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 TABLEOFCONTENTS Volume I Foreword ..................................................................................................................... Acknowledgments .................................................................................. vi1 ..v Abbreviations andAcronyms .......................................................................................... viii ... Executive Summary I TheCaseForaMoreEfficientandSustainableEnvironmentandNatural . ............................................................................................................ x ResourceManagementinNamibia ........................................................................... 1 1.1Contribution ofthe environment andtourism sector to the Namibian economy 1 .. 1.2 Key Achievements inthe Environment and Tourism Sector................................ 3 I1 The Sector's Policy,LegislativeFrameworksandInstitutionalAnalysis . 1.3 EnvironmentalManagement Challenges .............................................................. .............58 2.1 The Policy andLegislative Framework of the Environment andTourism Sector 8 2.1.1 Mainfindings related to the Policy Framework ............................................ 8 2.1.2 Mainfindings related to the LegislativeFramework................................... 10 2.1.3 Challenges related to the Policy and Legislative Framework ...................... 11 2.2 Institutional Analysis .......................................................................................... 12 2.2.1 Main findings related to the Institutional Analysis...................................... 12 2.2.2 Challenges related to the Institutional Analysis ........................................... 19 1II.Financingof the EnvironmentandTourismsector ............................................... 21 3.1 Fiscal Assessment ofthe Environment and Tourism Sector .............................. 21 3.1.1 Main 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 andBudget Management ..............25 3.2.1 Main findings related to MET's Public Spending ....................................... 25 i)FinancingoftheEnvironmentandTourismSector...................................... .. 25 11)Sources of financing ..................................................................................... 29 iii)SpendingbyDirectorate.............................................................................. 30 iv) Composition o fMETexpenditures by economic category ......................... 31 v) Assessment ofMET's budget execution2001/02-2005/06 .......................... 32 vi) Fiscaldeconcentration 34 vii) Donor assistance .. ................................................................................. ......................................................................................... 35 3.2.2 Challenges related to MET's Public SpendingandBudget Management...36 i)IssuesrelatedtoMET'sbudgetmanagement................................................ 36 ii)FinancingofMET'sSP................................................................................ 38 IV Recommendedactions . .............................................................................................. 40 4.1. Recommendations.............................................................................................. 40 4.2. Action Plan......................................................................................................... 49 ... 111 TABLES Table I1:Namibia's economic sector contributions to GDP in2006 . ............................... 1 Table 1.2: Tourism receipts. selected countries. 2003 ........................................................ 2 Table 1.3: Environmental challenges inNamibia and Governmental agencies ..................5 Table 111.1:Overall Structure ofthe Government Budget- Summary Estimate o f Operational. Development and Statutory Expenditure. 2005/06-2007/08 (N$ million) .-25 2001/02-2005/06 ............................................................................................................... Table 111.2: Ministry of Environment andTourism - central Government expenditures. 26 Table 111.3: Environmentalexpenditure as share of GDP and central Government expenditure ........................................................................................................................ 28 Table 111.4: Namibia centralbudget allocations to Natural Resource Management Ministries (as a % of nationalbudget) .............................................................................. 29 Table 111.5: MET expenditures and allocations by economic category. 2001/02 to 2007/08 (share of the total budget) ................................................................................................. 31 Table 111.6: M E T budget execution rate by directorate. 2001/02-2005/06 (%) ...............34 FIGURES Figure1.1: Incometo community conservancies and CBNRM activities (N$OOO) ...........4 Figure 111.1:Contributions ofthe environment and tourism sector to non-tax revenues 2002/03-2006/07 (% and N $ million) .............................................................................. 21 Figure111.2: Compositionoftotal METnontax-revenues 2001/02-2005/06 ..................22 Figure111.3: The hndingofthe Game Product Trust Fundbytype o frevenue 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 Figure111.6: Actual spending ofMET divisions 2001/02-2006/07 (%) ........................... 30 FigureIV.l: Map o fNamibia ........................................................................................... 66 BOXES Box 11.1: MET'Smandate ................................................................................................. 13 Box 11.2: Namibia's decentralization process - Achievements and Challenges ahead..... 17 Box 11.3: Results ofthe field study for Walvis Bay and Swakopmund ............................ 