicators (per 100 people) olds) 125 100 80 70 100 75 60 75 50 50 50 40 30 25 25 20 0 10 2000 2005 2010 0 0 1990 1995 2000 2010 2000 2005 2010 Prim ary net enrollment ratio Namibia Sub-Saharan Af rica Fix ed + m obi le s ubs cribers Int ernet users Ratio of girls to boy s in primary & sec ondary educ ation No te: Figures in italics are fo r years o ther than tho se specified. .. indicates data are no t available. 5/16/13 38 Annex 3. Bank Portfolio Performance CAS Annex B2 - Namibia Selected Indicators* of Bank Portfolio Performance and Management As Of Date 3/1/2013 Indicator 2010 2011 2012 2013 Portfolio Assessment Number of Projects Under Implementation a 2 1 1 0 Average Implementation Period (years) b 5.5 5.8 6.8 0.0 Percent of Problem Projects by Number a, c 50.0 0.0 0.0 0.0 Percent of Problem Projects by Amount a, c 59.2 0.0 0.0 0.0 Percent of Projects at Risk by Number a, d 50.0 0.0 0.0 0.0 Percent of Projects at Risk by Amount a, d 59.2 0.0 0.0 0.0 Disbursement Ratio (%) e 39.0 79.0 73.1 68.7 Portfolio Management CPPR during the year (yes/no) Supervision Resources (total US$) 80 40 45 22.5 Average Supervision (US$/project) 40 40 45 22.5 Memorandum Item Since FY 80 Last Five FYs Proj Eval by IEG by Number 1 1 Proj Eval by IEG by Amt (US$ millions) 0.0 0.0 % of IEG Projects Rated U or HU by Number 0.0 0.0 % of IEG Projects Rated U or HU by Amt 0.0 0.0 a. As shown in the Annual Report on Portfolio Performance (except for current FY). b. Average age of projects in the Bank's country portfolio. c. Percent of projects rated U or HU on development objectives (DO)or implementation progress (IP). d. As defined under the Portfolio Improvement Program. e. Ratio of disbursements during the year to the undisbursed balance of the Bank's portfolio at the beginning of the year: Investment projects only. * All indicators are for projects active in the Portfolio, with the exception of Disbursement Ratio, which includes all active projects as well as projects which exited during the fiscal year. 39 Annex 4. IFC Investment Operations Program Annex B3 Namibia: IFC Investment Operations Program 2010 2011 2012 2013* Original Commitments (US$m) IFC and Participants 10.80 IFC's Own Accounts only 10.80 Original Commitments by Sector (%)- IFC Accounts only EDUCATION SERVICES 100 Total 0 100 0 0 Original Commitments by Investment Instrument (%) - IFC Accounts only Loan 100 Total 0 100 0 0 * Data as of March 01,2013 40 Annex 5. Knowledge Activities Recently Completed or Underway CAS Annex B4 - Summary of Nonlending Services - Namibia As Of Date 3/1/2013 Completi Cost Product on FY (US$000) Audience a Objective b Recent completions Health Sector Note (P110113) 2010 190 Gov KG Post-Disaster Needs Assessment (P116815) 2010 450 Gov, Don, KG, PD Post-ICA follow up: Informality Survey(P118008) 2011 95 Gov, Pub KG, PS Macro Modelling (P119790) 2010 60 Gov PS Risk and Vulnerability Assessment Project (P122652) 2011 50 Gov PS Policy Notes on Growth and Employment (P122957) 2012 325 Gov, Pub KG, PD Macro Modelling (P124153) 2012 25 Gov PS Legal and Regulatory Framework for Microfinance (P124587) 2012 165 Gov PS Financial Crisis Simulation Program (P124616) 2012 245 Gov PS Underway Climate Risks Policy Dialogue (P118089) 2013 425 Gov PS Money Launding Risk Assessment (P130777) 2013 60 Gov KG, PS Crisis Management Plan (P132068) 2013 264 Gov PS Development of the Integrated Resource Plan (P122209) 2014 1,000 Gov, Pub KG, PS, PD Statistical strategy development and capacity building (P128888) 2014 390 Gov PS Policy dialogue on NCDs and injuries (P132790) 2014 75 Gov, Don PS Case Studiy of Nature Conservancies Joint Ventures (P144878) 2014 40 Pub, Gov KG Insolvency and Creditor Regime ROSC (P144909) 2014 140 Gov KG Financial Reporting for the City of Windhoek (P145015) 2014 75 Gov PS City Development Strategies Pilot (P121462) 2015 250 Gov PS Performance management and M&E (P124968) 2015 490 Gov PS TA to Ministry of Finance on Economic Management (P133682) 2015 175 Gov PS Strengthening Competition Policy (P143427) 2015 160 Gov PS ____________ a. Government, donor, Bank, public dissemination. b. Knowledge generation, public debate, problem-solving. 