Report No. 42472-NA Republic of Namibia Implementing the Agenda of the Namibian Ministry of Environment and Tourism A Rapid Country Environmental Analysis with a Public Expenditure Review for Aligning Policy, Institutional and Financing Priorities Document of the World Bank TABLE OF CONTENTS Volume I Foreword ..................................................................................................................... v .. Acknowledgments .................................................................................. vi1 ... Abbreviations and Acronyms .......................................................................................... viii Executive Summary ............................................................................................................ x I. The Case For a M o r e Efficient and SustainableEnvironment and Natural Resource Management in Namibia ........................................................................... 1 1.1 Contribution o f the environment and tourism sector to the Namibian economy .. 1 1.2 Key Achievements in the Environment and Tourism Sector ................................ 3 1.3 Environmental Management Challenges .............................................................. 5 . I1 The Sector’s Policy, Legislative Frameworks and InstitutionalAnalysis 8 ............. 2.1 The Policy and Legislative Framework o f the Environment and Tourism Sector 8 2.1.1 M a i n findings related to the Policy Framework ............................................ 8 2.1.2 M a i n findings related to the Legislative Framework ................................... 10 2.1.3 Challenges related to the Policy and Legislative Framework ...................... 11 2.2 Institutional Analysis .......................................................................................... 12 2.2.1 M a i n findings related to the Institutional Analysis ...................................... 12 2.2.2 Challenges related to the Institutional Analysis ........................................... 19 1II.Financing of the Environment and Tourism sector ............................................... 21 3.1 Fiscal Assessment ofthe Environment and Tourism Sector .............................. 21 3.1.1 M a i n findings related to the Fiscal Assessment ........................................... 21 3.1.2 Challenges related to the Fiscal Assessment ............................................... 24 3.2 Assessment of MET’s Public Expenditures and Budget Management .............. 25 3.2.1 M a i n findings related to MET’s Public Spending ....................................... 25 i) Financing o f the Environment and Tourism Sector ...................................... 25 .. 11) Sources o f financing ..................................................................................... 29 iii )Spending by Directorate.............................................................................. 30 iv) Composition o f MET expenditures by economic category ......................... 31 v) Assessment o f MET’s budget execution 2001/02-2005/06 .......................... 32 vi) Fiscal deconcentration ................................................................................. 34 .. vii) Donor assistance......................................................................................... 35 3.2.2 Challenges related to MET’s Public Spending and Budget Management ... 36 i) Issues related to MET’s budget management ................................................ 36 ii) Financing o f MET’s SP ................................................................................ 38 . I V Recommendedactions .............................................................................................. 40 4.1. Recommendations .............................................................................................. 40 4.2. Action Plan......................................................................................................... 49 ... 111 TABLES Table I.1: Namibia’s economic sector contributions to GDP in 2006 ............................... 1 Table 1.2: Tourism receipts. selected countries. 2003 ........................................................ 2 Table 1.3: Environmental challenges in Namibia and Governmental agencies ..................5 Table 111.1: Overall Structure o f the Government Budget - Summary Estimate o f Operational. Development and Statutory Expenditure. 2005/06-2007/08 (N$ million) .- 2 5 Table 111.2: Ministry o f Environment and Tourism - central Government expenditures. 2001/02-2005/06 ............................................................................................................... 26 Table 111.3: Environmental expenditure as share o f GDP and central Government expenditure ........................................................................................................................ 28 Table 111.4: Namibia central budget allocations to Natural Resource Management Ministries (as a % o f national budget) .............................................................................. 29 Table 111.5: MET expenditures and allocations by economic category. 2001/02 to 2007/08 (share o f the total budget) ................................................................................................. 31 Table 111.6: M E T budget execution rate by directorate. 2001/02-2005/06 (%) ............... 34 FIGURES Figure 1.1: Income to community conservancies and C B N R M activities (N$OOO) ...........4 Figure 111.1: Contributions o f the environment and tourism sector to non-tax revenues 2002/03-2006/07 (% and N $ million) .............................................................................. 21 Figure 111.2: Composition o f total MET non tax-revenues 2001/02-2005/06 ..................22 Figure 111.3: The hnding o f the Game Product Trust Fund by type o f revenue source 2000/01-2005/06 (N$000) ............................................................................................... 23 Figure 111.4: MET- budgetary allocation 2001/02-2009/10 (N$million) ........................ 27 Figure 111.5: Sources o f financing o f MET budget, 2002/03-2007/08 (N$000) .............. 29 Figure 111.6: Actual spending o f MET divisions 2001/02-2006/07 (%) ........................... 30 Figure IV.l: Map o f Namibia ........................................................................................... 66 BOXES B o x 11.1: MET’Smandate ................................................................................................. 13 B o x 11.2: Namibia’s decentralization process - Achievements and Challenges ahead ..... 17 B o x 11.3: Results o f the field study for Walvis Bay and Swakopmund ............................ 18 Box IV.1: Interim Management Plan between Walvis Bay and Swakopmund ................ 44 B o x IV.2: Elaboration o f a Natural Resources and Environmental Governance program in Ghana................................................................................................................................ 45 iv FOREWORD Adequate allocations of resources, good policy framework and strong institutions are critical elements for sustainable environmental management. Contribution of the Ministry of Environment and Tourism (MET) in implementing the National Development Plans is critical towards the realization of Vision 2030. It is with this in mind, that the Ministry of Environment and Tourism (MET) has sanctioned investment assessment and resources allocations to the environment sector in Namibia. With a current annual investment in the Ministry of Environment and Tourism of about N$130 million, Government gets a good return on its investment with a sectoral economy worth in excess of N$5 242 billion according to 2004 values, and growing faster than any other sector. Thus, the MET has designed its work programme outlines in the Strategic Plan for 2007/8 - 2011112 to improve its operation. The MET organization structure and policy development are set as priority areas in the Strategic Plan. This work consists of a Rapid Country Environmental Analysis including a Public Expenditure Review (PER). It is focused on the mandate of the Ministry of Environment and Tourism (MET). Its goal is to assist the Government of the Republic of Namibia with new analytical tools that will improve the understanding of current strengths and weaknesses and help prioritize actions related to policy, institution and financing. The work was jointly designed by the World Bank and the Government of the Republic of Namibia and implemented by a team of expert. It includes a first-time environmental and tourism sector expenditure review. It links the argument of the economic importance of the sector with an assessment of MET’S capacity to effectively and efficiently lead and manage the sector. A core part of this review, which focuses on the public funding of the environment and tourism sector, provides a comprehensive assessment of the Ministry’s budget management, and a recommended range of options to address its current shortcomings and constraints. The report also includes a brief review from the Erongo region that, for the first time, assessed the funding level of a regional council and selected municipalities and their ability to carry out environmental management. The assessment highlights the experience of Walvis Bay Municipality, which is considered a best practice in the environmental management at the local authority level. This report consists of two volumes. Volume I contain the executive summary, a concise presentation of the main findings, and a short- to medium-term action plan based on the recommendations. Volume I1 provides more in-depth analysis and background information. Both volumes are organized around three thematic chapters. Chapter I look at the contribution of the environment and tourism sector to the Namibian economy as well as at some key achievements and challenges. Chapter II describes the policy and legislative framework, and the institutional analysis of the environment and tourism sector. Chapter Ill examines the financing of the sector and some key budget management issues. And finally in Chapter IV of Volume I, a set of recommendations and short- and medium-term actions are proposed that aim to assist the Ministry in the implementationof its up-coming work programmes as well as the Strategic Plan. Chapter IV of Volume II includes the assessment of the financing of the sector at the local level using the example of the Erongo Region. V This report is a product of the dialogue between the Bank and the Government of the Republic of Namibia. From the start, the review has been a collaborative exercise among the Bank, MET, and the Ministry of Finance (MOF). Throughout the analytical and report preparation phases, there has been full participation from Government staff and other stakeholders. The MOF and the Swakopmund and Walvis Bay municipalities in the Erongo region have assisted the team by providing input and information in the preparation and during the review process. It will be evident from the report that the Environment and Tourism sector has a highly significant economic contribution to Namibia, and is considered now to rank as the second largest contributor to Gross Domestic Product after mining. The sector also holds considerable additional growth potential and has the strong competitive advantage of not being affected by non-renewable use of resources, and making the most of Namibian’s natural assets such as our world class scenery, landscapes, rich wildlife heritage, protected areas, history and cultural diversity. However this is a sector that makes its contribution across all sectors of the economy and this contribution has traditionally been difficult to quantify. Recommendations in this report will be critically analyzed by the Ministry to establish each circumstance with a view of finding the most appropriate strategy for the implementation of MET’S Strategic Plan, the Third National Development Plan (NDP Ill),and the decentralization process. 4 Netumbo NandLNdaitwah, MP Minister of Environment and Tourism December, 2008 v i ACKNOWLEDGMENTS A World Bank team led by Christophe Crepin and Kirk Hamilton prepared this report. The core team included: Sylke von Thadden, Gabriele Rechbauer, Melanie Eltz, Christoph Schuhman, and Michael Humavindu. The extended team received valuable inputs and guidance from Stephen Mink, Frank Byamugisha, Poonam Pillai, Eugenia Marinova, Juan Gaviria, Preeti Arora, and Sascha Djumena. The peer reviewers for the study included Sergio Margulis, William Sutton, Aziz Bouzaher and Guenter Heidenhof. Beula Selvadurai and Florence Richard provided administrative and secretarial support to the team. Marjory Anne Bromhead provided management oversight. GoN, mainly through MET, MOF, the National Planning Commission Secretariat (NPCS) and the Office o f the Prime Minister (OPM) provided key feedback during the preparation o f the study. The following Government officials were particularly helpful in participating actively in the review o f diverse parts o f the report and in providing insights to the task team: Peter Erb, Simon Muinjo, Jo Tagg, Timo Mufeti, Rob Braby, Nico Willemse, and Peter Muteyauli (MET); Chris Claassen and Paul Randall (MoF); David Uushona and Clive Lawrence (Municipality o f Walvis Bay and Swakopmund). The team would also like to thank the following Government officials for their feedback: Dr. Kalumbi Shangula, Teo Nghitila, Dr. M a l m Lindeque, Ben Beytell, Ulrich Boois, Albert Mieze, and Colgar Sikopo (MET); Carl Schlettwein, Ericah B. Shafudah, and A.N. Sinvula (MOF); Susan-Marie Lewis, Mary Hangula, Dagmar Honsbein, Emilia Ndapewa Amuaalua, and Ned Sibeya (NPCS); Etiene Maritz and Louisa Schixwameni (OPM); and TD Gonteb (Erongo Regional Council (ERC)). Important feedback was received from members o f international donor agencies, non- Governmental organizations, and projects including: United States Agency for International Development (USAID), European Union (EU), Gesellschaft h e r Technische Zusammenarbeit (GTZ), Swedish International Development Cooperation Agency (SIDA), World Wildlife Fund (WWF), Namibian Association o f Community- based Support Organizations (NACSO), Integrated Ecosystem Management Project (ICEMA), Namib Coast Conservation and Management Project (NACOMA) and Finnish Support to National Decentralization Program (FiSNDP). Valuable comments were also provided by Jon Barnes (MET), Peter Tarr (SAIEA, local consultant), Brian Jones (local consultant) and the private sector association, FENATA. vii ABBREVA I TI O NS AND ACRONYMS CBNRM Community Based Natural Resource Management CBO Community-Based Organization CBTE Community Based Tourism Enterprises CDM Clean Development Mechanism CITES Convention on International Trade in Endangered Species DANIDA Danish International Development Assistance DEA Directorate o f Environmental Affairs DFID Department for International Development (UK) DIP Decentralization Implementation Plan DLIST Distance Learning and Information Sharing Tool DNA Designated National Authority DOT Directorate o f Tourism DWWEM Department o f Water, Waste and Environmental Management EIA Environmental Impact Assessment EIS Environmental Information System EIF Environmental Investment Fund EMA Environmental Management Act EMS Environmental Management Section ERC Erongo Regional Council EU European Union FENATA The Federation o f Namibian Tourism Associations GDP Growth Domestic Product GoN GoN GPTF Game Product Trust Fund IFMS Integrated Financial Management System LA Local Authority MCA Millennium Challenge Account M&E Monitoring and Evaluation MET Ministry o f Environment and Tourism MLR Ministry o f Lands and Resettlement MME Ministry o f Mines and Energy . I . Vlll MOAWF Ministry o f Agriculture, Water and Forestry MOF Ministry o f Finance MRLGHRD Ministry o f Regional and Local Government, Housing and Rural Development MTEF Medium-Term Expenditure Framework MTP Medium-Term Plan NACOMA Namibia Coast Conservation and Management Project NACSO Namibian Association o f CBNRM Support Organizations NBSAP National Biodiversity Strategy and Action Plan NDP National Development Plan NDP 1 National Development Plan (1995/96 - 1999/00) NDP2 National Development Plan I1(200 1/02 - 2005/06) NDP3 National Development Plan I11(2007/08 - 201 1/12) NPCS National Planning Commission Secretariat NTB Namibia Tourism Board NWR Namibia Wildlife Resorts O&M Operations and Maintenance OPM Office o f the Prime Minister PE(E)R Public Environmental (Expenditure) Review PEMP Performance and Effectiveness Management Program PRS Poverty Reduction Strategy RC Regional Council SADC Southern African Development Community SAIEA Southern African Institute for Environment Assessment SIDA Swedish International Development Cooperation Agency SP Strategic Plan STR State Revenue Fund SWAP Sector Wide Approach Program TSA Tourism Satellite Accounts USAID United States Agency for International Development WWF World Wildlife Fund ix EXECUTIVESUMMARY ATE OF THE The interlinked environment and tourism sector contributes significantly to the Namibian economy ... 1. The Namibian economy i s primarily driven by the use of the country’s natural resources. The economy’s core natural resource based sectors are mining (especially diamonds), fishing, agriculture, manufacturing (meat, fish, and other food processing), and tourism. Sustainable management o f natural resources directly and positively affects the national and local economy as well as the local, national, and global environment. The nature-based tourism sector o f Namibia i s a strong example o f that linkage: the tourism receipts contributed 7.8 percent to Namibia’s Growth Domestic Product (GDP) 2003 and shows the sector plays an important role in national development. Namibia’s tourism sector contributes one o f the world’s largest relative percentages to GDP, similar to other countries like South Africa, Tanzania, and Kenya. K e y contributors to the sector are tourism expenditures attributable to protected areas (for example, in the form o f park fees, accommodation and trips) that, conservatively estimated, account for about N$ 1-2 billion, or 3.1-6.3 percent o f GDP 2004. Other contributions come from the direct use o f wildlife through trade, hunting, and wildlife consumption. 2. The sector contributes to job generation and improved livelihoods in rural areas. The bulk o f jobs generated in this sector originates from services (accommodations, restaurants, and tour safari operations) and accounted for 6.2 percent o f total Namibian employment in 2004. Given that the majority o f tourism establishments are in rural areas, the sector has an impact on rural employment and rural poverty. I t i s estimated that around 21 percent o f trophy hunting income accrues to the Government and some 40 percent to low-income earners and communal land communities. 3. Namibia’s National Accounts only partially capture this contribution from the environment and tourism sector. Some natural resources or environmental services that fall under MET’s mandate are undervalued, or not valued at all, for example, environmental and economic services like conservation, and the use o f wildlife in parks, conservancies, and nature-based tourism. Moreover, no one is assessing the cost o f mitigating degradation, the value o f resource depletion or the cost o f unsustainable use o f natural resources’. ’In addition, there i s insufficient knowledge, exchange, and use o f information on other environmental services and natural resources outside MET’s mandate (e.g, water, forestry, land). X 0 and has seen key achievements to date ... 4. MET has put in place several impressive programs and policies for tourism and environmental management. Namibia has achieved noteworthy successes in terms o f biodiversity conservation. It has an extensive and internationally renowned protected area network (17 percent o f the country in 2007), complemented by 14.4 percent o f the land covered by communal conservancies, which includes prime ecosystems, key habitats and species. The country has gained a worldwide reputation for i t s innovative approach o f linking conservation to poverty alleviation through i t s policy, the legal framework for Community-Based Natural Resource Management (CBNRM) and i t s related interventions, which are supportive o f partnerships with non- Governmental stakeholders who deliver results on the ground including supporting pro- poor tourism initiatives. 