18 Box IV .1:Interim Management PlanbetweenWalvis Bay and Swakopmund................44 Box IV.2: Elaboration of 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 sustainableenvironmental 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 investmentassessment 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, Governmentgets 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 StrategicPlan. 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 Governmentof 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, institutionand financing. The work was jointly designed by the World Bank and the Governmentof 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'Scapacity 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, providesa comprehensive assessmentof the Ministry'sbudget 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 municipalitiesand their ability to carry out environmental management. The assessment highlights the experience of Walvis Bay Municipality, which is considered a best practicein the environmentalmanagementat 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 recommendationsand short- and medium-term actions are proposedthat aim to assist the Ministry in the implementationof its up-comingwork 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 exampleof the Erongo Region. V This report is a product of the dialogue between the Bank and the Government of the Republicof Namibia. From the start, the review has been a collaborativeexercise 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 informationin the preparationand during the reviewprocess. It will be evident from the report that the Environment and Tourism sector has a highly significant economic contributionto 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, protectedareas, history and cultural diversity. However this is a sector that makes its contribution across all sectors of the economy and this contributionhas traditionally been difficultto quantify. Recommendations in this report will be critically analyzed by the Ministry to establish each circumstancewith a view of finding the most appropriatestrategy for the implementationof MET'S Strategic Plan,the Third NationalDevelopmentPlan (NDP Ill),and the decentralization process. 4 Netumbo NandLNdaitwah,MP Ministerof Environmentand 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 providedmanagement 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 preparationo f the study. The following Government officials were particularly helpful in participating actively inthe review o f diverse partso f the report and inproviding 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, andNed Sibeya (NPCS); Etiene Maritz and Louisa Schixwameni (OPM); and TD Gonteb (Erongo RegionalCouncil (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), BrianJones (local consultant) and the private sector association, FENATA. vii ABBREVIATIONS AND ACRONYMS CBNRM Community BasedNatural Resource Management CBO Community-Based Organization CBTE Community Based Tourism Enterprises C D M Clean Development Mechanism CITES Convention on InternationalTrade inEndangered Species DANIDA DanishInternationalDevelopmentAssistance DEA Directorate o f Environmental Affairs DFID Department for InternationalDevelopment (UK) DIP Decentralization Implementation Plan DLIST DistanceLearning and Information Sharing Tool DNA Designated National Authority DOT Directorate o f Tourism DWWEM Department o f Water, Waste andEnvironmental Management EIA Environmental Impact Assessment EIS Environmental Information System EIF Environmental Investment Fund EMA EnvironmentalManagement Act EMS EnvironmentalManagement Section ERC Erongo Regional Council EU European Union FENATA The FederationofNamibian Tourism Associations GDP Growth Domestic Product GoN GoN GPTF GameProduct Trust Fund IFMS Integrated Financial Management System LA Local Authority M C A MillenniumChallenge Account M&E Monitoring andEvaluation MET Ministryo fEnvironment andTourism MLR MinistryofLands andResettlement MME Ministryo fMines andEnergy V l l l .I. MOAWF MinistryofAgriculture, Water andForestry MOF MinistryofFinance MRLGHRD Ministry of Regional and Local Government, Housing andRural Development MTEF Medium-Term Expenditure Framework MTP Medium-TermPlan NACOMA NamibiaCoast Conservation andManagementProject NACSO Namibian Association of CBNRM Support Organizations NBSAP National Biodiversity StrategyandAction Plan NDP National Development Plan NDP1 National Development Plan(1995/96 - 1999/00) NDP2 National Development Plan I1(2001/02-2005/06) NDP3 National Development Plan I11(2007/08 -2011/12) NPCS National Planning Commission Secretariat NTB NamibiaTourism Board NWR NamibiaWildlife Resorts O&M Operations andMaintenance OPM Office o fthe Prime Minister PE(E)R Public Environmental (Expenditure) Review PEMP PerformanceandEffectiveness ManagementProgram PRS Poverty Reduction Strategy RC Regional Council SADC SouthernAfrican Development Community SAIEA SouthernAfrican Institute for Environment Assessment SIDA SwedishInternationalDevelopment Cooperation Agency SP Strategic Plan STR State RevenueFund SWAP Sector Wide Approach Program TSA Tourism Satellite Accounts USAID UnitedStates 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 is 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. Key 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 in2004. Given that the majority o f tourism establishments are in rural areas, the sector has an impact on rural employment and rural poverty. It i s estimated that around 21 percent o f trophy hunting income accrues to the Government and some 40 percent to low-income earners andcommunal landcommunities. 