41 Annex 6. Social Indicators Latest single year Same region/income group Sub- Upper- Saharan m iddle- 1980-85 1990-95 2005-11 Africa incom e POPULATION Total population, mid-year (millions) 1.1 1.7 2.3 853.4 2,452.1 Grow th rate (% annual average for period) 2.6 3.1 1.8 2.5 0.7 Urban population (% of population) 26.4 29.8 37.9 37.4 57.4 Total fertility rate (births per woman) 6.2 5.2 3.7 4.9 1.8 POVERTY (% of population) National headcount index .. 69.3 28.7 Urban headcount index .. 39.0 14.6 Rural headcount index .. 81.6 37.4 INCOME GNI per capita (US$) 1,120 2,210 5,110 1,258 6,563 Consumer price index (2005=100) 21 68 123 147 127 INCOME/CONSUMPTION DISTRIBUTION Gini index .. 64.6 59.7 Low est quintile (% of income or consumption) .. 1.4 5.7 Highest quintile (% of income or consumption) .. 78.7 56.5 SOCIAL INDICATORS Public expenditure Health (% of GDP) .. .. 5.3 3.0 3.0 Education (% of GNI) .. .. 8.9 5.0 4.8 Net prim ary school enrollm ent rate (% of age group) Total .. .. 72 75 94 Male .. .. 69 77 93 Female .. .. 74 73 95 Access to an im proved w ater source (% of population) Total .. 69 84 61 93 Urban .. 98 .. 83 98 Rural .. 57 .. 49 86 Im m unization rate (% of children ages 12-23 months) Measles .. 68 73 75 96 DPT .. 74 86 77 96 Child malnutrition (% under 5 years) .. 26 18 22 3 Life expectancy at birth (years) Total 60 60 65 54 73 Male 59 58 64 53 71 Female 62 62 66 55 75 Mortality Infant (per 1,000 live births) 65 55 46 76 17 Under 5 (per 1,000 live births) 97 77 42 121 20 Adult (15-59) Male (per 1,000 population) 427 373 288 379 161 Female (per 1,000 population) 366 318 228 346 100 Maternal (per 100,000 live births) .. 200 200 650 60 Births attended by skilled health staff (%) .. 68 81 46 98 CAS Annex B5. 05/23/13 Note: 0 or 0.0 means zero or less than half the unit show n. Net enrollment rate: break in series betw een 1997 and 1998 due to change from ISCED76 to ISCED97. Immunization: refers to children ages 12-23 months w ho received vaccinations before one year of age or at any time before the survey. 42 Annex 7. Key Economic Indicators Actual Estimtate Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 National accounts (as % of GDP) a Gross domestic product Agriculture 5 4 4 5 5 4 .. .. .. Industry 24 21 21 20 20 19 .. .. .. Services 56 55 61 64 65 62 .. .. .. Total Consumption 78 78 87 89 87 84 .. .. .. Gross domestic fixed investment 22.3 21.2 19.8 21.1 21.1 20.6 20.1 21 20 Government investment 5.5 7.4 8.6 7.7 7.1 6.4 5.8 6 6 Private investment 16.9 13.9 11.2 13.4 14.0 14.2 14.3 14 14 b Exports (GNFS) 51 53 47 48 45 43 45 44 47 Imports (GNFS) 52 55 56 55 52 49 55 52 51 Gross domestic savings 22 22 13 11 13 16 .. .. .. c Gross national savings 31 32 25 19 25 30 .. .. .. Memorandum items Gross domestic product 8812 8830 8859 11082 12511 12287 13049 14101 14769 (US$ million at current prices) GNI per capita (US$, Atlas method) 3970 4210 4110 4380 5110 5410 5755 6123 6514 Real annual growth rates (%, 2004 prices) Gross domestic product at market prices 5.4 3.4 -1.1 6.0 4.9 5.0 4.8 4.4 4.4 Gross Domestic Income 10.5 5.6 -2.7 2.4 4.9 0.8 3.6 5.5 7.7 Real annual per capita growth rates (%, 2004 prices) Gross domestic product at market prices 3.5 1.5 -2.9 4.0 3.2 3.4 2.6 2.7 2.7 Total consumption 5.7 6.2 6.8 3.4 2.3 5.7 1.6 1.5 2.7 Private consumption 4.1 6.9 7.6 3.7 0.7 5.7 0.4 0.3 3.6 Balance of Payments (US$ ) b Exports (GNFS) 3518 3744 3760 4902 5309 5245 5907 6256 