5. Moreover, MET’S performance has been considered some o f the best regarding the process o f preparing i t s Performance Effectiveness Management Program (PEMP), i t s Medium-Term Expenditure Framework (MTEF), and its Medium-Term Plan (MTP) as well as the quality o f i t s products delivered, which were used as models for other ministries. but faces increasing challenges that w i l l affect the sustainable development of the country f n o action is taken. 6. The country faces a number o f environmental challenges, some related to Namibia being the driest country in Sub-Saharan Africa. The country’s key environmental issues include freshwater scarcity and water degradation; land degradation and desertification; deforestation; coastal and marine degradation; unrehabilitated mines; and urban waste and water related pollution. More, Namibia i s highly vulnerable to climate variability and change, with impacts related to prolonged droughts and frequent floods. 7. The sector i s further exposed to a number o f external factors which impact the resource base and thus the scope and scale o f MET’S work program: (i) the weak capacity o f local, regional, and national Government in conservation and environmental management, (ii) an increase in the urban population, (iii) some increased industrial investments in parts o f the country, and lastly (iv) increasing inter-sectoral challenges under a growth-oriented development agenda, related to tourism, mining, fishery, and agriculture. 8. Therefore, this report documents the need for a strategic increase o f financial resources and an improved efficiency o f investments in the sector to ensure i t s contribution to the national economy and the Vision 2030 goals. xi Policy and legal framework implementation 9. While, M E T succeeded in achieving several milestones under Namibia’s Second National Development Plan (NDP2), the Ministry’s role as a regulator has lagged behind expectations, in particular in the area related to environmental management and environmental impact assessment. Over the past years, the Ministry experienced substantial delays with advancing key legislative pieces such as the Environmental Management Act (EMA), the Pollution Control and Waste Management, and the Parks, and Wildlife Management Bills. A milestone was passing the EMA in 2007, which provides for a strong regulatory role for MET. The implementation o f the EMA i s now the Ministry’s priority and one o f i t s key challenges. I t requires institutional changes at central and regional levels, significant capacity building at the level o f the Ministry’s responsible Directorate o f Environmental Affairs (DEA), and highlights the need for improved and efficient cross-sectoral coordination on environmental issues within the Government. 10. Regarding tourism, a Tourism Policy, essential to guide the rapid growth o f the sector in the country, has been under preparation and delayed. DEA’s regulatory function has been undermined due to under-funding and understaffing. However, an important recent accomplishment i s the approval o f the Policy on Tourism and Wildlife Concession on State Land in 2007. The implementation of this Concession Policy has important resource implications and will require critical capacity building and institutional adjustment within the Ministry at national and regional levels, some o f which are being supported under one o f the Ministry’s projects2. Institutional capacity and decentralization 11. MET’S institutional capacity i s undermined by a limited number of qualified staff. The Ministry staffing more than doubled in 2001 and 2002 with the takeover o f 1000 additional staff, mainly employed in park management, as requested by the Government. Today, more than 40 percent o f the entire Ministry staff (around 1,586) has insufficient qualifications while the professional staff accounts for only 2.5 percent o f the total staff. A key challenge for the Ministry i s the recruitment and retention o f qualified staff because salaries paid in the private sector are more attractive. 12. In the context o f the Government’s decentralization agenda, the Ministry’s task to devolve functions to regional and local authorities (under discussion are the management o f parks and community-based natural resource management) constitutes an enormous challenge given the current limited financial and institutional level of capacity within these authorities. The assessment o f the Erongo Region carried out * UNDPIGEF funded SPAN project. xii under this work, suggests that the ability o f Regional Councils (RCs) and Municipalities to ensure environmental planning and management is constrained owing to limited funding and the absence o f empowering legislation. At the level o f municipalities, only the best-resourced municipalities, like Walvis Bay and Swakopmund, have the structure and financial means to start managing environmental issues and natural resources, contrary to most other municipalities. Moving forward the decentralization agenda would require additional human and financial resources, which will also compete with other priorities o f the Ministry. Funding and resource mobilization 13. There has been a recent increase in financial commitments by the Government to MET in 2006/07 and 2007/08 translating by a sharp increase o f budget appropriations over the past two years, 2006/07 and 2007/08, coming to N $ 2 9 9 million or 1.7 percent o f the total Namibian budget in 2007/08. I t i s important to note that the budget envelope o f the new MET Strategic Plan i s based on a first rough costing and has not yet been linked to the Ministry’s MTEF or available and planned external resources (including for example, funds available under the Millennium Challenge Account (MCA), see next paragraph). The costing o f the Strategic Plan will need to be revised and strengthened significantly before any further gap analysis might be done. As is, with an annual estimate for implementation of the SP (N$ 648.7 million) which is currently three times higher than the average budget appropriations o f MET’S MTEF (2007/08-2009/10), it does not seem realistic. 14. Donors’ contributions are important in funding the Ministry’s program o f activities but are largely spent outside the Government’s budget and have declined over the past years. However, the sector should benefit in the near future from significant funds to be provided under the MCA, around U S $ 96.9 million, for the next five years 2008-2013. These funds will complement mainly ongoing initiatives in the tourism sector but also include support for wildlife management and conservancies. Financial management 15. The Ministry’s budget implementation i s currently characterized by budget overruns and under-spending. The Ministry experienced budget overruns over the past years3 mainly generated by the two Directorates, Parks and Wildlife and Administration. This can be partially attributed to weaknesses in budget planning and a lack in fiscal discipline at the regional offices. But also, there were inadequate appropriations to cover increased expenditures due to past increases in staffing, and maintenance costs o f the parks, and the development o f the tourism infrastructure. While internal funding o f development expenditures is small (less than 6 percent on average over the period 2001/02-2005/06), actual spending on development programs has been even below budget appropriations (on average only 83 percent), which raises questions related to the Ministry’s absorption capacity and the financial sustainability o f the planned tourism infrastructure investments under M C A . Average 113 percent over the years 2002/03-2005/06. xiii 16. As well, there i s under-funding of some key functions and activities. In particular, the DEA, responsible for standards, regulations (environmental impact assessment), and legislative and policy planning, has only a small budget (on average less than 3 percent o f the overall Ministry budget). As a result, this Directorate has been severely constrained in adequately fblfilling its mandate. Further, a large share o f the Ministry’s budget is spent in favor o f protected area management and related staffing (representing 44 percent o f total spending in 2006/07); but even that i s not sufficient to ensure adequate maintenance o f parks infrastructure. 17. The MET made some good progress in the preparation o f its MTEF, but key challenges in budget planning and monitoring remain. Weaknesses exist in particular in budget planning in the regional offices, in the centralized planning process, in the per-unit costing o f spending items, in the financial and economic analysis o f projects, and in the coordination between the recurrent and development budget and donor rep~rting.~ Despite some progress over the past years in improving i t s Performance and Effectiveness Management Program (PEMP) related database and capitalizing on some o f its indicators, the sector’s monitoring and evaluation s t i l l needs improvement as the indicators are not attached directly to the programs or the budget and shortcomings exist in the data reliability. 18. The rapid analysis done for this report lead to a set o f recommendations and actions that are designed to assist the Government with the up-coming operationalization o f the Ministry’s SP. Both the SP and i t s annual implementation plans will guide MET in setting priorities, aligning resources and results and thus are expected to address some o f the past bottlenecks. As indicated earlier, there are issues that fall outside the mandate o f MET (e.g., the macro-level budget processes and the broader natural resource management agenda dealt with by a number o f Governmental agencies and organizations). 19. The recommended short- and medium-term actions fall under two main objectives; 1) to improve policy and legislative tools to enhance METs leadership in the environment and tourism sector, and 2) to grant the Ministry the necessary institutional, organizational, and financial and budget management tools to strengthen its delivery and execution capacity. The operationalization o f the SP as well as o f these recommendations will depend strongly on the rapid establishment o f a dedicated implementation team that reports directly to the Minister and the Permanent Secretary. Some o f the issues with budget planning can only be addressed by a broader Government reform agenda (e.g., the dual budget preparation on program and line item basis given that the accounting system i s still on a line-itembasis). xiv 20. Among the recommended actions (see chapter IV), priority would be put on the following: 1. Improve MET’s policy and legislative framework by finalizing key pieces. With the tourism sector being one o f the fastest growing sectors, there is a need to rapidly provide a regulatory policy framework. I t is therefore recommended that the Tourism Policy should be finalized and submitted to Cabinet and Parliament for approval in 2008. Regarding the sector’s legislative framework, a priority for the Ministry should be the finalization of the drafting of the Parks and Wildlife Management Bill and the Pollution Control and Waste Management Bill. The latter constitutes a key missing building block o f the sector’s legislation with regard to increasingly relevant urban environmental management. Additionally, the current policy and legislative framework does not yet cover the new environmental challenges such as climate change, urban environment, and coastal zone management. The analysis emphasizes further the need to move from a regulatory framework to actual implementation and compliance monitoring which requires additional resources and capacities for delivery at central and regionaVloca1 level. 2. Reinforce MET’s institutional capacity at central and regional level for short- and medium-term priorities. A key short-term concern i s to ensure compliance with the newly approved EMA and the Tourism Concession Policy, in particular, for reviewing and endorsing environmental impact assessments and concessions. The first issue will require establishing local level representation o f the DEA and additional central level structures. Another institutional short-term priority i s the strengthening of inter-ministerial, and inter-institutional coordination including with non-Governmental, private sector stakeholders, and development partners for enhanced planning and delivery. The effective implementation o f the Ministry’s SP will need the active participation o f development partners as well as other sector related line ministries by means o f establishing and maintaining a regular dialogue with forums. This will provide an opportunity to better coordinate activities and will allow the increased contribution o f other sector ministries to the financing and implementation o f priority actions, which offer strong synergies (e.g., coastal zone management, environmental impact assessment, community-based natural resource management, tourism, etc.). In addition, growing private sector activities in wildlife management and use and increasing overall mining and tourism activities will require a more regular review with adjustment of the roles and responsibilitiesof the private and public sector, which can then become part o f the broader sector dialogue and forum. (The Ministry’s recently approved and draft policies and legislation demonstrate an encouraging trend towards i t s shift from regulation and control to facilitation, extension support, and compliance monitoring, while the private sector takes on a more responsible self regulatory role, which i s necessary to cost-effectively address existing and h t u r e sector challenges.) All these efforts combined could hrther result in opportunities to embark on a Sector Wide Approach Program (SWAP). Over the medium-term, xv the Ministry i s expected to foster its agenda for decentralization by finalizing and launching the yet pending decentralization implementation plan. Further strengthening the capacity o f the RCs and Local Authorities (LAs) to enhance local environmental and tourism service delivery should complement the latter effort. In that context, the documentation and dissemination o f the good practices o f the local level environmental management o f the Walvis Bay Municipality should be encouraged. 3. Improve financial and budget management o f the Ministry. MET’s M T E F (2007/08) shows a return to the trend o f the Ministry’s funding after special budgetary allocations in 2006 and 2007. The question o f options for funding Ministry activities in the context o f the SP therefore becomes very pointed. M C A funds related to tourism will have significant financial implications regarding the future operations and maintenance o f the tourism investment program through adequate domestic resources. While the M C A will address some o f the investment needs o f the tourism sector, i t is important to note that it does not deal with the institutional and capacity issues o f the ministry and seems to be disconnected from the activities planned under the Strategic Plan. Hence, in the short term, a key priority should constitute the preparation of an annual implementation plan that derives from the Strategic Plan. This plan would include a l i s t o f prioritized activities that are attached with a budget, linked to the current and planned domestic and external resources (including the M C A ) and embedded in MET’s MTEF 2008/09. This, in turn, would allow the Ministry to identify the sector’s financing gap for the fiscal year 2008/09. It would be also important to establish realistic and measurable benchmarks for each o f the activities. I t can be assumed that the annual implementation plan will still result in a (more realistic) funding gap. To mobilize more funds, MET can increase its revenues, focus on efficiency gains and strengthen its budget management as well a s ensure resources are allocated according to MET’s priorities and responsibilities: a) Increase efficient collection o f revenues. A periodic review and revision o f Namibia’s environmental and tourism pricing system i s recommended over the short and medium term. This offers an option to strengthen its revenue collection, notably for fees related to the concession, environmental certificates, wildlife utilization and park entry fees. b) Strengthen budnet efficiency. Efficiency gains can be made in the short terms by strengthening fiscal discipline and enforcing more rigorous reporting duties at the regional offices and at central level. There i s a need to strengthen the budgeting capacity o f regional offices in order to allow for adequate financial data analysis and better information sharing between regional and central level. Additional measures should focus on the involvement o f the regional offices in the discussions o f the budget committee, the transmission o f budget ceilings to the regional offices prior to their budget planning and the dissemination o f the appropriated budget ceilings. In the medium term, the establishment o f a planning and monitoring unit as well as improvements o f the Ministry o f Environment xvi and Tourism’s aid management would reinforce the Ministry’s strategic budget planning and execution performance. Lastly, there i s also a need to strengthen the PEMP indicators by linking them to MET’s budget and programs Reinforce budget planning. It would be important for M E T to strengthen its budget planning in order to better identify i t s needs and to defend well i t s funding position at MOF and the development partners. Some o f the key measures in the short term constitute: (i)strengthening the budgeting capacity o f the Parks and Wildlife Directorate, ( ii)continue reinforcing MET’s budget programming and (ii) improving the preparation o f the recurrent and development budget (e.g. by introducing a budget costing model). Increase support for the Ministry’s key but under-funded functions. The implementation o f the SP constitutes an opportunity for the Ministry to reallocate some o f i t s resources; particular attention should be given to DEA, the Directorate o f Tourism (DOT) and the C B N R M sub-division. 21. Finally, the review identified the scope for further analytical work and advisory services for G o N such as (i) revising the costing o f MET’s SP, (ii) developing MET’s annual implementation and monitoring plan, ( iii)providing detailed fiscal and human resource assessment o f the Ministry’s regional offices, (iv) assessing MET’s parastatals (the Namibia Tourism Board (NTB) and the Namibia Wildlife Resorts (NWR)) and importantly, (v) conducting a similar exercise in the other natural resource management sectors (including forestry, fishery, water resources, land, etc.) which all contribute to the national economy. xvii I. The Case For a M o r e Efficient and Sustainable Environment and Natural Resource Management in Namibia 1.1 Contribution o f the environment and tourism sector to the Namibian economy 22. The Namibian economy i s primarily driven by the extraction and export o f the country’s renewable and non-renewable natural resources. The economy’s core natural resource based sectors are mining (especially diamond mining), fishing, agriculture, manufacturing (meat, fish and other food processing), and tourism. Namibia’s economy i s vulnerable to high variances in output from year to year in several important economic sectors such as fishing and mining. Using agriculture, fishing, mining, and tourism as proxies, natural resources provide the basis o f about 20 percent o f the Namibian economy (Table 1.1 below). Table 1.1: Namibia’s economic sector contributions to GDP in 2006 Economic Sector AS Yo of GDP Other services 19.9 Government 18.6 Manufacturing 12.6 Wholesale and Retail Trade 11.6 Transport and Telecommunication 7.3 Mining 8.3 Agriculture 5.7 Fishing 4.2 Construction 3.9 Financial Services 3.5 Electricity and Water 2.8 Hotels and Restaurants 1.6 Total 100 - Memo GDP in 2006 (Nominal values) N$ 44,467million GDP in 2006 (Nominal values) US$6.9 billion GDP per capita at market exchange rates US$3,553 (2005) Source: Bank o f Namibia (2007), NPC (2005), Irwin, Jacobs, & Greene (2007) 23. Namibia’s National Accounts only partially capture the contribution o f the environment and tourism sector. While the contribution o f natural resources, in terms o f agriculture, fisheries and mining i s in general well documented in Namibia’s national economic accounting framework, for other natural resources that fall under the jurisdiction o f MET, this i s not the case. Some natural resources or environmental services that fall under MET’S mandate are not valued (e.g., services provided by 1 ecosystems, wildlife in parks, conservancies and landscapes including for non- consumptive tourism landscapes), the value o f nature tourism i s not broken out, and the value o f depletion o f natural resources i s not measured. Furthermore, the proxies that are used in conventional national economic accounting (i.e. such as hotels and restaurants for tourism) for the tourism sector do not capture benefits that accrue to other tertiary sectors or activities in the informal sector. 