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 inparks, conservancies, andnature-based tourism. Moreover, no one is assessingthe cost o f mitigating degradation, the value o f resource depletion or the cost o f unsustainable use o fnatural resources'. ' In addition, there is 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 environmentalmanagement.Namibia has achieved noteworthy successes interms of biodiversity conservation. It has an extensive and internationally renowned protected area network (17 percent of 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 its innovative approach o f linking conservation to poverty alleviation through its policy, the legal framework for Community-Based Natural Resource Management (CBNRM) and its related interventions, which are supportive of 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 its Performance Effectiveness Management Program (PEMP), its Medium-Term Expenditure Framework (MTEF), and its Medium-Term Plan (MTP) as well as the quality o f its products delivered, which were used as models for other ministries. but faces increasing challenges that will affect the sustainable development of the country f n o action is taken. 6. The country faces a number of environmental challenges, some related to Namibia being the driest country in Sub-Saharan Africa. The country's key environmentalissues include freshwater scarcity and water degradation; landdegradation and desertification; deforestation; coastal andmarine degradation; unrehabilitatedmines; 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 fMET'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 of 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 its contribution to the national economy andthe Vision 2030 goals. x i Policy and legalframework 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 managementand environmentalimpact 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 is now the Ministry's priority and one o fits key challenges. Itrequires 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 preparationand delayed. DEA's regulatory function has been undermined due to under-funding and understaffing. However, an important recent accomplishment i s the approval of the Policy on Tourism and Wildlife Concession on State Land in 2007. The implementationof 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 beingsupported under one o f the Ministry's projects2. Institutional capacity and decentralization 11. MET'Sinstitutional capacity is 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 inpark 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 inthe private sector are more attractive. 12. Inthe context of the Government's decentralizationagenda, 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 * UNDPIGEFfunded 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 fthe 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$299 million or 1.7 percent o f the totalNamibianbudget in2007/08. It is important to note that the budget envelope o f the new MET Strategic Plan is 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 implementationof the SP (N$648.7 million) which is currently three times higher than the average budget appropriationso fMET'SMTEF(2007/08-2009/10), it does not seem realistic. 14. Donors' contributions are important in funding the Ministry's program o f activities but are largely spent outside the Government's budget and have declined over the past years. However, the sector should benefit in the near future from significant funds to be provided under the MCA, around US$ 96.9 million, for the next five years 2008-2013. These funds will complement mainly ongoing initiatives in the tourismsector but also include support for wildlife management and conservancies. Financial management 15. The Ministry's budget implementation is 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 planningand 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 plannedtourism infrastructure investments underMCA. Average 113 percent over the years 2002/03-2005/06. xiii 16. As well, there is 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 adequatemaintenance o fparks infrastructure. 17. The MET made some good progress in the preparationof its MTEF, but key challenges in budget planning and monitoring remain. Weaknesses exist in particular inbudget planningin the regional offices, in the centralized planningprocess, 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 inimproving its Performance and Effectiveness Management Program (PEMP) related database and capitalizing on some o f its indicators, the sector's monitoring and evaluation still needs improvement as the indicators are not attached directly to the programs or the budget and shortcomings exist inthe 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 its annual implementation planswill 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 of 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 budgetmanagement tools to strengthenits 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 of the issues with budget planningcan only be addressedby a broader Governmentreformagenda (e.g.,the dualbudgetpreparationonprogramandlineitembasis giventhat the accountingsystemis still on a line-itembasis). xiv 20. Among the recommended actions (see chapter IV), priority would be put on the following: 1. ImproveMET's policy and legislativeframework by finalizingkey pieces. With the tourism sector beingone o fthe fastest growing sectors, there is a needto rapidly provide a regulatory policy framework. It is therefore recommended that the TourismPolicyshould be finalizedandsubmittedto Cabinet and Parliament for approval in 2008. Regarding the sector's legislative framework, a priority for the Ministryshouldbe the finalizationof the draftingof the Parks andWildlife ManagementBilland the PollutionControlandWaste ManagementBill.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 environmentalchallenges 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 regionaVloca1level. 