7015 Merchandise FOB 2920 3190 3101 4011 4399 4431 4807 5064 5676 b Imports (GNFS) 3604 4443 4914 5598 6326 6661 7186 7264 7591 Merchandise FOB 3091 3848 4321 4900 5624 5810 6218 6219 6414 Trade balance -85 -700 -1154 -695 -1017 -1416 -1278 -1008 -576 Net current transfers 1000 1125 1258 1232 1323 1795 1696 1634 1615 Current account balance 807 273 -31 22 -416 -68 -322 -225 8 Net private foreign direct investment 730 715 559 703 1048 1237 1357 1467 1587 Long-term loans (net) .. .. .. .. .. .. .. .. .. Official .. .. .. .. .. .. .. .. .. Private .. .. .. .. .. .. .. .. .. Other capital (net, incl. errors & ommissions) 231 -1325 -951 -1398 -233 -1224 -1360 -1485 -1618 d Change in reserves -444 -484 -526 536 -239 -67 88 -41 -147 Memorandum items Trade balance (% of GDP) -7.7 -7.9 -13.8 -8.0 -9.8 -11.2 -11.0 -8.5 -5.2 Real annual growth rates (2004 prices) Merchandise exports (FOB) 8.3 8.1 -12.3 16.0 0.3 .. .. .. .. Primary -1.6 -2.5 -33.3 25.3 -13.8 .. .. .. .. Manufactures 19.8 17.6 9.6 9.0 9.4 .. .. .. .. Merchandise imports (CIF) 29.0 -8.3 3.6 17.8 4.4 .. .. .. .. (Continued) 43 Namibia - Key Economic Indicators (Continued) Actual Estimate Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 e Public finance (as % of GDP at market prices) Current revenues 33.3 32.1 32.0 28.7 32.0 35.5 34.5 33.1 31.5 Current expenditures 23.1 23.1 25.9 27.3 29.3 30.5 33.0 30.2 28.8 Current fiscal balance surplus (+) or deficit 10.2 9.0 6.1 1.4 2.7 5.0 1.5 2.8 2.7 Capital expenditure 3.0 6.6 8.0 7.4 9.9 7.9 7.9 6.9 6.1 Foreign financing 1.0 0.4 0.8 2.9 4.7 1.6 0.6 1.0 0.8 Monetary indicators M2/GDP 40.0 40.1 65.6 66.5 66.3 60.6 62.5 62.5 62.5 Growth of M2 (%) 10.1 17.9 68.5 9.1 11.8 6.1 9.2 9.5 9.4 Private sector credit growth 12.9 7.3 10.0 11.2 9.3 11.0 10.3 9.5 9.4 total credit growth (%) Price Indices (2004=100) Merchandise export price index 152.3 178.4 178.9 166.1 174.8 .. .. .. .. Merchandise import price index 116.3 130.9 132.9 137.1 146.1 .. .. .. .. Merchandise terms of trade index 131.0 136.3 134.6 121.2 119.6 .. .. .. .. f Real exchange rate (US$/LCU) 100.4 96.5 108.2 125.7 122.4 .. .. .. .. Real interest rates Consumer price index (% change) 6.7 10.4 8.7 4.5 5.1 6.5 6.0 5.2 4.5 GDP deflator (% change) 9.0 13.7 4.0 1.4 6.9 10.5 5.8 4.9 4.8 a. GDP at factor cost b. "GNFS" denotes "goods and nonfactor services." c. Includes net unrequited transfers excluding official capital grants. d. Includes use of IMF resources. e. Consolidated central government. f. "LCU" denotes "local currency units." An increase in US$/LCU denotes appreciation. 44 Annex 8. Key Exposure Indicators Actual Estimated Projected Indicator 2007 2008 2009 2010 2011 2012 2013 2014 2015 Total debt outstanding and 2261 2002 2506 3473 4248 4364 4424 4488 4499 a disbursed (TDO) (US$m) a Net disbursements (US$m) .. .. .. .. .. .. .. .. .. Total debt service (TDS) 342 388 397 222 511 .. .. .. .. a (US$m) Debt and debt service indicators (%) b TDO/XGS 58.6 49.3 62.6 68.0 78.8 80.4 74.9 71.7 64.1 TDO/GDP 25.7 22.7 28.3 31.3 34.0 35.5 33.9 31.8 30.5 TDS/XGS 9.7 10.4 10.6 4.5 9.6 .. .. .. .. Concessional/TDO 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 IBRD exposure indicators (%) IBRD DS/public DS 0.0 0.0 8.7 0.0 26.8 0.0 0.0 0.0 0.0 Preferred creditor DS/public 0.0 0.0 8.7 0.0 26.8 0.0 0.0 0.0 0.0 c DS (%) IBRD DS/XGS 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 d IBRD TDO (US$m) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 Of which present value of guarantees (US$m) Share of IBRD portfolio (%) 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 0.0 d IDA TDO (US$m) -- -- -- -- -- -- -- -- -- IFC (US$m) Loans Equity and quasi-equity /c MIGA MIGA guarantees (US$m) a. Includes public and publicly guaranteed debt, private nonguaranteed, use of IMF credits and net short- term capital. b. "XGS" denotes exports of goods and services, including workers' remittances. c. Preferred creditors are defined as IBRD, IDA, the regional multilateral development banks, the IMF, and the Bank for International Settlements. d. Includes present value of guarantees. e. Includes equity and quasi-equity types of both loan and equity instruments. 