24. According to the World Tourism Organization (WTO), the environment and tourism sector contributes significantly to Namibia’s economy, and tourism receipts, as shown in table 1.2 below, contribute 7.8 percent to Namibia’s GDP. As such, the sector not only positions itself as an important contributor to the Namibian economy, but also it takes the lead in contribution o f international tourism receipts to GDP. K e y contributors to the sector are tourism expenditures attributable to protected areas (for example, in form o f park fees, accommodations, and safari trips that conservatively estimated, account for about N$ 1-2 billion, or 3.1 percent to 6.3 percent o f GDP.’ Other contributions from the direct use o f natural’resources relate to trade (e.g, trade o f meat, animals and trade o f plants, etc.), hunting fees, and wildlife consumption. Table 1.2: Tourism receipts, selected countries, 200. International Percent tourism o f GDP receipts $ m Namibia 333 7.8% Ghana 414 5.4% Botswana 356 4.8% Tanzania 450 4.4% Zambia 149 3.5% Senegal 184 2.9% South Africa 4270 2.7% Kenya 339 2.4% Mozambique 98 2.3% Madagascar 76 1.4% Source: World Tourism Organization (2005) 25. The sector also contributes to job generation and improved livelihoods in rural areas. According to a 2004 study conducted by NTB, i t was estimated that 24,150 people were directly employed in travel and tourism, which comes to 6.2 percent o f total Namibian employment in the same year. The bulk o f the jobs generated in this sector originate from accommodations, restaurants, and tour safari operations. Since tourism touches all sectors o f the economy (transport, financial services, communication, and retail), i t s real impact i s even greater. Given that the majority o f tourism establishments are in rural areas, the sector has an impact on rural employment and rural poverty. An example o f the sector’s contribution to poverty reduction, supported by available research data, i s trophy hunting. I t i s estimated that around 21 percent o f trophy hunting income accrues to Government and some 40 percent to low-income earners and communal land Turpie, J., Lange, G.M., Martin, R., Davies, R., and Barnes, J., Economic Values and Financing of Namibia’s Protected Areas, 2004. 2 communities. Another example i s the communal area conservancy o f Puros, which has a population o f 260, including children, and 35 adults are employed in the tourism industry and 23 by the conservancy in tourism-related activities. 1.2 Key Achievements in the Environment and Tourism Sector 26. MET has established a progressive framework of environmental policies and laws since the country’s independence in the beginning of the 1990s. The sector has more than 50 environment relevant policies with many addressing specific environmental and wildlife management related issues. A range o f policy and legislative reforms has also encouraged the creation o f innovative collaborative partnerships with other ministries, NGOs, CBOs, and donors agencies working through C B N R M and the Country Pilot Partnerships for Sustainable Land Management, both spearheaded by MET; Additionally, the Ministry o f Agriculture, Water and Forestry manages both the Community Based Management o f Rural Water Supply and the Community Forestry Program. 27. Namibia has achieved important successes in terms of biodiversity conservation. Namibia has an extensive and internationally renowned protected area network (covering 17 percent o f the country in 2007). Furthermore, Namibia’s communal and freehold conservancies have added substantially to the network o f conservation areas in Namibia, covering approximately 19 percent o f Namibia’s land. This indicates that more than one third o f Namibia land surface (36 percent) i s under some form of conservation managementq6 28. Twenty-one o f Namibia’s 29 vegetation types have at least 10 percent o f their area within this protected area network. N o species have become extinct in Namibia in recent years and there are signs that rare and endangered species are either holding their own, or increasing in number and expanding back into areas where they had previously di~appeared.~ Moreover, the northwest communal areas o f Namibia have seen increases in antelope, and they have the world’s only increasing free-ranging population o f black rhinos. Likewise, Namibia has a healthy and growing elephant population with few incidents o f poaching, despite many o f these animals living outside protected areas. Wildlife on freehold land has also increased over the past decade, supporting a quality wildlife-based tourism and trophy-hunting product. 29. Namibia has also gained a worldwide reputation for its innovative approach to linking conservation and poverty alleviation through its communal area conservancy program and pro-poor tourism initiatives. Conservancies on communal land are areas in which rural communities gain rights to use, manage, and benefit from the consumptive and non-consumptive use o f wildlife within defined boundaries. The The communal conservancies covered 14.4 percent o f Namibia, while 16.5 percent o f Namibia’s surface area i s within national parks and game reserves (inclusive o f the Sperrgebiet National Park). Lastly, around 6 percent o f Namibia i s managed b y freehold conservancies and a further 1.3 percent i s under concessions and community forest management. (Source: Namibia’s communal conservancies, a review o f progress in 2006) ’Ministry o f Environment and Tourism, Strategic Plan 2007/08-2011/12, November 2007. 3 success o f the program can be attributed in particular to dynamic policy adjustments that have devolved those rights o f wildlife and tourism to communities in remote rural areas, where poverty i s rife. C B N R M aims to strengthen the conservancy system on communal lands and the other community-based resources, by unlocking the economic potential o f wildlife and tourism in communal areas and creating incentives to manage wildlife and other natural resources sustainably. The program thus promotes empowerment, capacity, and skills at the local level. I t contributed to a recovery o f Namibia's wildlife populations outside national parks even while poaching was being reduced throughout Namibia. By the end o f 2006, there were 50 registered conservancies covering 118,704 km2.About 220,620 people live within the conservancies. Total income to community conservancies and C B N R M activities accounted for N $ 26 million in 2006 (Figure 1.1 below). I n addition, private sector partners generated a turnover o f almost N$70 million. The net national income generated by these activities i s estimated to exceed N$140 million. Figure 1.1: Income to community conservancies and CBNRM activities (N$'000) 30,000 25,000 20,000 15,000 10,000 5,000 0 I 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source: Namibia's communal conservancies, a review o f progress and challenges in 2006 ')The figure includes income from three categories: cash payments to conservancies, non-cash or in-kind incomes to conservancies, and incomes to C B N R M activities outside conservancies. 30. The conservation successes have unlocked enormous tourism development opportunities. In fact, much o f the conservancies income growth over the past years has coincided with the parallel growth o f the tourism industry; the most lucrative income source in communal conservancies stems from joint venture agreements for tourism and wildlife utilization. Community-based tourism has witnessed an increase in the number o f visitors staying in community-based lodges and campsites, from 30,000 in 1999 to over 90,000 in 2004. 4 1.3 EnvironmentalManagement Challenges 31. Over the past decade, the environmental demands on the sector have increased and become more complex’. The country faces a number o f environmental challenges, one i s being the driest country in Sub-Saharan Africa and thus exposed to water scarcity, increasing land degradation, and desertification These are often accelerated by inadequate or lack o f environmental management at the central and local Government levels. Namibia’s protected park network and i t s coastline and marine environment are two key examples that have been adversely affected by this. The key resource-based related challenges are summarized in the table 1.3. below: Table 1.3: Envirl imental challenges in Namibia and Governmental agencit Responsible Governmental Resource base EnvironmentalChallenge Lead Agenc(y/ies) Water Freshwater scarcitv, depletion, and degradation. Limited M A W rainfall threatens water availability although demand exceeds supply already (increasing trend). In addition, MET increasing pollution o f ground and surface water reduces available clean water. Land Unsustainable land uses leading to land degradation and MAWF (Agricultural desertification. Land degradation (soil erosion, bush Production) encroachment and soil salination) in Namibia due to MLR overgrazing, land clearing for crop farming or inappropriate MET cultivation techniques but also due to incorrect policies, incentives and regulations and lack o f land tenure, inequitable access to land and lack o f an integrated planning. I t causes economic loss and escalating poverty and a loss o f food security. T h i s leads to human migration, rapid urbanization and increased need for the Government to import food. Forestry Increasing deforestation and unsustainable use o f wood and M A W woodland resources. Unsustainable deforestation has occurred in many parts o f the country and i s most severe in MET those areas that have highest population density (north- central, north-eastem and outskirts o f Namibia’s rapidly expanding urban areas). Results are increased rainfall run- o f f and soil erosion, declining soil fertility, changes in the local water cycle and loss o f biodiversity as well as contribution to global warming. Wildlife Human-Wildlife conflicts are increasing in communal areas MET (Sustainable and require adequate procedures and instruments to support Tourism) CBNRM program objectives. Need for equitable access and benefit-sharing mechanism supported by MET’Sregulatory * See volume 11, annex to chapter Ifor summary table o f environmental challenges. 5 framework. Coastal and Unsustainable use o f coastal and marine resources and MFMR Marine absence o f integrated planning, management, and Resources monitoring schemes. MET Minerals Lack o f r e d a t o w framework until recently (passing o f MME EMA) and weak institutional capacity at MET to ensure compliance at central and regional level. Unrehabilitated MET mines, mostly in protected areas. A century o f mining with little or n o planning to reduce environmental damage has MFMR impacted heavily upon large areas in Namibia especially in the Namib Desert. There are approximately 40 abandoned, unrehabilitated mines in Namibia, o f which 40 % are in nature reserves. Biodiversity Increasing uressure on protected areas from other land and MET resource uses. Need to recognize wildlife-based tourism (CBNRM) as valid land-use option that can replace other M A W direct land-uses like agriculture in certain areas. Until recently, there has been a lack o f benefit sharing schemes MME with neighboring communities. The new Concession Policy addresses the issue to some extent. Continued support for implementation o f National Biodiversity Strategy and Action Plan (NBSAP) including addressing biosafety, bioprospecting, and biotrade issues. Further need to address national park management including strengthening linkages to local, regional and national planning and management system. Urban Increasing challenges related to waste and water LA Environment management and pollution in urban centers. MET Climate Namibia’s vulnerabilitv to climate change impacts has been MET Change demonstrated over the past years by prolonged drought and frequent floods, increasing temperatures, reduced rainfall, M A W and a reduction in the agricultural sector’s productivity (crops and livestock). In the future, if n o effective MFMR mitigation measures are taken by national and international stakeholders the scenario includes: increased coastal flooding: reduced productivity in fisheries due to the warming o f the Benguela current; infrastructure destruction by floods; limited water availability; and an expectation o f absolute water scarcitv by 2020. 32. Additional external factors contributing to the demands on the sector are comprised of: (i) weak capacity o f local and national Government in conservation and environmental management; ( ii) the increase o f urban population over the past years that requires MET to address sustainable urban development issues in combination with rural development concerns;’ and (iii) the scaling up o f the volume and the diversity o f industrial investments in some parts o f the country, which in the past few years have often put the fragile systems and key resources under pressure. This requires MET to Available statistics indicate that by 1981 only 11 percent o f the population lived in urban centers while this had risen to almost 40 percent by 2000. 6 significantly step up i t s involvement, in particular in terms o f policy and institutional coordination, and in environment impact assessment work. 33. Despite the fact that MET was successful in achieving important milestones over the past 10 years, the Ministry’s performance i s increasingly affected by a number o f factors related to some pending legislation and policies, inefficient human resource management, weak communication and coordination among directorates, regions and other ministries, and shortcoming in i t s budget management. In response to the management and conservation challenges o f the sector and the issues affecting the Ministry’s ability to fulfill i t s mandate, MET formulated i t s first SP (2007/08-20011/12). In order to assist the Ministry in the implementation o f its SPYthe following two chapters discuss more in-depth the challenges the Ministry faces related to the sector’s policy and legislative framework and i t s institutional and budget management capacity. The last chapter proposes a set o f recommendations. 7 11. The Sector’s Policy, Legislative Frameworks and Institutional Analysis 2.1 The Policy and Legislative Framework of the Environment and Tourism Sector 34. Namibia’s Constitution, Vision 2030, the aligned 5-year National Development Plans (NDPs), and the recently finalized 5-year MET SP provide the broader policy framework for MET’s actions within the tourism and environment sector. In addition, the Governmental “Civic Organisations Partnership Policy (NPC 2005)” enhances partnership opportunities that benefit civil society, non-Governmental organizations, and the Government. lo 2.1.1 MainJindings related to the Policy Framework 35. National Development Plans (NDPs): In general, planning and implementation o f NDP1 and NDP2 by the line ministries (including MET) had been mostly sectoral, rather than integrated. With regard to MET’s NDP2 agenda (2001/02- 2005/06), some progress was made during the five year implementation period regarding the targets for the environment and natural resource sector.” N o t reaching goals can partly be attributed to Parliament’s delay enacting some o f the sector’s key legislations, or over ambitious planning lacking a detailed institutional assessment. Also absent were a SP and sectorally defined priorities with aligned institutional and finding capacities. NDP3 has been prepared taking a sectoral but cross-ministry approach and that ensured involvement by all 13 regional Governments in establishing regional priorities to integrate into sectoral themes. Nonetheless, most implementation o f the NDPs has been sectoral rather than integrated. 36. As part o f i t s mandate, MET i s responsible for inter-sectoral policy- making, coordination o f activities, and the integration o f environmental policies and strategies by line ministries, but i t has been hampered in fulfilling this function in the past. Environment and natural resource management are crosscutting issues involving several line ministries (for example, the Ministry o f Agriculture, Water and Forestry, Ministry o f Mines and Energy, Ministry o f Fisheries and Marine Resources, etc.). MET’s DEA is responsible for ensuring the inter-sectoral coordination and national development planning and implementation processes o f goals are set within the natural resource sector under NDP3. However, MET’s coordination functions have been hampered because o f a shortage o f suitably experienced and qualified personnel to fill positions in the DEA and the pending enactment o f the Environmental Management Bill. Drafting policy (and legislation) has been at the forefront o f general Governmental actions in the past, but more recently-processing and approval has moved rather slowly and been inconsistent in staying aligned with the line ministry’s sectoral mandates. This i s in particularly true for loSee Namibia CEAPER Volume I1 for a more detailed description o f the sector’s policies. I’ See Namibia CEAPER Volume I1(Appendix 1 , table A). 8 MET which prioritized policies (and legislation) with income generating potential like wildlife management, tourism, and gambling as opposed to other environmental areas such as urban environment or waste management, which was probably due to unbalanced donor support for the green issues.I2 More delays with some ground-making policies such as the concession policy and tourism policy (the first was finally approved in 2007), have hampered finalizing related draft policies like the Human-Wildlife Conflict, the Parks and Neighbors Policy, and delayed advancing an integrated C B N R M Policy which fosters MET’Sdialogue with other related sector ministries. The delays can be attributed to five factors: (i) lack o f capacity with drafting and processing policies within MET; (i i) lack o f overall strategic planning within MET and thus creating an absence o f prioritization and timing; ( iii) lack o f clear policy development, approval, and implementation and related monitoring processes and procedures; (iv) changes at the highest senior management level; and (v) inefficient intersectoral consultation and coordination with other line ministries. 37. Government has recognized the increasing value of the tourism sector as well as the importance of the sector’s linkages to the long-term sustainable management of Namibia’s fragile natural resource base. This i s reflected in i t s political commitment inscribed in NDP2. l3 Some important milestones were achieved under NDP2, such as the establishment o f NTB by MET in April 2001 and the preparation o f the Tourism Satellite Account in 2006; however, DOT faced several constraints in terms o f resources and staffing (see section 2.2), impeding the achievement o f several o f the NDP2 t a r g e t ~ . ’ ~ 38. Despite Government’s commitment to the tourism sector, the policy framework that would guide the rapid growth o f tourism has been delayed for almost 10 years and as a result it has severely undermined the Tourism Directorate’s regulatory function. This delay i s owing to staff shortages and shortcomings in the capacity o f the Tourism Directorate, senior management changes at MET, and uneven technical assistance from donors. The policy will require MET to work closely with public agencies, such as NTB, and the tourism industry. One important new institution that would emerge from the policy i s the establishment o f the National Tourism Council that will act as an umbrella body and help to develop the Namibian tourism sector through cooperation, coordination, and communication. 