2. Reinforce MET's institutionalcapacity at central and regional level for short- and medium-term priorities. A key short-term concern is 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.). Inaddition, growing private sector activities in wildlife management and use and increasing overall mining and tourism activities will require a more regular review with adjustmentof the roles and responsibilitiesof the privateandpublic sector, which can thenbecome part o f the broader sector dialogue and forum. (The Ministry's recently approved and draft policies and legislation demonstrate an encouraging trend towards its 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 hture 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 Ministryi s expected to foster its agenda for decentralization by finalizingand 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. Inthat 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 of the Ministry. MET's MTEF (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 Ministryactivities inthe context ofthe SP therefore becomes very pointed. MCA 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 it does not deal with the institutional and capacity issues o f the ministry and seems to be disconnected from the activities plannedunder 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 list o f prioritized activities that are attached with a budget, linked to the current and planned domestic and external resources (including the MCA) 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. It 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 efficiencygains and strengthenits budget managementas well as 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 is 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 its needs and to defend well its 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 its resources; particular attention should be given to DEA,the Directorateo fTourism (DOT) andthe CBNRM sub-division. 21. Finally, the review identified the scope for further analytical work and advisory services for GoN 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. TheCaseForaMoreEfficientandSustainableEnvironmentand NaturalResourceManagementinNamibia 1.1Contributionof the environmentandtourismsector to the Namibianeconomy 22. The Namibianeconomy is primarily driven by the extraction and export of 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 highvariances inoutput 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 of about 20 percentof the Namibianeconomy(Table1.1below). Table 1.1: Namibia's economic sector contributions to GDP in2006 Economic Sector ASYo of GDP Other services 19.9 Government 18.6 Manufacturing 12.6 Wholesale and RetailTrade 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 in2006 (Nominal values) N$ 44,467million GDP in2006 (Nominal values) US$6.9 billion GDP per capita at market exchange rates US$3,553 (2005) Source: Bank of Namibia (2007), NPC (2005), Irwin,Jacobs, & Greene (2007) 23. Namibia's NationalAccounts only partially capture the contribution of 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 of natural resources i s not measured. Furthermore, the proxies that are used inconventional national economic accounting (i.e. such as hotels andrestaurants for tourism) for the tourism sector do not capture benefits that accrue to other tertiary sectors or activities inthe informal sector. 24. According to the World TourismOrganization (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. Key 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 andtrade o fplants, etc.), huntingfees, andwildlife consumption. Table 1.2: Tourism receipts, selected countries, 200. International Percent tourism of 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 TourismOrganization (2005) 25. The sector also contributesto job generationand improvedlivelihoodsin rural areas. According to a 2004 study conducted by NTB, it was estimated that 24,150 people were directly employed intravel 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), its 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 fthe sector's contribution to poverty reduction, supported by available research data, i s trophy hunting. It 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 ProtectedAreas, 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 inthe tourism industry and 23 bythe conservancy intourism-related activities. 1.2 Key Achievements inthe EnvironmentandTourismSector 26. MET has establisheda progressiveframework of environmentalpolicies and laws since the country's independence in the beginningof 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 CBNRM and the Country Pilot Partnerships for Sustainable LandManagement, both spearheadedbyMET; 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 in2007). Furthermore, Namibia's communal and freehold conservancies have added substantially to the network o f conservation areas in Namibia, covering approximately 19 percent of 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 andtrophy-hunting product. 29. Namibia has also gained a worldwide reputation for its innovative approach to linkingconservationand poverty alleviationthrough 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 of wildlife within defined boundaries. The The communal conservancies covered 14.4 percent of Namibia, while 16.5 percent of Namibia's surface area i s within national parks and game reserves (inclusive of the Sperrgebiet National Park). Lastly, around 6 percent of Namibia i s managed by freehold conservancies and a further 1.3 percent i s under concessions and community forest 'management.Environment (Source: Namibia's communal conservancies, a review ofprogressin 2006) Ministryof and Tourism, Strategic Plan 2007/08-2011/12, November 2007. 3 success o f the program can be attributed inparticular to dynamic policy adjustments that have devolved those rights o f wildlife and tourism to communities inremote rural areas, where poverty is rife. CBNRM 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. It contributedto a recovery o fNamibia'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 CBNRM activities accounted for N$ 26 million in 2006 (Figure 1.1 below). In 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$140million. Figure 1.1: Income to community conservancies and CBNRM activities (N$'000) 30,000 25,000 20,000 15,000 10,000 5,000 I 0 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 Source:Namibia's communal conservancies, areview ofprogressand challenges in2006 ')The figure includes income from three categories: cashpayments to conservancies, non-cash or in-kind incomes to conservancies, and incomes to CBNRM 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 inthe number o f visitors staying in community-based lodges and campsites, from 30,000 in 1999 to over 90,000 in2004. 