45 Annex 9. Statement of IFC and IDA/IBRD Investment Portfolio B8 (IFC) for Namibia Namibia Committed and Disbursed Outstanding Investment Portfolio As of 1/31/2013 (In USD Millions) Committed Disbursed Outstanding **Quasi Partici **Quasi Partici FY Approval Company Loan Equity Equity *GT/RM pant Loan Equity Equity *GT/RM pant 2011 Trustco 8.03 0 0 0 0 8.03 0 0 0 0 Total Portfolio: 8.03 0 0 0 0 8.03 0 0 0 0 * Denotes Guarantee and Risk Management Products. ** Quasi Equity includes both loan and equity types. 46 CAS Annex B8 - Namibia Operations Portfolio (IBRD/IDA and Grants) As Of Date 3/1/2013 Closed Projects 4 IBRD/IDA * Total Disbursed (Active) of w hich has been repaid 0.00 Total Disbursed (Closed) 15.07 of w hich has been repaid 15.36 Total Disbursed (Active + Closed) 15.07 of w hich has been repaid 15.36 No Applicable Data Found. 0.00 0.00 0.00 0.00 0.00 Active Projects Difference Between Last PSR Expected and Actual Supervision Rating Original Amount in US$ Millions Disbursements a/ Development Implementati Project ID Project Name Fiscal Year IBRD IDA GRANT Cancel. Undisb. Orig. Frm Rev'd Objectives on Progress P128511 Namibian Coast Conservati # # 2013 1.925 621.514 47 Annex 10. Trust Fund Mobilzation Table 5. Active Trust Fund Grants Grant Available Closing Program Grant Name Amount Balance Date Source Northern Namibia Flood Risk Mapping (TF010645) $295 $66 2013 GFDRR Namibia statistics strategy update and capacity building (TF010708) $392 $171 2013 TFSCB Financial Sector Crisis Management Plan (TF012660) $264 $110 2013 FIRST GEF - NACOMA Additional Financing (TF013706) $1,925 $1,925 2015 GEFIA Development of the Integrated Resource Plan (IRP) in Namibia (TF097165) $700 $39 2013 SAFETE Namibian City Development Strategies (CDS) Pilot (TF097546) $250 $175 2013 CITIES Performance management and Monitoring &Evaluation (TF099836) $489 $489 2015 IDF Financial analysis of tourism joint ventures with commu- nal conservancies (in preparation) $60 TRTA Road traffic injury surveillance systems (in preparation) $50 GRSF City of Windhoek accounting (in preparation) $78 PPIAF Central Securities Depository (requested) FIRST Total $4,502 $2,975 Source: eTrustFund, March 8, 2013 48 Annex 11. Stakeholder Consultations The Bank organized a series of formal consultations in November 2012 to solicit feedback on the proposed direction of the CPS from representatives from civil society, firms and private sector organizations, international partners, and local economists. Bank staff delivered a brief presenta- tion on the proposed CPS and invited stakeholders to offer input on development challenges facing Namibia, the pillars of the CPS, and the World Bank Group’s comparative advantage. There was broad support among stakeholders for Government Capacity The government in general moves too slowly. Many laws and policies have not changed since the apartheid era. New laws are prepared and implemented very slowly. This is aggravated by weak inter-ministerial processes. Ministries operate independently with little consultation. This is especially problematic when one ministry's output is needed as an input by another ministry. The GRN has good access to financial resources but has difficulties using them effectively. High personnel costs crowd out program spending. Budgeting systems weakly connect spending to strategic priorities. Over-centralization in some areas hampers effective delivery of public ser- vices. Civil