39. Nevertheless, an important recent accomplishment has been the approval of the Policy on Tourism and Wildlife Concession on State Land’’. The policy focuses on concessions in proclaimed protected areas and any other State land such as communal A similar situation occurs for the Ministry of Agriculture, Water and Forestry (MOAWF) with its Water Resource Management Act, which was approved in 2004 but i s still lacking implementationand enforcement. I3The goal manifested in NDP2 for the tourism sector was to develop the tourism industry in a sustainable, equitable, and responsible manner while contributing significantly to the economic development of Namibia and the quality of life o f all her people. In Namibia’s long-term Vision 2030, tourism i s depicted as the country’s sector of greatest promise, and it i s stated with confidence that tourism “has more potential as a sustainable industry than any other form of economic development in Namibia.” l4See Namibia CEAPER Volume I1 (Appendix 1, table B). I5 State land here means “land inside and outside o f protected areas that belongs to the State and it includes national parks, game parks, recreational areas, communal land, conservancies and communityforests”. 9 conservancies, concerning natural resources under the jurisdiction o f the Minister. The purpose o f the policy i s to articulate a policy and regulatory framework for MET’S awarding and managing four types o f concessions (tourism, plant harvesting, trophy hunting, and wildlife), which will enhance objectivity and transparency to the process. I t i s complementing the legislative framework based o n the Nature Conservation Amendment Act (1996) and the Forest Act (2001), both authorizing the Minister to grant concessions but lacked, until now, formalized standards and procedures. The Policy sets out a standard and a robust procedural framework for awarding and managing concessions, indicates what supporting documents and procedures are required to initiate, and implements an approval o f the concession process while ensuring efficient compliance monitoring. The concession policy, for the first time, explicitly targets the empowerment o f local communities by enabling the Minister to award concessions directly to a community that meets certain conditions like having a representative legal body, and without having to go through a public tender. Provision for implementing this policy will accordingly be made in the Parks and Wildlife Management Bill. An important additional objective o f the policy is to obtain support from other line offices, ministries, and agencies. Since the development, management, administration, and particularly the monitoring o f concessions have significant cost implications for the Ministry, and one o f the goals i s to generate revenue for the State through concessions as a means o f recovering costs. 40. As a first step, MET recruited an advising Tourism Concession Specialist, who will be part o f the proposed concession unit. The Policy is closely linked to the s t i l l pending Policy on Parks and Resident Neighbors. 2.1.2 Main cfindings related to the Legislative Framework 41. A milestone achievement has been the recent passing of the EMA. The EMA i s the main vehicle for ensuring that policies o f sectoral ministries are consistent with the environmental constraints and principles o f sustainable development. The recent passage o f this Act has major implications for MET, particularly about the scale and scope o f Environmental Impact Assessment (EIA) activities. Due to the 10-year delay in passing this bill, the Ministry’s role as a regulator, in particular in the area o f environmental management, has lacked behind expectations. The recent passage o f the EMA should enable MET to play a stronger regulatory role in this area. Delays in preparing the EMA must be sought in the weak institutional capacity o f the Ministry but also in the fact that i t will empower MET and have far-reaching consequences on economic activities to be undertaken by the private sector and line Ministries and as such took longer to be agreed upon by all stakeholders. 42. Further bills are required to enhance the Ministry’s effectiveness to promote the sustainable utilization of natural resources; however, the process in developing and adopting important sector bills i s long, mainly because there are no established procedures and processes. Other important sector regulation bills are the Parks and 10 Wildlife Management Bi1116as well as the Pollution Control and Waste Management Bill, but these are still at an advanced stage o f preparation. Delays with the Parks and Wildlife Management Bill occurred mainly due to alignment with other emerging policies such as the Human-Wildlife-Conflict Policy, the Parks and Neighbors Policy and the Concession Policies. The absence of approval of these bills and draft policies over the past years i s seen as the main obstacle to enforcement o f current regulations and laws, and the promotion of harmonized and sustainable utilization of natural resources. 43. There are a number of Acts that do not fall within the jurisdiction of MET but that have direct relevance to sustainable environmental management. These include the Water Act (yet to be signed off), Inland Fisheries Bill, and the Forestry Act, as well as bills from the Ministry o f Mines and Energy and the Communal Land Reform Act. While these bills have a sectoral focus, they generally recognize that sectors cannot work in isolation, that they need to promote sustainable practices and diversified land-use options and that institutional partnerships are essential. 2.1.3 Challenges related to the Policy and Legislative Framework 44. An ongoing challenge for the environment and the Natural Resource Management sector i s the conflict between the policies and legislation of the different sectors.” As in many countries, there i s a lack o f an overall framework that integrates sectoral policies with respect to addressing natural resources, the environment, and its natural variability. However, a key feature o f Namibia’s development approach based on participation, devolution o f responsibilities, or community empowerment is included in many sectoral policies and a national policy on partnerships with civic organizations has been issued by NPC in 2005. 45. The Tourism Directorate continues to be challenged moving the tourism policy forward. The tourism policy has been at the final stage o f approval at MET for the past twelve months. However, the Directorate faces severe staffing shortages as most o f the senior management has left and not yet been replaced. This raises questions regarding the Directorate’s ability to move the tourism policy forward (planned to start in 2008), and be implemented effectively and efficiently. 46. The implementation of the EMA will have resource implications for MET and increase the need for cross-sectoral coordination on environmental issues within Government. The Act calls for the appointment o f an Environmental Commissioner with broad powers with regard to environmental clearances and assessment o f EIAs. The Permanent Secretary o f MET is required to appoint ministry officials to support the work o f the Commissioner. l6 The passage of the Parks and Wildlife Bill Act will enable MET to proclaim areas that are currently in an indeterminate state, including the coastal dune belt between Swakopmund and Walvis Bay, and the Walvis Bay Nature Park. The Pollution and Waste Management Bill provides for sustainable environmental management of urban development issues such a s water and waste management. Namibia’s environmental sector 1990-2007: progress and challenges Activity of the Enviro PRE (Participatory Review and Evaluation) September 2007. 11 47. O n coordination, all ministries are required to prepare environment plans for their operations, to be sent to the Commissioner, who in turn recommends approval o f the plans by the Minister; annual reports on the implementation o f these plans are sent to the Minister. On clearances and EMS,the proponents o f listed projects under the Act, which include most major infrastructure, heavy industry, land use planning, and natural resource development projects, are required to apply to the Commissioner for a clearance to proceed with the project; the Commissioner determines whether an EIA i s necessary, consults with other organs o f state or interested or affected persons as appropriate, reviews any EL4 submitted for acceptance or rejection, and grants the application and assesses a fee for the clearance certificate. Project proponents may include other ministries o f Government in the case o f public investment programs. A key challenge for the Ministry will be its rapid readiness for the implementation o f the EMA. Donor assistance for this key area has been earmarked. 48. The implementation of the concession policy will also have resource implications for MET and require capacity building. The development, management, administration, and particularly the monitoring o f concessions will have significant cost implications for the Ministry. The new concession policy requests MET to set up a Concessions Unit within the Ministry and to develop management plans. These plans will prepare the basis for defining concessions, and specifying areas that would be excluded from concessions. The policy emphasizes that the generation o f revenues for the State through concessions should be used to recover the cost, and in this case, MET needs to consult with MOF to ensure that the Ministry or other involved entities will not be left with additional management and monitoring costs concerning concessions, without a commensurate increase in its financial resources. It i s also suggested to establish a find for supporting concession-based enterprise development in consultation with the MOF in case MET’s resource envelope is inadequate. 49. Implementation o f MET’S policies on community-based management o f wildlife and tourism remains under-resourced in terms of funding and personnel. The elevation o f C B N R M to a major component o f MET’s SP should lead to a re- assessment o f the role o f MET in C B N R M and help generate the resources it requires to fulfill i t s mandate o f supporting conservancies and monitoring their compliance with legislation. This i s particularly important if C B N R M i s to reduce i t s reliance on donor funding. 2.2 InstitutionalAnalysis 2.2.1 Main findings related to the Institutional Analysis 12 MET’s SP 50. The Ministry recently finalized its first SP (2007/08-2011/12) that will be the Ministry’s implementation plan of NDP3 (2007/08-2011/12). I t i s designed to allow MET to effectively manage the demanding task o f supporting economic growth (in particular through tourism, while at the same time regulating its own and other sector’s managed activities (environment). The Plan aims to refocus the Ministry’s programs and to re-examine the Ministry’s institutional and financial arrangements in order to increase the sector’s contributions to rural development, economic growth, environmental management, and conservation. The SP i s centered around nine themes and 135 activities (so called “initiatives”) that are related to the respective themes that establish the legislative, institutional, and financial setting needed for the Ministry to strengthen its role as a regulator and to enable i t to scale up its programs. 5 1. The process o f developing MET’s SP and i t s final result has been qualified by the OPM as a best practice and model for other line ministries. MET’Sorganizational structure 52. MET i s responsible for policy development, planning, environmental regulations and enforcement. MET’s mandate includes the following objectives: 53. The implementation o f i t s mandate i s translated into five strategic areas and four crosscutting programs identified in the Ministry’s SP. I t links the Ministry’s mandate and respective Directorates to the objectives inscribed in the SP and the NDP3 as well as the actual achievements and current gaps. The Ministry consists o f the usual top structure o f 13 Minister, Deputy Minister, Permanent Secretary, and Deputy Permanent Secretary. Its comprised o f a Department o f Natural Resource Management and the Directorates that are responsible for Parks and Wildlife Management, Tourism, Environmental Affairs, Scientific Services, and Administration and Support Services. 54. The function of managing and operating tourism establishments within proclaimed parks has been outsourced on a commercial basis to the Government- owned company NWR”, while tourism promotion and quality assurance i s handled by the parastatal NTB. As a joint venture between the Government and the private sector, the prime objective o f NTB i s to effectively market the tourism industry and to promote the development o f environmentally sustainable tourism. It also deals with the registration and regulation o f accommodation establishments. Institutional issues 55. MET’s institutional capacity i s constrained by its limited qualified staff. The Ministry’s staffing temporarily more than doubled in 2001 and 2002 with the takeover o f 1000 additional staff as requested by the Government. This inflated significantly MET’s budget in terms o f salaries but was not adequately supported by increases in goods and services (for example per diem, camping allowances, uniforms, etc.). 56. In addition, more than 40 percent o f the entire MET staff (representing around 1,586 in 2007) has few qualifications while the professional staff accounts for only 2.5 percent o f total MET staff. At the same time, MET has a large number o f vacancies, amounting to almost 24 percent o f the total staff component o f the Ministry, mostly for l o w priority posts (55 percent) but also for high priority positions (15 percent). Overall, the Ministry faces difficulties in recruiting and keeping well-qualified staff, as salaries paid in the private sector are more attractive for qualified employees. This challenge i s particularly important within the DEA. 57. An assessment of MET’s Directorates revealed issues affecting most Directorates related to qualified staffing, resources, and co~rdination’~: First.taking into account MET’s core functions o f policy and planning carried out by the DEA, inefficiencies seem to exist in the allocation o f resources and staffing allocated to the DEA that are significantly smaller compared to the Directorate o f Scientific Services. Due to insufficient qualified staff, DEA’s ability to review EIA submissions, to undertake l8The =Company began operations in April 1999 with the main purpose to provide a corporationthat manages all commercial aspects relating to marketing, operations, and product improvement o f the Government-owned tourism resorts. However, since its inception N W R has been faced with internal problems (related to insufficient capitalization, the Board o f Directors, senior management, the lack o f trained staff, etc.)” As a result, the Government has been subsidizing the company over the past years. To rectify the situation Government adopted a turn around strategy (based on lease and performance agreements between MET and NWR) that is currently rolled out, appointed a new MD, and retrenched most senior management. I t also made a substantial financial commitment o f a two year N$120 million loan guarantee to upgrade tourism facilities, especially in Etosha, to international standards. T h e constraints faced by the Directorate o f Parks and Wildlife owing to the lack o f additional expenditures to adequately cover recurrent salary and non-salary expenditures and the implications are discussed in chapter IV. 14 site inspections, and to issue compliance certificates i s a severe constraint.20 Technical capacities are missing in several disciplines that are commonly related to urbanization, including waste and wastewater management, pollution control, climate change adaptation and mitigation, economic modelling, and environmental monitoring. In addition, many o f the tasks related to drafting NDP3 had to be outsourced to a local consultancy company, as the DEA did not have in-house capacity. Second: the lack o f capacity at DOT, responsible for policy formulation, tourism development and planning, and facilitation, is considered an inherent weakness in supporting a sustainable tourism industry and conservation objectives. One o f the key sub-divisions, Community Based Tourism, i s not staffed. Also, until recently, there has been no specialized expertise in MET regarding tourism partnerships (an advising Tourism Concession Specialist was recruited in late 2007).21 Third, the understaffing o f the Maintenance unit, attached under the Directorate o f Administration and Support Services constrains the Directorate to conduct regularly, timely, and cost-effective maintenance. Fourth, synergies among the Directorates have not been sufficiently explored. The management o f the C B N R M program (managed by the Directorate o f Parks and Wildlife (DOPW)) and the CBTE Program (managed by DOT), both concerned with decentralized resource management, are not yet aligned to achieve synergies in terms o f resource sharing at the program design and implementation levels. The C B N R M program has not yet been mainstreamed (from a technical, institutional, and financial point o f view) at central and regional levels. Fifth, there i s a general lack o f access to management information and utilization o f the information by MET’s management. This i s mainly because the Ministry does not have a management information system or a monitoring and knowledge management system and lacks a planning unit. The lack o f a consensus on data needs and data management arrangements amongst Directorate o f Environmental Affairs, Directorate o f Scientific Services, Directorate o f Parks and Wildlife Management, Directorate o f Tourism, and high senior management further exacerbates the situation. A system is needed that tracks MET’s progress towards achieving the different goals and at the same time monitors resource consumption (budget finds). A central multi-level database should contain the annual work plan for senior and lower management review and up-date, and be linked to the MOF’s IFMS and incorporate the PEMP data. 2o If the in-house capacity is not sufficient, appraisals are outsourced (at the expense o f the applicant, until recently on a voluntary basis in line with the Environmental Assessment Policy o f 1995). ” This means that the Ministry has to develop the capacity to assess proposed partnerships between the private sector, local communities, and financial institutions based on a clear understanding o f best practice yardsticks. This capacity deficit also inhibits the ability o f MET to develop informed transparent guidelines regarding, for example, lease duration, remuneration levels, and affirmative action obligations to be incorporated in the contractual relations governing tourism partnerships. 15 Administrative deconcentration of services 58. MET has deconcentratedsome administrative services to the regions, though its effectiveness on the ground i s nevertheless weak. The Ministry has 72 regional offices based in the 13 MET geographical regions. At present, most o f MET’s regional offices are staffed only by MET’s Parks and Wildlife Directorate. Little capacity exists at the regional offices to monitor and enforce environmental standards and regulations since most o f these tasks are s t i l l managed at the central level. The main responsibility for national parks in the region has been shifted from the region to centrally located Windhoek. Only the handling o f problem animals i s delegated to the regional offices. Regulation and enforcement carried out by the offices have been undermined due to the intervention o f other politicians (for example regarding the provision o f permits by the regional offices).22 Adequate support from head office is often not provided in such cases. Evidence suggests (i) that no clear, known and accepted procedures are in place to regulate activities on state land, (ii) little capacity exists within the region to handle trespassers, and (iii) political interference exists in the granting of permission to host events on state land. Current decentralization status 59. MET i s one of the line ministries tasked by the Cabinet to prepare the decentralization of some of its f~nctions.~’ Conservation (including, for example forestry and parks development and management) was among the key public sector functions identified by the National Assembly to be decentralized to RCs as part o f Government’s decentralization strategy.24 MET set up a taskforce in 2005 that is charged to guide the decentralization o f MET functions. However, the taskforce’s work plan has been slowed down and even put on hold for the last two years, as the ministry does not have sufficient staff and resources to allocate to the preparation o f the decentralization implementation plan (DIP) but also due to political decisions. Following guidance from MRLGHRD, a DIP usually i s prepared based on a SP to indicate the necessary institutional restructuring. Achievements and main challenges o f this decentralization process are summarized in Box 11.2. 22 This was the case at a recent international quad bike championship that was granted by the governor and held on state land in the vicinity o f Walvis Bay, despite the objection o f the regional office to grant permission. 23 Volume I1 includes a description o f Namibia’s decentralization process. 24 Following the slow progress in delegating finctions to the regions across most Ministries (with the exception o f the Ministry o f Agriculture, Water and Forestry, the Ministry o f Education and the Ministry o f Works, Transport and Communication), the Government has acknowledged that the magnitude and complexity o f the implementationprocess has been underestimated and that line ministries and sub-national Governments need substantial capacity building in conceptualizing, implementing, and monitoring the decentralization implementationprocess. 16 implementationprocess; (viii) substantial process support and technical assistance to support regional councils and A case study o f decentralization: the Erongo region 60. The Erongo Case study showed that the Erongo Region Council’s ability and priority-setting to ensure environmental protection and planning with the framework o f regional development is constrained due to limited funding, the absence o f empowering legislation, limited involvement by MET’S regional and national staff and delays in devolving some o f i t s functions to the sub-national level. This i s reflected in the RC’s administrative structure, i t s planning, law enforcement, and sector coordination and its financial basis: (i)the Erongo Regional Council i s charged with the regional planning but no adequate attention is given to environmental planning; (ii) the ERC’s enforcement capacity is also largely limited by the fact that empowering legislation i s either not in place or aimed at strengthening the mandate o f line Ministries; (iii) nonetheless the ERC 17 consults with the MET regional office on environmental issues such as coastal management, provision o f general advice on regional development issues (e.g. EIAs for mining and exploration), and advice on ecologically sensitive areas; and (iv) lastly, the region faces two major problems in implementing fiscal decentralization, one i s that the generation o f local revenues by the ERC is small, covering only one fifth o f i t s budget; and two that the ERC is s t i l l largely dependent on central transfers. However, the Erongo region s t i l l remains a place where local/regional best practices have been developed and implemented in terms o f decentralization. Box 11.3 below highlights the institutional frameworks set up by the municipalities o f Walvis Bay and Swakopmund. The SwakoDmund MuniciDality i s comprised o f an Envi responsible for the promotion o f public health and the monitoring o f the environmental impact on health as well as the provision o f solid waste management services. The Department leads an Environmental Committee, attended by representative o f MET, the Ministry o f Fisheries, and the toring and control of all h also has a consultative Environmental assessment 61. Environmental assessments are conducted but oversight from the DEA i s relatively weak. A large majority o f EIAs in Namibia have been carried out for projects. A smaller number have been done after a project’s implementation, while very few Strategic Environmental Assessments (SEAS) have been done.25 Around 79 f ill project EIAs have been conducted between 1991 and 2001 with the majority carried out with regard to mining and infrastructure development. Only three EIAs have been conducted for Namibia’s fast growing tourism industry. Based on the example o f the mining sector, the cost of EIAs (as a percent o f the total project cost) has ranged between 5.2-0.01 25 SAIEA, 2003. 18 percent.26 The quality o f environment assessments appears to vary as a number o f local consultants undertake environmental assessments but have different levels o f qualifications and expertise.27 2.2.2 Challenges related to the Institutional Analysis 62. The implementation of the SP will probably constitute a major challenge when held against the current implementation capacity and magnitude o f required funds. As mentioned above, the SP i s comprised o f 135 activities that have not been prioritized. MET recently costed the SP. The total annual budget requirement is roughly estimated at N$ 648.7 million (US$ 92 million). This costing i s based on very first estimates and it is almost three times higher when compared to the current average budget appropriations o f MET’s MTEF (2007/08-2009/10) amounting to N$243 million. Overall the numerous activities as well as the large resource envelope suggests that there i s a clear need for prioritization o f activities and improved costing to translate the plan into a realistic work program for MET and align with available funding. The planned scaling up o f MET’s programs under the implementation o f the SP will, however, also require much more effort to strengthen the Ministry’s institutional capacity (e.g., hiring o f skilled staff, having more efficient human resource management, etc.). The lack of qualified staffing i s a severe constraint for MET’s service delivery (notably the DEA) but depends on negotiationswith OPM and MOF. 63. In the context of Government’s decentralization agenda service, the Ministry’s task to devolve functions (such as the management of parks) constitutes an enormous challenge given the current weak capacity at the level of the local authorities. In addition, moving forward MET’S decentralization agenda would require additional human and financial resources and thus, this competes with other priorities of the Ministry. A further challenge for MET will be to decentralize the tasks uniformly to all regions as these areas have different requirements (e.g., high tourism potential o f some regions versus the undeveloped potential o f others). 64. A main challenge regarding the implementation o f the EMA will be to mainstream the concept of environmental assessment. This mainstreaming, as a mechanism to guide development, must be pursued at the Government and private sector level. This process requires the support by the DEA that will have to monitor environmental management plans from a wide range and scale o f economic activities and enforce regulations. This will also require additional regional presence o f the DEA to facilitate the process; however, i t s current effectiveness through its regional offices is weak. At the same time, it would be important to develop capacities o f local environmental assessment practitioners to further support the process. Overall, significant capacity building will have to be carried out to ensure the DEA can fulfill i t s new responsibilities. ~~ ~~ 26Tarr, 1999 and SAIEA, 2003. Namibia’s environmentalsector 1990-2007: progress and challenges Activity o f the Enviro Participatory Review and 27 Evaluation, September 2007. 19 65. MET i s often guided in its tasks by a bias towards rural areas and communities, though environmental needs related to increased urban development demand MET to also address sustainable urban development issues. One o f the strategic themes inscribed in the SP is dedicated specifically to “rural development” while issues related to urbanization are not mentioned. This can be partially attributed to the DEA’s inadequate technical capacity on urban related issues. 66. Barriers on private sector investment in the Namibia tourism sector needs to be addressed but are beyond MET’S mandate. One o f the key factors hampering private sector investment i s the insecurity around land tenure in Namibia’s communal areas that makes access to loans difficult and thus inhibits tourism development.28 There are also a number o f bureaucratic hurdles that make tourism investment time consuming and burdensome. MET, through i t s Tourism Directorate, aims to develop the tourism potential in previously neglected areas. To improve the investment environment for the private sector, the Ministry’s role i s limited to advocating for a concerted effort by all involved public agencies and ministries. 28 A major constraint that manifests itself currently relates to the reluctance o f Namibian financial institutions to lend towards communal tourism investments. There are mainly three sets o f constraints to the financing o f tourism investments in the communal areas. First, the ability o f a financial institution or lender to intervene to take cession over title deed or even to replace the lodge operatorlowner in case o f non-repayment o f a loan is unclear. This situation hampers the lenders ability to appoint interim management in replacement o f the borrower to ensure continued servicing o f the loan. In the absence o f such rights, financial institutionsllenders perceive themselves to have a high risk on financing tourism investments in the communal areas. Second, the financial institutionsllenders banks will aim to reduce exposure on the loans for tourism investments in communal areas b y raising the security/collateral requirements. Unfortunately for emerging conservancies, such requirements may be prohibitive. And third, tourism entities normally reach break-even after 3-4 years, as it takes long to reach break-even occupancy rates. This places a heavy burden on cash flows during the early years o f operation. As a result, conservancies need a longer grace period before servicing their loans. Namibian Financial institutionsllenders normally provide grace periods o f more than 6 months. The recently established Development Bank o f Namibia, however, does provide project finance with longer grace period (up to 24 months) and a longer maturity (up to 10 years). 20 111. Financing of the Environment and Tourism sector 3.1 Fiscal Assessment of the Environment and Tourism Sector 3.1.1 M a i n flndings related to the Fiscal Assessment 67. The sectors’ contributions to non-tax revenues have increased significantly over the past three years (Figure 111.1 below). The sector’s non-tax revenues have increased by almost 300 percent from N$ 5.4 million in 2000/01 to N$ 29.9 million in 2005/06, thus representing 2.8 percent o f Government’s planned non-tax revenues in the same year. This substantial increase in revenues can be mainly attributed to MET’S takeover o f the collection o f park entrance fees from Namibia Wildlife Resorts (NWR) in 2004 and increases in fee tariffs in 2005/06. The overall contribution from the sectors to Government’s revenues is higher but not known since the amount o f the tourism and environment sectors’ contribution to Government’s tax revenues i s not specifically identified in the budget or not included. Figure III.l Contributions o f the environment and tourism sector to non-tax revenues : 2002/03-2006/07 (YOand N$million) 2.T-” ” _- “ - 2000101 2001102 2002103 2003104 2004105 2005106 2006107 actual actual actual actual actual actual estimate Source: MOF 68. Despite a range of non-tax revenue sources, a large share of revenues comes only from one source, the park entrance fees. Figure 111.2 shows that the bulk o f the revenues stem from park entrance fees (90 percent) and tourism concessions (6.2 percent) in 2005/06.29 Owing to the NWR’s failure to transfer revenues to MOF (NWR was initially responsible for the collections o f entrance fees), MET took over the collection o f park entrance fees from the N W R since April 2004 and succeeded to improve the collection and more importantly the transfer to MOF over the following years. ~~ 29Other revenues sources o f MET contribute considerably less (around 3 percent) to total MET non-tax revenues in 2005/06. These include film fees, wildlife registrations and licenses, wildlife utilization permits, unclaimed checks, departmental fines, application fees for gambling licenses and miscellaneous. 21 Figure 111.2: Composition of total MET non tax-revenues 2001/02-2005/06 (as a share o f total revenues) 100.0 Application fees gambling licenses 90.0 Serwces rendered to Ministnes 0 Departmental Fines 80.0 Unclaimed cheques 70.0 Miscellaneous 60.0 Pnvate telephone calls Wildlife utilization permits 50.0 Wildlife registrations and licenses 40.0 cl Film fees 30.0 Registration of culling teams Registration of professional huntel+ 20.0 Sale of trophies 10.0 Tounsm concessions Park entrance fees 0.0 2000101 2001 102 2002103 2003104 2004105 2005106 Source: MOF 69. Despite important increases in the collection o f park entrance fees, the capacity o f MET to effectively collect revenues i s constrained by a number o f factors. First, revenue collection i s limited due to leakages3' which occurred at the local stations. Second, weak capacity o f the staff to manage revenue (low qualification in accounting or financial management, l o w salaries, as well as the absence o f a computerized system) has resulted in the delays o f transferring information and there are shortcomings in data reliability. Third, estimation o f revenues are in general based o n past trends, however, MET faces sometimes difficulties in estimating revenues or in the case o f the Game Product Trust Fund (GPTF), does not have a revenue planning system in place. Unpredictable natural events such as drought or flooding affecting the flow o f tourism make realistic planning at times difficult. The absences o f revenue forecasts undermine effective planning o f expenditures and result in an ad hoc management o f expenditures, 70. W h i l e most o f the collected revenues are transferred to the State Revenue Fund (around 70 percent), some can b e retained by MET. These include the export levy, hunting concessions, and revenues derived from the proceeds o f game product sales. Since 2005, the Ministry can retain 25 percent o f the park entrance fees for direct park maintenance and biodiversity conservation. The funds are transferred to the Game Product Trust Fund (GPTF) and re-invested in the sector.31 Likewise, the Environmental 30In the form o f theft on the road or the corrupt practices o f some staff. 3iGPTF constitutes an important instrument for the MET to distribute collected non-tax revenues. Established by an Act o f Parliament in 1997, it supports the conservation and management o f wildlife resources and rural development. I t aims to provide grants to emerging public wildlife organizations and protected areas, and to persons and institutions approved to the Minister. A board, appointed b y the Minister o f MET, manages the Fund. Though the act makes provision for outsourcing, MET currently administers the Fund in order to save cost. 22 Investment Fund (EF), i s a similar instrument at the disposition o f MET but has not been capitalized until today. 71. GPTF has grown over the period 2000/01-2005/06. As shown in figure 111.3, the fund has been growing over the past years by 139 percent in real terms from about N $ . 5.7 million in 2000/01 to almost N $ 20 million in 2005/0632. However, this has also raised questions in terms o f the sector’s capacity to effectively use these funds. Projects are approved on a tri-semester basis by the board. Some NGOs find i t difficult to access the fund33.MET, on the other hand, has faced the problem o f a range o f proposals oriented towards an enterprise related activity instead o f an environmental or conservation related project. It is also important to note that GPTF i s a fimd that is not documented under Namibia’s national budget (the State Revenue Fund (SRF)). Though the balance o f GPTF i s published annually in the MTEF, it i s difficult to access information on the h n d s mid-year disbursement status. Figure III.3: The funding of the Game Product Trust Fund by type of revenue source 2000/01-200906 (N$000) 25,000 20,000 15,000 10,000 5,000 0 -5,000 -10,000 Source: MET 72. The EIF has not yet been capitalized. Established in 2001, it aims at enhancing the country’s environmental and wildlife protection efforts by raising resources for direct investment in environmental protection and natural resource management.34 It seeks to grant loans and bursaries to community-based environmental projects, NGOs, and individuals involved in environmental programs and activities that promote economic development and empowerment for communities. The Cabinet authorized N $ 15 million 32 Namibia’s proposals in respect of the Convention on International Trade in Endangered Species (CITES) and the trade in elephant products and black rhinoceros hunting quotas include a commitment that any related income i s deposited into the Fund. Over the period 2000/01 to 2004/05 the main source of revenues derives from hunting concessions, while in 2005/06 the park entrance fees provide the largest contribution. 33 There i s a need for improving access to and dissemination o f information on the GPTF functions and results as well as administrative processes. 34 Environmental Investment Fund Act (No.13 of 2001). 23 to be put into the fund in equal parts over 3 years, if resources are available. However, until today the fund has not yet been capitalized. MET has also been authorized to capitalize this fund from revenues earned exceeding projected revenue levels o f tourism concession^.^^ As the policy on concessions was recently approved in 2007, MET was not yet able to capitalize the fund through this mechanism. 3.1.2 Challenges related to the Fiscal Assessment 73. A range of measures has been identified to increase the efficiency of revenue collection, but they lack funding and capacity until today. Recent efforts by the Ministry to address revenue leakages have focused mainly on introducing cash registers to increase the security o f the collected funds and to outsource on a trial basis the transport o f revenues to banks. Moreover, since M a y 2007 NWR offers tourists the ability to pre-pay park entrance fees. In addition, the Ministry has identified a range o f additional measures to improve the Ministry’s revenue collection, including: the establishment o f a better database (on a pilot basis at Etosha park), better marketing o f the credit card payment facilities at all park entrances, and the introduction o f a loyalty- based Wild Card system (on a pilot basis).36 A detailed costing o f these measures has not yet been undertaken. However, constraints in MET’Sresource envelope has hampered the full-fledged implementation o f these measures. 74. Though GPTF has played an important part in both MET’S and conservancies’ operations and managed to support more activities with the increase in resources over the past years, evidence suggests that the resources are not adequate to address the needs o f all conservancies as well as MET. The Ministry has on various occasions proposed that a greater proportion o f park revenues be retained and allocated to GPTF. However, the Ministry was not able to keep up with the increase o f GPTF’s receipts (income) over the past years, resulting in an accumulated stock o f resources o f almost N$20 million in 2005/06. The effective and transparent management and disbursement of the GPTF’s resources constitutes a challenge for MET. 35 Following a cabinet decision it was approved that the EIF could be either capitalized with N$15 million over three financial years through a budgetary appropriation, or alternatively through revenue earned by MET, in consultation with MOF. (Cabinet Decision 23d/24.08.04/004) 36 Such a system i s practiced by national parks in South Africa. The purchase o f the card entitles the user to unlimited free access to specifiedparks for a specified period. The price depends on the group o f parks that the purchaser chooses to include. 