society representatives highlighted lack of accountability and transparency. Policies are not developed with adequate analysis, empirical evidence, or input from outside of government. The quality of data and statistics has been poor for many years. Technical issues are politicized. Analytical skills are missing. Studies commissioned by the GRN frequently are not discussed publicly. Civil society input into draft legislation and policies is not used. The GRN suffers from weak middle management. Older staff in middle management positions frequently lack technical credentials. Younger staff or potential recruits are bid away by the private sector, especially those with critical technical skills (e.g., chartered accountants). Civil service procedures create rigidities in staff deployment. Private Sector Capacity and Organization Concerns about weaknesses in the private sector also emerged from the consultations. Critical capacities are also missing in the private sector, due to deficiencies in the education system, but also to difficulties in obtaining work permits for foreigners with skills not available locally. Local economists and some private sector representatives cited the dearth of risk-seeking money as a special challenge. Pension funds send their money to South Africa for higher and easier returns. Regulatory challenges and insecure property rights (e.g., to use of land in communal areas) raise the transaction costs and risks of investing in Namibia. Credit enhancement products could help attract investment into the private sector and for public infrastructure. The small size of Namibia’s domestic market also creates challenges. It is difficult for Namibian firms to compete with South Africa for buyers and investors due to better scope for scale econo- mies in South Africa. Furthermore, it is harder to avoid collusion and market dominance in such a small market. 49 Role of the World Bank Group Many stakeholders argued that knowledge services were a major comparative advantage of the World Bank Group, whether in the form of global research and data, the ability to deliver high- quality analysis, or facilitation of cross-country knowledge exchanges. There were several expressions of interest in the World Bank Group engaging directly with civil society and the private sector without the dialogue being mediated by the government. 50 IBRD 33453R NAMIBIA SELECTED CITIES AND TOWNS TRUNK ROADS REGION CAPITALS MAIN ROADS NATIONAL CAPITAL DISTRICT ROADS RIVERS RAILROADS REGION BOUNDARIES INTERNATIONAL BOUNDARIES 15°S 15°E 20°E 25°E To ANGOLA ZAMBIA Lubango OHANGWENA OSHANA To Lusaka Kunene Oshikango Uutapi Oshakati Ok Katima I ava AT Ondangwa ng o Mulilo Opuwo Rundu Kongola US OSHIKOTO Bagani K AVA N G O OM Etosha CAPRIVI atako N Pan Tsumeb Om To ts. a Sesfontein Okaukuejo Maun M m vi Otavi la Grootfontein i b U Tsumkwe KUNENE 20°S Outjo O T J O Z O N D J U PA 20°S D Khorixas Otjiwarongo e Eiseb Okakarara s e Kalkfeki Ugab Brandberg Epata (2,606 m) r t Uis To Omaruru OMAHEKE Livingtsone ERONGO Karibib Okahandja B O T S WA N A WINDHOEK Gobabis Swakopmund KHOMAS To Gaborone Walvis Bay Rehoboth K a l a h a r i AT L A N TIC Kalkrand Aranos D e s e r t N Stampriet osso HARDAP b OCEAN Maltahohe Mariental N a 25°S 25°S m i Fish b Bethanien Keetmanshoop D e Luderitz Great s e KARAS Karas To Mts. Kimberley 0 50 100 150 200 Kilometers r t Grünau Karasburg 0 50 100 150 Miles To Gaborone NAMIBIA Oranjemund Orange This map was produced by the Map Design Unit of The World Bank. The boundaries, colors, denominations and any other information SOUTH shown on this map do not imply, on the part of The World Bank Group, any judgment on the legal status of any territory, or any To AFRICA endorsement or acceptance of such boundaries. Bitterfontein 15°E 20°E MARCH 2007