24 3.2 Assessment o f MET’s Public Expenditures and Budget Management3’ 3.2.1 Main findings related to MET’SPublic Spending i) Financing of the Environment and Tourism Sector3‘ 75. MET’s spending has declined and fluctuated over the past years. Table 111.1 shows the overall structure o f the budget and so, MET’S total expenditures over the last f e w years. Table III.1: Overall Structure of the Government Budget - Summary Estimate of Operational, Development and Statutory Expenditure, 2005106-2007108 (N$million) Actual Estimate Estimate 2005106 2006107 2007108 President 185,7 244,5 230,2 Prime Minister 61,8 74,7 115,7 National Assembly 55,2 62,9 68,4 Auditor General 20,3 23 26 Home Affairs and Immigration 84,3 95,l 119,l Police 763,5 837,2 976,5 Foreign Affairs 239,8 243,l 272,8 Defense 1,259 1,382 1,683 Finance 2,352 3,248 3,946 Education 3,171 3,257 3,699 National Council 24,9 30,2 31,6 Gender Affairs and Child Welfare 141,4 151,9 191,3 Health and Social Services 1,334 1,395 1,683 Labour and Social Welfare 572,l 707,6 787,2 Mines and Energy 90,3 139,9 96,4 Justice 169,7 202,2 246,l Regional and Local Government 43 1,9 459,5 5 18,3 Environment and Tourism 139,3 151,l 299,9 Trade and Industry 108,2 107,9 126,5 Agriculture, Water and Forestry 619,3 640,5 652,7 Prisons and Correctional Services 173,9 20 1,2 2 12,2 Fisheries and Marine Resources 107,8 133 163,7 Works 292,7 31 1,l 357,5 Transportation and Communication 246,l 645,l 713,2 Lands and Resettlement 130,l 124,7 140,l National Planning Commission 50,7 53,3 50,4 37 In Namibia, budget information i s documented in the State Revenue Fund (SRF), the development budget, and the MTEF. The SRF i s comprised of detailed estimates of income, revenue and expenditure. The MTEF i s the main policy document and serves as the basis of discussion in Parliament while the Development budget and the State Revenue Fund are presented for accounting purposes. Most of MET’s donor aid i s not inscribed in neither the SRF nor the development budget, but documented in the MTEF. These funds do not enter through the Government budget, which makes it more difficult to derive accurate estimates of available and disbursed resources. 38 The following analysis i s based on the data documented in the SRF and therefore does not include the off-budget donor aid and GPTF which i s also off-budget. 25 Actual Estimate Estimate 2005106 2006107 2007108 Youth, National Service, Sport and Culture 156,4 189,9 205,8 Electoral Commission 13,8 998 25,7 Information and Broadcasting 192,l 158,2 154,2 Anti-corruption Commission 0 696 11)2 Veterans Affairs 0 0 22,9 TOTAL 13,189 15,268 17,827 Source: MOF 76. As shown in table 111.2 below, over the past 5 years total expenditures declined in real terms by 6 percent between 2001/02 and 2005/06. The sharp increase by 16 percent between 2002/03 and 2003/04 can be mainly explained by MET subsidizing NTB as well as an overspending o f MET budget on personnel expenditures and goods and services. The downward trend the following years is partially due to cuts in subsidies to NTB in 2004/05 and the transfer o f the Forestry Directorate to the Ministry o f Agriculture and Water in 2005/06. Table III.2: Ministry o f Environment and Tourism - central Government expenditures, 2001/02-2005106 2001102 2002103 2003104 2004105 2005106 ACTUAL EXPENDITURES Total expenditures (N$) 118.5 140.3 172.9 149.1 139.3 Total spending (as a % o f total budget expenditures) 1.7 1.7 1.7 1.2 1.1 Total spending (as a % o f GDP) 0.4 0.4 0.5 0.4 0.4 Real growth 7.4 15.8 -16.8 -9.3 NationalBudget (in real growth as a %) 12.2 13.9 19.6 -2.6 Memo CPI (end-of-period) 9.3 11.3 7.2 4.1 2.3 National Budget (estimate) 7,273 8,485 10,116 11,999 12,772 National Budget (actual) 6,797 8,413 10,201 12,642 12,679 GDP (at market prices, in millions N$) 28,158 33,141 34,607 37,385 39,562 Exchange rate (Namibia dollar/US dollar) 9.1 9.8 7.3 6.4 6.5 Source: MOF 77. Budget appropriations have increased over the past two years 2006/07 and 2007/08. The recent increases in appropriations since 2006/07 and 2007/08 are due to expenditures incurred for the Tourism Directorate (e.g., NTB and the tourism infrastructure upgrading for the 2010 World Cup), the Directorates o f Parks and Wildlife (e.g., upgrading the park infrastructure in view o f the 100 years Etosha Park celebration in 2007), and MET’s administration (e.g., the construction o f the new headquarters). In the current fiscal year 2007/08, MET’s budget envelope i s the largest ever when compared to past years with N $ 299 million (around U S $ 43 million), accounting for 2.3 percent o f the total Namibian budget and 0.6 percent o f the country’s GDP. As shown in figure 111.4 below, this i s a temporary sharp increase as appropriations within the 2007/08-2009/10 MTEF are expected to drop, on average, to N $ 210 million (US$ 30 million) for the next two years (2008/09 and 2009/10). 26 Figure III.4: MET- budgetary allocation 2001/02-2009/10 (N$million) 350 300 250 200 150 100 50 0 2001/02 200Z03 2003/04 2004/05 2005/06 2006/07 2007/08 2008/09 2009/10 Budget Budget Budget Budget Budget Budget Budget Budget Budget forecast forecast Source: MOF 78. Among the middle-income countries o f Latin America, Colombia i s perhaps the best comparator since it has similar levels o f income per capita and share of Government expenditures in GDP. Namibian expenditures o n environmental protection compare favorably with Colombia and, as expected, are lower than the levels seen in higher income countries such as Chile and Mexico. These figures, however, are only indicative, since there i s no guarantee that environmental expenditures are defined similarly across different jurisdictions in other countries. Furthermore, there i s n o ‘correct’ level o f expenditure on the environment-the use o f public resources should be proportional to the environmental benefits they create, and these can vary widely across countries, with varying environmental conditions and levels o f development. I t is nonetheless useful to benchmark environmental expenditures across countries. Within Africa, Namibia i s clearly spending more on environmental protection than a lower income country such as Ghana. Madagascar i s a less ideal comparator because o f the very high level o f donor support for biodiversity conservation. 27 Table III.3: Environmental expenditure as share o f GDP and central Government expenditure Yo o f GDP YOo f Central Gov. Expenditure Ghana 0.02% 0.10% Madagascar 0.47% 2.00% Namibia 0.24% 0.70% Argentina 0.10% 0.55% Chile 0.48% 2.57% Colombia 0.30% 0.96% Mexico 0.65% 4.22% Source: Namibia, State Revenue Fund 2005106 Ministry o f Environment and Tourism; Ghana 2005 Appropriation Act, Ministry o f Environment and Science; Madagascar Ministry o f Finance (Loi des Finances 2005); Latin American countries: World Bank 2006, Environmental Priorities and Poverty Reduction: A Country Environmental Analysis for Colombia, Washington: The World Bank. (Figures for Latin America are for 2003) 79. An international comparison of tourism capital expenditures with selected Namibia’s competitors suggests an under-capitalization of the tourism sector in Namibia.39Capital investment in the Namibia tourism sector in 2006 was forecast to account for U S $ 212.6 million in 2006. In comparison, Tanzania (US$ 366.6 million), Kenya (US$ 509.7 million), Mauritius (US$391.7 million), and South Africa (US$ 6,095 million) are all investing much more heavily in the tourism sector. The l o w sector capitalization means many prime tourism areas o f the country remain vastly underdeveloped. 80. A comparison of appropriations among different natural resource management ministries shows that the Ministry of Agriculture, Water and Forestry (MOAWF) receives the largest share of the budget. When comparing appropriations o f MET with other environment and natural resource management Ministries (Table 111.3 below), one finds that MOAWF receives the largest share o f budgetary allocations (around 3.7 percent) in 2007/08, while funding o f other sectors (Mines and Energy and Fisheries) and MET amount to less than 2 percent o f the total national budget. The large budget for MOAWF can be explained by it’s the national development importance to its rural population and Government’s role in providing large investment related services. In contrast, Government has more o f a regulatory and oversight function in the other natural resource management sectors. 39 Millennium Challenge Account Namibia, draft proposal, 2007. 28 Table III.4: Namibia central budget allocations to Natural Resource Management Ministries (as a YOo f national budget) 2001102 2002103 2003104 2004105 2005106 2006107 2007108 Budget Budget Budget Budget Budget Budget Estimate Environment and 1.3 1.2 1.3 1.1 0.9 1.o 1.7 Tourism M i n e s and Energy 1.o 0.9 0.8 0.8 0.8 0.9 0.5 Agriculture, Water 5.4 4.9 4.4 4.4 5.2 4.2 3.7 and Forestry’ Fisheries and 1.1 1.1 1.o 0.9 0.9 0.9 0.9 M a r i n e Resources Source: MOF Appropriations Acts; MOF-SRF’ Prior to 2005/06, the Ministry o f Agriculture and Forestry included Rural Development while Forestry was under the aegis of MET. ii) Sources offinancing4O 8 1. Domestic resources represent the main source o f financing of MET’Sbudget. MET relies on three types o f sources o f revenues: fiscal revenues, GPTF, and donor assistance. As shown in figure 111.5 below, over the observed period 2002/03-2007/08 domestic resources represented, on average, around 80 percent o f MET’S budgetary allocations. Though most o f the domestic resources derive from Government’s fiscal revenues, the Ministry also receives a small amount o f domestic resources available through GPTF, amounting to 5.2 percent o f MET’S total domestic resources in 2005/06.41 MET has an important amount o f discretionary influence on its spending which gives the Ministry a degree o f flexibility in managing public finance. Figure III.5: Sources o f financing o f MET budget, 2002103-2007108 (N%000) I 100% 80% 60% 40% 20% 0% 2002/03 2003/04 2004/05 2005/06 2006107 2007108 0 Allocated domestic resources 0 Planned external assistance Source: MOF, State Revenue Fund, MTEF, MET GPTF data base Note: The figures related t o planned external assistance take into account only programs executed by MET; others, for example funded by WWF and U S A I D are not included. ‘O In order to present all sources o f the Ministry’s financing together, the following section also includes the off-budget funding, namely from donor aid and GPTF. 4’ GPTF figures are based on actual expenditures given that planned expenditures are not available. The information on the available funds for the year 2006107 and 2007108 was not yet available. 29 82. Furthermore, private sector financing has played a growing role over the past years but actual figures are not available. The private sector has increasingly supported investments with direct impact on environmental ecosystem services and investments in private and communal conservancies, or, for example, on the coast which directly contributes to achieving MET’s objectives. i i i ) Spending by Directorate 83. The Directorates of Parks and Wildlife, Tourism and Administration consume the largest share of MET’Sbudget (on average 77 percent of the total MET budget over the period 2001/02-2005/06), whereas the DEA, responsible for standards, regulations, and policy planning in the sector has only a small budget (on average 2 percent over the same period). In terms o f MET’s funding o f its programs, there is a general prioritization o f the Ministry’s budget in favor o f the protected area management that notably i s managed by the Directorate o f Parks and Wildlife and represents 44 percent o f MET’s budget in 2006/07. This i s due to the high number o f staff and recurrent cost involved; though this i s s t i l l insufficient to ensure adequate maintenance o f the parks i n f r a s t r ~ c t u r e . ~ ~ Figure III.6: Actual spending o f MET divisions 2001/02-2006/07 (YO) 100% 80% 60% 0 Science Services 40% 20% 0% 2001102 2002103 2003104 2004105 2005106 2006107 Actual Actual Actual Actual Actual Revised budget Source : MOF (State Revenue Fund) 42 Other programs o f MET’s other programs include the protection and management o f key species and natural resources, CBNRM and tourism, regulation o f environmental protection and sustainable resource management, tourism development, and improving the economic value o f natural resources and protected areas under MET’s jurisdiction. 30 iv) Composition of MET expenditures by economic category43 84. As shown in table 111.4, recurrent expenditures account for almost the entire MET spending (on average for 95 percent between 2001/02 and 2005/06). Expenditure on personnel i s the largest spending item within MET’s budget, representing on average 48 percent o f total MET spending over the period 2001/02 to 2005/06. In the context o f Government’s reintegration program o f Namibia’s ex-combatants, MET had to take over 500 ex-combatants in 2000 and 500 in 2001. The salaries o f this additional staff were included in the 2002/03 budget and accounted for the growth in remunerations by 20 percent between 2001/02 and 2002/03. The drop in 2005/06 i s related to the transfer o f the Forestry Directorate with all i t s staff to the Ministry o f Agriculture and Water. Spending on transport accounts was the second largest spending item. Most o f MET’s subsidies and transfers serve to subsidize NTB. Table III.5: MET expenditures and allocations by economic category, 2001102 to 2007108 (share of the total budget) 2007108 2001102 2002103 2003104 2004105 2005106 2006107 F o r e Actual Actual Actual Actual Actual Budget cast TOTAL Recurrent Expenditures 86.5 95.0 95.5 96.7 96.6 65.4 Personnel Expenditure 44.2 49.5 45.2 53.6 47.5 23.3 Remuneration 38.6 44.6 40.0 48.2 41.4 20.8 GIPF (Pension fund) 5.2 4.7 4.8 5.0 5.5 2.3 Other 0.4 0.2 0.4 0.4 0.6 0.2 Goods and other Services 30.9 37.0 33.5 30.9 33.5 16.7 Travel and Subsistence Allowance 6.0 7.0 6.2 4.5 3.3 5.7 3.3 Transport 16.4 20.2 17.9 16.7 18.8 11.5 6.9 Utilities and Maintenance 5.2 6.9 6.5 6.7 8.3 4.9 3.4 Other services and expenses 3.2 2.8 2.9 3 .O 3 .O 4.3 3.1 Subsidies and other Transfers 11.4 8.5 16.8 12.2 15.7 21.1 25.4 Capital Expenditures 4.4 0.5 1.o 1.4 1.4 1.4 0.5 Development budget 9.0 4.5 3.5 1.9 2.0 7.5 34.1 TOTAL 100.0 100.0 100.0 100.0 100.0 100.0 100.0 Source: MOF (SRF) 85. I n the past years, operation and maintenance funding of MET programs have been underfunded. Budget cuts in 2004/05 and 2005/06 affected in particular transport, travel, and subsistence allowance spending items. This has adversely affected the Directorate o f Parks and Wildlife as i t had not sufficient finds to maintain the park infrastructure, equip their staff (e.g., with uniforms), and carry out law enforcement. 43 The figures do not include off-budget financing by the development partners which limits the assessment o f the distribution between recurrent and development expenditures to domestic resources. 31 86. Internal funding of development expenditures i s small. Public investment in the sector has not constituted a priority for the Government over the past 5 years given that development expenditures have consistently declined (on average by 30 percent in real terms) over the observed period 2001/02 to 2005/06. With the preparation for two ’ important national events (the 2007 Etosha park celebration and the World Cup in 2010), MET succeeded in significantly increasing budgetary provisions for development for the last two years, 2006107 and 2007/08, by 192 percent and 760 percent in real terms respectively. W h i l e this reflects Government’s acknowledgment o f the sector’s important role to income generation and poverty reduction in light o f these national events, i t raises the questions: (i) whether the Ministry will be in the position to increase i t s absorption capacity significantly in this one year period and achieve a satisfactory rate o f implementation and (ii) how recurrent cost implications will be considered in future budget planning. I t i s important to note that this increase has not been foreseen in the Ministry’s three-year rolling budget and therefore did not give much time to MET to strengthen i t s institutional capacity. v) Assessment of MET’S budget execution 2001/02-2005/06 87. MET experienced significant budget overruns over the past years. Over the past years MET overspent i t s budget significantly, resulting in an execution rate o f 113 percent on average over the years 2002/03 to 2005/06 (Table 1 115 below). The largest . overspending categories are personnel expenditures, goods, and services and have been mainly created by the Parks and Wildlife Directorate. The budget overrun o f the Directorate o f Parks and Wildlife can be partially explained by (i) appropriations that were not sufficient to cover increased expenditures incurred by the increased additional staff (for example per diem, camping allowances, uniforms, etc.), (ii) the l o w level o f adequate financial control by the Directorate’s headquarter on spending carried out by the regional offices related to transport, subsistence expenses, and utilities, (iii) the lack o f realism in the initial estimate, and (iv) the difficulty o f the Directorate to budget for emergencies. Because o f the budget overruns, the Ministry has been depending on the supplementary budget. This pattern o f spending strongly endorses the call for budgets that are more realistic, budgeting discipline, and the use of a contingency fund in case of emergencies. 88. MET’S execution performance related to capital and development expenditures i s very weak. This l o w level o f capital and development spending i s a characteristic across all directorates. I t can be explained by three factors: first, delays in budget approval by Parliament resulting in delays in budget implementation (the 2005/06 national budget was approved in August 2005/06, most other years the budget was approved in June); second, cumbersome procurement procedures; and third, in the case o f budget approval delays by Parliament, regulations in the Finance Act that limit the provision o f operational and development resources to 33 percent o f the previous year. There i s concern about weak execution performance in particular in view o f a strong increase in budget provisions for development expenditures over the past two years, 32 while past performance suggests that the capacity o f the Ministry for planning and implementation o f development projects may need to be strengthened. 89. Among the directorates, the Directorate of Environmental Affairs has the lowest execution performance amounting to less than 80 percent over the observed period 2001/02 to 2005/06 (Table 111.5. below). The l o w spending on personnel expenditures can be partially attributed to the low payment rate o f consultant works and to positions that could not be filled during the fiscal year. Nevertheless, the severe underspending across all other categories (notably subsidies and transfers and capital) in particular in 2005/06 suggests that some weaknesses in DEA’s budget implementation capacity exist. 33 Table III.6: MET budget execution rate by directorate, 2001102-2005106 (YO) DIRECTORATES 2001102 2002103 2003104 2004105 2005/06 Office of the Minister 107.4 139.2 94.3 85.6 86.4 P.E 100.8 98.6 71.7 72.4 80.3 Goods and Services 120.0 195.1 141.8 108.4 94.3 Capital 66.7 34.3 55.6 42.6 112.0 Administration and Support Services 95.1 67.2 117.4 108.2 103.6 P.E 96.8 53.4 93.6 119.4 119.3 Goods and Services 90.2 97.4 150.4 102.7 92.7 Capital 115.6 20.8 41.3 31.2 91.2 Development n.a n.a n.a n.a 83.7 Parks and Wildlife 99.9 126.4 144.5 137.8 146.8 P.E 100.0 108.9 127.2 118.7 136.0 Goods and Services 100.2 189.2 201.2 233.7 181.5 Subsidies and transfers 71.1 11.1 7.6 16.0 51.4 Capital 100.0 36.3 58.4 47.9 87.4 Development 100.0 73.4 90.4 75.2 64.3 Science Services 103.5 103.7 96.6 83.5 79.3 P.E 110.2 110.4 98.0 87.7 79.4 Goods and Services 92.6 104.5 98.0 84.3 80.4 Subsidies and transfers 64.8 45.5 ' 178.6 27.5 128.3 Capital 146.3 14.4 67.6 43.5 34.7 Tourism 101.6 94.2 97.5 92.9 97.0 P.E 106.3 122.9 96.3 72.6 88.9 Goods and Services 118.1 192.3 63.7 68.7 126.1 Subsidies and transfers 100.0 86.5 99.1 97.1 98.1 Capital 100.0 83.2 53.6 4.6 67.2 Develonment 100.0 48.6 85.2 n.a n.a DEA 83.2 88.9 77.5 77.4 70.8 P.E 81.6 82.4 96.5 95.2 66.3 Goods and Services 102.6 98.9 67.2 52.0 86.2 Subsidies and transfers 102.6 0.0 145.7 173.6 21.7 Capital 101.6 75.5 68.0 0.0 45.2 Forestry" 104.9 77.6 84.1 97.7 n.a. P.E 100.0 73.5 80.0 97.4 n.a Goods and Services 73.5 134.3 106.8 111.3 n.a Subsidies and transfers 134.3 56.4 0.0 35.8 n.a Capital 56.4 62.3 86.2 16.0 n.a Development 62.3 36.6 93.1 92.4 n.a TOTAL. 100.0 101.5 112.5 110.2 115.5 Source: MOF (SFW) ')The Forestry Directorate was transferred to MOAWF in 2005/06. vi) Fiscal deconcentration 90. The regional offices are underfunded and weak on budget management. The regional offices are financed currently through the budget o f the Parks and Wildlife Directorate. Discretion over deconcentrated layers o f personnel and budget management 34 at the regional offices remain very limited as all expenditures are managed and executed from MET centrally. For a few years, non-salary recurrent expenditures (for example overtime and transport expenditures) are deconcentrated at the regional offices, while expenditures subject to procurement continue to be approved by the central Parks and Wildlife office. 91. The underfunding o f the Parks and Wildlife Directorate operating budget (especially o f goods and services) has influenced the delivery o f services at the regional offices resulting in a deterioration o f the park infrastructure, inadequate control and enforcement, and inadequately equipped personnel. Efforts by the Directorate to address this situation are reflected in the budget overruns between 2003/04 and 2005/06. However, a lack o f fiscal discipline by the implementing units on spending items such as overtime, transport, and utilities (which cannot be controlled by the central administration) compounded by weak budget control at the regional offices are also key factors contributing to the budget overruns. 92. An assessment o f the distribution o f expenditures to the regional offices was not possible owing to technical weaknesses o f the Parks and Wildlife Finance Unit to provide a comprehensive data set for the recent years. Also, a coherent database that would allow mapping o f external and domestic budgetary allocations and expenditures at the regional level doesn’t seem to exist, which in turn impacts strategic budget planning. vi9 Donor assistance 93. Donors’ contributions are important in funding the Ministry’s budget but are largely spent outside Namibia’s budget. This results in a rather distorted picture o f planned and actual expenditures in the sector. At present, MET i s implementing six off- budget programs in 2007/08, amounting to an estimated budget envelope o f N$37.8 million (US$ 5.4 million).44 In general, donor assistance declined by 41 percent in real terms over the past 5 years, from N$50.8 million in 2002/03 to N$37.8 million in 2007/08. Some o f the main donors in providing financial assistance constitute the GEF funded by the Bank and the United Nations Development Programme (UNDP) and the German cooperation. As mentioned above, most o f the donor assistance to MET consists o f technical assistance but i s also combined with infrastructure components in the area o f climate change, capacity building at MET, support o f the Northeastern parks, clean production technology, National Protected Area Network, coast conservation and management, as well as integrated community based ecosystem management. 94. There are concerns about the sustainability o f Government programs on environment and tourism, given the high degree o f donor funding compared to Government funding for the sector. This concerns in particular the CBNRM Program that has been largely supported by donor funding for the last 10 years and requires a long- term sustainable funding strategy. 44These figures are based on the information provided in the MTEF and therefore do not include the Namibia-Finland Forestry Program that i s documented in the NPC. 35 95. The tourism sector will obtain substantial funding through MCA over the next years that provides an opportunity to maximize the contribution o f tourism to economic growth and poverty reduction in Namibia. The Namibia M C A seeks to support the tourism sector with a total estimated budget o f US$ 96.9 million over a five- year period (2008-2013).45 The M C A aims to unlock the tourism potential o f many o f Namibia’s protected areas and create strong linkages between park and conservancy development and rural poverty alleviation through increased private sector investment and involvement. The main beneficiary would be members o f conservancies and all people involved in the tourism industry inclusive o f communal and commercial enterprises. Overall, the M C A Namibia investment will complement on-going initiatives, including the ongoing C B N R M Program but i t will not replace the resources invested by Government, NGOs, and other partners to build the capacity o f conservancies. Given current MET capacity, managing the M C A fbnding and implementation o f activities i s likely to be a challenge in itself and will require prior planning within MET. 3.2.2 Challenges related to MET’SPublic Spending and Budget Management i) Issues related to MET’Sbudget management 96. MET made some good progress in the preparation o f its MTEF, but key challenges in budget planning remain.46Weaknesses exist in budget planning at the regional offices, the centralized planning process, the per-unit costing o f spending items, the economic analysis o f projects, and the coordination between the recurrent and development budget. Some o f the weaknesses in budget planning can only be addressed by Government’s reform agenda (e.g., the dual budget preparation on program and line- item basis given that the accounting system i s s t i l l on line-item basis). 97. There i s also a need to strengthen financial control, accounting procedures and accountability at the regional offices in order to align budget appropriations better with budget execution. The Integrated Fiscal Management System (IFMS) has contributed significantly to strengthening MET’S fiscal discipline, however, the main challenge for the Ministry is that the regional offices are not tapped into the control system.47 Certain spending categories, which are paid post de-facto (Le. overtime, telephone bills, and transport charges to Government garage) are executed at the regional level, but are out o f the proper commitment control system and contributed significantly to budget overruns in the past. Furthermore, the limited number o f staff (currently only one person) makes i t impossible to integrate the cost centers o f all directorates, to ensure 45 The focus of the MCA Namibia Program i s twofold: (i) poverty reduction through economic growth and (ii) economic transformation. The program i s comprised of four components: resource development and management, marketing, barriers removal, empowerment and capacity building. 46 Namibia introduced a range of reforms over the past six years, the most important are a MTEF, medium term plans (MTPs) for each vote and PEMP. (See Namibia CEAPER Volume I1 for a more in-depth assessment.) 47 Note Namibia’s internal control system has a well-built financial control through a strong centralization of the payment system. All payments are made by MOF through the treasury single account. The centralized control system seeks to prevent the emergence of off-budget funds, budget overdrafts, and the misuse o f funds. This system had been strengthened significantly with the introduction o f IFMS. IFMS was introduced for all sector ministries by the MOF in 2006/07 and seeks to eliminate overspending and enforce spending discipline. 36 timely coherence between data collected by the Directorates and data available in the I F M S as well as to report regularly on the Ministry’s disbursement status to MET’s management. The efficiency o f MET’s procurement has been partially impacted in the past (e.g., related to the low threshold ceiling or the exemptions o f the tender board that allow spending on certain items outside the control o f MET, etc.). Following the significant increases in the development budget for the year 2007/08, the current mid- year slow disbursement rate suggests that the Directorates need to build significant technical capacity (notably related to procurement). This concerns particularly the Tourism Directorate that is responsible for the implementation o f the N$ 41 million development budget in 2007/08, but has neither the staff nor the training on procurement to ensure a timely execution o f its program^.^' 98. The implementation of donor aid outside MET’s budget has some advantages for the Ministry but constitutes a key challenge related to the Ministry’s aid management. On the one hand, the outside budget provides several advantages such as the accessibility to donor aid, since some donors would not have been able to provide assistance otherwise, and the guarantee o f funds, whereas in the case o f budget support the Ministry would be obliged to constantly negotiate the funds with MOF. 99. O n the other hand, the varying disbursement and monitoring requirements from multiple donors, poses substantial management costs for the ministry. As a result, currently, the ministry manages to monitor donor aid for only the purpose o f reporting to donors. Less monitoring i s conducted for program management purposes. An additional issue faced by the ministry i s the sustainability o f a project and whether recurrent cost implications have been taken into account and will need to be covered by the Ministry’s operational budget in the future. In addition, information on the level o f counterpart fbnding and the Ministry’s capacity to provide these fbnds i s not well documented. 100. In Namibia, Government’s policy i s that donor assistance should be channeled through the state revenue fund as this lowers the transaction cost, assures the programs are within Government’s priorities, and are less susceptible to mismanagement. However, this depends to a large degree on the willingness o f the donors to channel their funds through the SRF and the line ministry advocating the integration o f assistance in the budget. 101. Another challenge for MET i s the monitoring and evaluation of the sector programs’ performance, which i s important in view of the reinforcement o f its programs, and planned in the context o f the SP. While MET has made significant 48 These programs include in particular: the Community Tourism Lodge Development (N$ 20 million) and the Community based tourism development program (N$21 million). 49 In the Namibian SRF, project assistance in form of grants i s subject to the same Government procedures a s budget support and therefore i s not inscribed in the budget as a separate budget line. Certain donors are not comfortable with this system as it makes it impossible to earmark funds in the budget of the beneficiary ministry as well as to track the utilization of external aid. At the same time, given the overall limited contribution of donor assistance to the national budget, in the past years the inclusion of donor assistance in the national budget has not been a priority for the MOF so it made it possible that a range of donors assistance was not included in the development budgetor in the SRF. 37 progress over the past years in improving i t s database and capitalizing on some o f i t s indicators established under PEMP, monitoring and evaluation o f the sector programs’ performance and impact i s s t i l l weak.” In the context o f Namibia’s public finance reform agenda, the Government developed a PEMP that aims to assist sector ministries in assessing the effectiveness o f their expenditures and setting accountability targets. Despite some achievements related to improving the Ministry’s database and generating better information on the economic contributions o f the sector, MET was not yet able to use PEMP as an effective operational performance management tool. A key shortcoming is that the indictors are not attached directly to either the programs or the budget. Additionally, the lack o f coordinated data collection and sharing and the absence o f an operational National Environment Information System (EIS) constrain the evaluation o f environmental impact o f Government and donor funded programs at national level. ii) Financing of MET’S SP 102. To implement the SP, MET will have to mobilize support and funds among the development partners. However, this constitutes a challenge as some important development partners have already or are windin down their support, e.g., USAID, DFID, SIDA, Finnish Embassy, and DANIDA ”. The European Commission, an important partner in the sector in the past years, recently conducted a Country Environment Profile but has not yet indicated if it will provide further support in the future. 103. Despite the important growth opportunity for the sector under the MCA, a main challenge for the sector i s its capacity to implement the large investment program (on average U S $ l 9 million per year). According to the investment proposal, the activities will be funded in a phased fashion (outside Namibia’s SRF), with a primary emphasis on the front-end loading o f capitalization cost during the first three years and dissipation o f recurrent costs during the remaining two years (4-5). MET i s currently assessing the recurrent cost implications for the sector on the long term. The investment envelope o f the Ministry (including donor aid) amounts to U S $ 20 million (constituting an exceptional one time substantial investment budget) in 2007/08 but needs to be accompanied with capacity strengthening measures to ensure adequate planning and implementation (notably related to procurement). Given past implementation record, it i s questionable that any o f the public sector implementation agencies will be able to keep up with the speed and scope o f the M C A implementation over the short period o f five years. Though the M C A program i s designed to ensure a financial sustainability o f the activities (including components such as a cost-sharing mechanism and a focus on management efficiency and decentralization o f park management), the assessment i s based on several optimistic assumptions that are likely not to materialize, such as the reduction o f maintenance cost due to new infrastructure, the establishment o f 20 additional financially 50See Namibia CEAPER Volume I1 for a more in-depth assessment. USAID funds have been implemented through NGOs with the World Wildlife Fund (WWF) being a key co-investor and the Namibia Nature Foundation (NNF) being the main subcontractor. Though these funds are not documented in the MTEF, important funding was provided by USAID over the past years to support Namibia’s CBNRM Program. 38 self-sufficient conservancies and an estimated 25 community-lodges, or the return o f all gate entrance fees to park management.52 104. Under the Namibia MCA, a substantial investment o f US$12.9 million over a five-year period i s also planned for marketing Namibia’s tourism products, which will gear NTB to a higher platform o f operation and expand its effectiveness into the U S and emerging markets in Europe. The implementation o f this program will require intensified efforts by NTB and the private sector to build on existing mechanisms and increase the scope of their existing marketing approach. 52 MCA includes the following funding mechanism: a) capacity building and training, b) public-private partnership with MCA providing the public investment portion into joint venture driven by business principles, c) public investment in infrastructure to unlock private sectorhusiness opportunities, and d) revolving funds. No grant or equity funding would be made directly available to companies or private individuals. However, equity support to community owned ventures (for example conservancies) could be considered. Technical assistance and research could be considered but only when of an immediate supportive nature for the main action. 39 IV. Recommended actions 105. This study presents an important opportunity for GoN, in particular MET and all relevant stakeholders in the sector, to bring to mind again the importance o f natural resources in national economies, the achievements and current constraints in the sector’s legislative and policy framework, MET’Sinstitutional capacity to accomplish i t s mission, as well as the effective and efficient utilization and management o f the Ministry’s public expenditures. The main objective of the report i s to assist the Government in the implementation of MET’s SP as well as in reinforcing its dialogue with MOF and the development partners. 106. Now that MET has finalized its SP, the Ministry would need to appoint a task force (under the SP) to launch the implementation of the Plan and to follow-up on the CEA action plan. The task team should meet on a frequent basis and the taskforce team leader should be employed on a full time basis to ensure a well-managed and monitored process. 4.1. Recommendations 107. As the C E A seeks to assess some o f MET’S key policy, institutional and financial challenges in the context o f the Plan’s implementation, several cross cutting themes emerge that may constitute a list o f prioritized measures to address the environmental challenges described in table 1.3. that the Ministry may wish to embark 0 d 3 : 1 1. Improving and implementingMET’s policy and legislative framework I 108. With the tourism sector being one o f the fastest growing sectors, there i s a strong need to provide a regulatory policy framework. The policy should cover issues o f coordination across public and private sector entities, tourism development planning, regulation, the role o f public sector enterprises, and tourism promotion. It would also be important to lay out the framework and responsibility that will be important to unlock private investment and financing through a sound business climate. The policy i s currently for approval at MET’s management level. I t would be important that MET’S senior management approves the tourism draft policy so that it can be submitted to Cabinet and Parliament in 2008. 109. Finalize the drafting of the outstanding legislation. After the recent passing o f the EMA, the finalization o f the outstanding legislation and policies (in particular the Parks and Wildlife Management Bill as well as the Pollution and Waste Management ’’ Please see the action plan that i s comprised o f the CEA recommendationsand proposed actions. These are grouped according to a short- (up to 1 year) and medium-term (up to 3 years) timeframe and are attributed to the responsible ministry or public or private agency. 40 Bill, the Parks and Resident Neighbors, and the Human-Wildlife Conflict Policy) should constitute a priority for the Ministry as they represent together MET’s empowering legal framework. In addition, a draft MET C B N R M Policy Framework and Implementation Guidelines i s available and should be endorsed in 2008 by MET. Additionally, new policies and legislation needs to be drafted to address emerging environmental challenges and issues related to climate change, urban environment, and coastal zone management. For all these processes, the Ministry should mobilize assistance if needed and take the lead on consulting stakeholders. 110. Regulating private sector activities. Furthermore, the private sector plays an increasingly important role in the sector, contributing to growth by using resources on a renewable and non-renewable basis. Private companies have invested in communities and state land to support the aim o f improved environmental management o f wildlife and natural resources. Growing private sector activities in wildlife management and use (game farms, game reserves, hunting, live exports, etc.) as well as overall increasing mining and tourism activities suggest a review and adjustment of the Ministry and the private sector roles and responsibilities in the area o f wildlife management environmental impact assessment, urban environmental management, and tourism development including community-based and concession. The Ministry’s recently approved and draft policies and legislation demonstrate an encouraging trend towards shifting from regulation and control to facilitation, extension support, and compliance monitoring whereas the private sector i s taking on a more responsible self regulatory role; in order to address cost-effectively and through partnership arrangements the existing and fbture sector challenges. 111. Establish a process and set of procedures for policy development, implementation, and monitoring. A clear process is required identifying who i s responsible for policy development and how this should take place, including internal and external consultations and participation, and procedures for policy approval. With the introduction o f a number o f new policies, a system needs to be set up for monitoring the implementation of policies based on data gathering on the impact o f implementation and the analysis o f any gaps or required changes in policy. There should be provision for the review of policies after an appropriate implementation period. I 2. StrengtheningMET’s institutionalcapacity 112. Reinforcing MET’s institutional capacity at the central level. The Ministry i s currently conducting a study on reorganizing options for the Ministry. Following the outcomes o f the study and the expected DIP, i t would be important for MET to establish a human resource management and development plan that i s comprised of the training and other capacity building54 needs related to: i)the new responsibilities under EMA, i i) the tourism concession and wildlife concession policy, and i ii)budget management. This plan should be part o f MET’s annual business plan. Furthermore, the reorganization o f the ministry constitutes an opportunity to address (i) institutional inefficiencies (e.g., a 54In addition with a MET specific training and recruitment plan tailored according to identified needs, sub-sector specific (CBNRM) and mostly on-the ground related tasks will continue to be outsourced to NGOs. 41 review o f i t s core functions and the option to outsource some o f the services o f the Directorate o f Scientific Services that could free resources for other Directorates or to build more on synergies among the Directorates), ( ii)strengthening o f MET’s regional offices (e.g., establish DEA representation at the regional offices to enforce EL4 and monitor environmental management plans), (iii) the installation o f a MIS, together with (iv) the establishment o f a policy, planning, and monitoring unit within MET to allow for improved policy development and monitoring a better utilization o f management information, and to improve the Ministry’s reporting on mid-year budget execution. 113. MET has to prepare itself for the new responsibilities under EMA and adequately plan for it. Some important measures involve: (i) the establishment o f the Sustainable Development Advisory Council, ( ii)the appointment o f an Environmental Commissioner at the appropriate authoritative level, together with the support structure consisting o f Environmental Officers and their functional and administrative organizations. MET would also have to: provide assistance to the process o f drafting the required environmental management plans by the institutions affected by the Act; facilitate approval and acceptance and ensure compliance; and ensure the implementation o f the environmental assessment process (including registering applications, reviewing assessment reports, preparing environmental clearance certificates, ensuring adherence to international agreements or conventions, deal with offenders, etc.). 114. Reinforce the regional offices. This would involve the strengthening o f the mandate o f the regional offices. Moreover, it would be important to strengthen the budgeting capacity o f the regional offices in order to allow for adequate financial data analysis and better information sharing between the regional and central levels. Inlight o f the limited training and financial capacity o f the regional offices, MET should submit a formal request to MOF and OPM for the creation o f accountants positions for each region on the staff roster o f MET. I n the meantime, accountants from the Directorate Administration and Support Services should be tasked as part o f MET’s deconcentration (decentralization) plan to move to the main regional offices. Additionally, measures should focus on the association o f the regional offices in the discussion o f the budget committee, the transmission o f budget ceilings to the regional offices before their budget planning, and the dissemination o f the appropriated budget ceilings. 115. Increase public access to environmental information (e.g., through “The Access Initiative” (TAI)). To continue MET’s public consultation and engagement with stakeholders during the implementation o f i t s SP, MET could be a champion by supporting TAI or any similar movement to reinforce public consultation and transparency in light o f the implementation o f i t s SP. T A I is a global coalition o f civil society groups that promote access to information, participation, and justice in decision- making that affects the e n ~ i r o n m e n t . ~ ~ 55The coalition works to hold national Governments accountable for their commitments to these ideas as expressed in Principle I O o f the 1992 Rio Declaration and more recently in the 2002 Johannesburg Plan o f Implementation. TAI partners use a common methodology to conduct national-level independent assessments o f both law and practice. 42 I 2 a) Reinforcing local service delivery I 116. Clarify respective roles and responsibilities between MET, RCs and other involved Ministries. Taking into consideration the limited technical and financial capacity o f the RCs in the area o f conservation and environmental management, MET’S efforts could be focused on: i) initiating and facilitating the process o f streamlining key environmental legislation that would improve the workings o f sub-national Governments; ii) strengthening communication between MET, RCs and other involved Ministries to render law enforcement more effective and to clarify land ownership (for example the dune belt area at Walvis Bay); iii) pursuing a close working relationship with the RCs; iv) improving environmental awareness amongst high-level decision makers at local, regional, and central levels on the importance and vulnerability o f Namibia’s natural habitats and the need to address this through policy, legal, financial, strategic, and operational measures, and v) using the opportunity (with the recent approval o f the EMA) to vigorously strengthen the regularity and quality o f E I A s . ~ ~ 117. Document and disseminate the “best practice” experience o f Walvis Bay in other municipalities. Until today, only two Local Authorities (Windhoek and Walvis Bay) have started implementing Local Agenda 2 1. MET should encourage and actively supports local authorities throughout Namibia to establish Local Agenda 2 1 mechanisms within their constituencies. The highly successful bottom-up experience o f the Municipality o f Walvis Bay could be replicated at other Municipalities. The documentation and wide dissemination o f Walvis Bay’s approach to local environmental management should be encouraged. 118. Decentralizing some of the Ministry’s functions. I t i s recommended that MET focus o n finalizing the Ministry’s decentralization implementation plan that would lay out the devolution o f some o f the Ministry’s functions to local authorities, e.g., the devolution o f park management and C B N R M including consideration o f alternative management systems (such as Public-Private Partnerships). This would need to be accompanied with local capacity building. 119. Supporting civil society based initiatives and organizations by forming partnerships with Governmental authorities in environmental awareness building and environmental management support provides another venue o f increasing (local) service delivery (Example in box IV.1 below). ’‘ See also SAIEA, Namibian Coast Conservation and Management (NACOMA) Project - Issues and options for institutional mandates, policies and laws relating to coastal management, July 2007. 43 Box IV.l: Interim Management Plan between Walvis Bay and Swakopmund The establishment o f the Interim Management Plan for the dune belt between Walvis Bay and Swakopmund i s an example where concerned stakeholders, (consisting o f private citizens, officials from local and RCs, law enforcement officers, and tourism operators) took the initiative to draft a plan o f action that would help reduce the impact o f holiday makers on the ecologically sensitive areas o f the dune belt. The NACOMA Project actively supported the initiative. The example illustrates that c i v i l society can manage the environment even in the absence o f stringent laws. If such movements are officially supported, they can assume much o f the non-core fhctions o f MET on a cost-effective basis. 120. Create a DEA Environmental Management position based in the Erongo Region (possibly at the Erongo Council) to serve initially as MET’s contact point for the coastal and environmental management. I 2 b) Strengthening inter-ministerial, NGO-Governmental and donor coordination I I and harmonization 121. The implementation of the Ministry’s SP will need the participation o f the development partners as well as other ministries (e.g., MOAWF, the Ministry o f Fisheries and Marine Resources, etc.) involved in the sector. I t i s therefore important that MET establish regular discussion forums and meetings. The Ministry could establish: an annual sector review, organized at the beginning o f the fiscal year with the aim to update donors on sectoral priorities, review physical and financial progress and coordinate assistance. Apart from the development partners, other stakeholders including NGOs, MOF, and representatives o f the private sector could participate in this review; and a roundtable every four months under MET’s leadership to assist the sector in strengthening the dialogue with the donors and the efficiency o f procedures. The review could also provide an opportunity for MET to discuss the implementation progress o f the M C A funding and the areas o f support needed to strengthen the Ministry’s implementation capacity. 122. A better coordination of activities with other Ministries would allow an increased contribution from other sector ministries to the financing and implementation of priority actions identified in MET’S programs and which offer strong synergies (e.g., coastal zone management, EIA, CBNRM, Tourism). In some specific areas, MET could maybe even become an executing agent for funds from other Ministries. 123. Budget support i s the preferred financing instrument by the GoN allowing better alignment o f aid to Government strategies and procedures, to render public 44 expenditures more efficient, and to harmonize donor assistance. Currently, the sector remains dependent on donors that, for the vast majority, still provide their support in terms o f a project, each with their o w n specific modalities and procedures. The Ministry’s efforts to strengthen i t s budget process and reporting while embarking on a comprehensive sector development program offer the opportunity to embark o n a Sector Wide Approach Program (SWAP). Box IV.2 below i s an example o f how a C E A has supported a more broad development program (NREiG) in Ghana. Budget support would allow the Ministry to reduce the transaction costs related to the preparation, implementation and monitoring o f different donor projects. Convincing donors to modify their project approach towards sector-wide medium to long term funding arrangements will require as a precursor establishment of: i) a comprehensive, costed, and prioritized sector expenditure framework to operationalize the SP and to orient investment in the sector, and ii) an improved donor coordination framework. At the same time, improvements in MET’S budget management provides incentives for the donor community to focus o n enhancing aid alignment and harmonization in line with the Paris declaration. I into discussion around Natural % \ f 8 Resources Management, The CEA \\ 1 1 \ e provided a rationale for involving *r c6 a l l partners in a broader dialogue 1 and approach, moving to e ~ v i ~ o ~~eo n ~~ nce~ e l~ a Through the process shown here, the Government and its partners decided to prepare and implement a new Natural Resources and Environmental Governance program. Three key areas o f governance were defined as we31 as the following objectives: (i)improving revenues management and transparency in forestry and mining, (ii) securing livelihoods in 45 1 3. Improving the financial and budget management at MET 124. The Ministry o f Environment and Tourism’s Medium Term Expenditure Framework (2007/08) shows a return to the trend in the Ministry’s funding after special budgetary allocations in 2006 and 2007. The question o f options for funding Ministry’s activities in the context o f the Strategic Plan therefore becomes very pointed. The costing o f this SP will need to be strengthened significantly before any gap analysis might be done57.Furthermore, the up-coming and high volume M C A funds related to tourism will have significant financial implications regarding the future operations and maintenance o f the tourism investment program through adequate domestic resources. While the M C A will address some o f the investment needs o f the tourism sector, it is important to note that i t does not deal with the institutional and capacity issues o f the ministry and seems to be disconnected from the activities planned under the Strategic Plan. 125. Hence, a key priority should constitute the preparation o f an annual implementation plan that derives from the Strategic Plan. This plan would include a list o f prioritized activities that are attached with a budget, linked to the current and planned domestic and external resources (including the M C A ) and embedded in MET’s MTEF 2008/09. This, in turn, would allow the Ministry to identify the sector’s financing gap for the fiscal year 2008/09. I t would be also important to establish realistic and measurable benchmarks for each o f the activities. I t can be assumed that the annual implementation plan will still result in a (more realistic) funding gap. 126. To mobilize more funds the MET can increase its revenues, focus on efficiency gains and strengthen its budget management as well as ensure resources are allocated according to MET’Spriorities and responsibilities: 127. Increasing revenue efficiency. A periodic review and revision o f Namibia’s environmental and tourism related pricing system offers an option to improve MET’s revenue collection (hunting permits, export head levy, and environmental certificate-, concession- and park entrance fees, etc.). Revenues could be increased mainly by ’’Assessing the level o f GDP financed by the sector should provide follow-up funds for identified gaps. 46. strengthening the collection efficiency (through the strengthening o f the financial management capacity o f the Chief Control Wardens at the regional offices, the introduction o f a performance based incentive system, etc.). Some o f these measures are currently applied, but for others, MET needs to mobilize support among the donors and MOF. Additionally, a particular focus should be given to reduce cash payments in the parks by (i) investigating the pre-paid systems similar to the Wild Card model used in South Africa), and (ii) establishing an I T system to better monitor collection at park entrances, accompanied with respective training. 128. Strengtheningbudget efficiency. Efficiency gains can be made by strengthening fiscal discipline (applying the GPS tracking system at the Parks and Wildlife Directorate in order to better control the utilization o f cars, etc.) and enforcing more rigorous reporting duties at the regional offices.’* 129. Another area to improve budget efficiency i s MET’s aid management which would further help strengthen the Ministry’s strategic budget planning and execution performance. One o f the main goals o f aid management reform in Namibia is that the Government seeks to improve the coverage o f externally financed assistance. The following recommendations aim to assist MET in strengthening its capacity in aid management: 9 MET and National Planning Commission Secretariat (NPCS) should establish a clear process o f aid accounting to improve the documentation o f MET’s “outside” budget in the NPCS’s development budget. As a first step, the Program Investment Forms should include all donor assistance, which is managed by MET. The NPCS, in turn, needs to ensure that the documentation provided by MET will be also effectively registered. ii) I t would be desirable for the donor community to assist the Ministry to install a customized management system that integrates monitoring and reporting for the multiple donor projects and for program performance for the national and sectoral priorities. This system could be used by the NPCS and other Ministries involved in the sector to improve overall donor aid documentation and h a r m o n i ~ a t i o n . ~ ~ iii) T o strengthen the unity and transparency o f MET’s budget, the implementation o f the donor aid could be documented in the Ministry’s quarterly disbursement reports and discussed during MET’s quarterly meeting on the Ministry’s budget execution. 130. I t would be important for MET to strengthen its budget planning to better identify i t s needs and to defend well i t s funding position at the M O F and the development partners. Some o f the key measures would be: (i) strengthening the budgeting capacity o f the Parks and Wildlife, (ii)continuing to reinforce MET’s budget programming and (ii) 58See Volume I1 o f the CEAPER. 59 It i s noteworthy that UNDP has provided support to the GoN in compiling data on external aid sources and content for the first time in 2007 but it is not clear if this information is transferred to and used b y MET nor if this process will continue. 47 improving the preparation o f the recurrent and development budget (e.g., by introducing a budget costing model).60 13 1. Lastly, it would also be important to establish a comprehensive and operationally- focused monitoring system to allow the Ministry to monitor and evaluate the efficiency and effectiveness o f its programs. There is a need to strengthen PEMP indicators by linking them to MET’s budget and programs. 132. Increased support for MET’S key function, p a r k infrastructure, and institutional gaps. The implementation o f the SP constitutes an opportunity for the Ministry to reallocate some o f i t s resources; particular attention should be given hereby to the DEA and the C B N R M sub-division. As the report highlighted, there i s a strong need to increase budgetary allocations and ensure adequate staffing, but also to render the DEA more efficient. The same case can be made for D O T and the C B N R M sub-division. The C E A report flags the inadequate funding for operating and managing national parks infrastructure. Moreover, as mentioned above, the implementation o f the SP (in particular the EMA and the new Concession Policy) as well as the M C A investment program require MET to train its staff and conduct capacity-building measures. I 4. Areas of future advisorv services and analvtical work I 133. The review identified the scope for hrther analytical work and advisory services to MET, both as new stand-alone activities and in the context o f on-going or planned operations. These areas include (i) reviewing and fine-tuning the costing o f the SPY( ii) developing MET’s annual implementation and monitoring plan (format, process, and content), ( iii) strengthening human resources management, in particular at the level o f the regional offices, and lastly (iv) conducting a similar exercise in the other natural resource management sectors (including forestry, fishery, water, etc.) which all contribute to the national economy. 6o See Volume I1 o f the CEAPER. 48 0 v, 3 VI E I I N m m m 4 4 4 n m v, 6 N d: N x M % a - 0 9: N t; N od m 0 d 5 n L w IA MAP SECTION 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