4 1.3 EnvironmentalManagementChallenges 31. Over the past decade, the environmental demands on the sector have increasedand become more complex'. The country faces a number of 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 of environmental management at the central and local Government levels. Namibia's protected park network and its coastline and marine environment are two key examples that have been adversely affected by this. The key resource-based related challenges are summarized inthe table 1.3. below: Table1.3: Envirl imentalchallengesinNamibiaand Governmentalagencit Responsible Resourcebase EnvironmentalChallenge Governmental 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. It causes economic loss and escalating poverty and a loss o f food security. This 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- off and soil erosion, declining soil fertility, changes in the local water cycle and loss o f biodiversity as well as contributionto global warming. Wildlife Human-Wildlife conflicts are increasing in communal areas MET (Sustainable and require adequate procedures and instruments to support Tourism) CBNRMprogramobjectives. Need for equitable access and benefit-sharing mechanism supported by MET'Sregulatory * Seevolume 11, annex to chapter Ifor summarytable of environmental challenges. 5 framework. Coastaland 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 no planning to reduce environmental damage has MFMR impacted heavily upon large areas inNamibia 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 inurban 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 no 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 externalfactors contributingto the demands on the sector are comprised of: (i) capacity o f local and national Government in conservation and weak environmental management; (ii) increase of urbanpopulation over the past years that the requires MET to address sustainable urbandevelopment issues in combination with rural development concerns;' and (iii)the scaling up of the volume and the diversity of industrial investments in some parts of 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 indicatethat by 1981 only 11percentofthe populationlived inurban centerswhile this hadrisen to almost40 percentby 2000. 6 significantly step up its involvement, in particular in terms o f policy and institutional coordination, and inenvironment impact assessmentwork. 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 of 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 its budget management. In response to the management and conservation challenges o f the sector and the issues affecting the Ministry's ability to fulfill its mandate, MET formulated its first SP (2007/08-20011/12). Inorder to assist the Ministryinthe implementationofits SPYthe following two chapters discuss more in-depththe challenges the Ministry faces related to the sector's policy and legislative framework and its institutional and budget management capacity. The last chapter proposes a set o frecommendations. 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 thePolicy 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." Not reaching goals can partly be attributed to Parliament's delay enacting some o f the sector's key legislations, or over ambitious planninglacking 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 of the NDPs has been sectoral rather than integrated. 36. As part o f its mandate, MET is responsible for inter-sectoral policy- making, coordination of activities, and the integration o f environmental policies and strategies by line ministries, but it 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, Ministryo fMines and Energy, Ministryo fFisheries andMarineResources, etc.). MET's DEAis responsible for ensuring the inter-sectoral coordination andnational development planningand implementation processeso 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 inparticularly true for loSee NamibiaCEAPERVolume I1for a moredetailed descriptionof the sector's policies. I'See NamibiaCEAPERVolume 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 in2007), have hampered finalizing related draft policies like the Human-Wildlife Conflict, the Parks andNeighbors Policy, and delayed advancing an integrated CBNRM 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; (ii) 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 recognizedthe increasingvalue 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 is reflected in its political commitment inscribed in NDP2.l3Some 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 interms o fresources and staffing (see section 2.2), impeding the achievement o f several o fthe NDP2 target~.'~ 38. Despite Government's commitment to the tourism sector, the policy framework that would guide the rapid growth of tourism has been delayed for almost 10 years and as a result it has severely undermined the Tourism Directorate's regulatory function. This delay is owing to staff shortages and shortcomings in the capacity o f the Tourism Directorate, senior management changes at MET, anduneven technical assistance from donors. The policywill requireMET 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, andcommunication. 39. Nevertheless, an important recent accomplishmenthas been the approval of the Policy on Tourism and Wildlife Concession on State Land''. The policy focuses on concessions inproclaimed 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 ManagementAct, which was approvedin2004 but is still lackingimplementationandenforcement. I3 The goal manifested inNDP2 for the tourism sector was to develop the tourismindustryin a sustainable, equitable, and responsiblemanner 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 is depicted as the country's sector of greatest promise, and it is stated with confidencethat tourism"has more potentialas a sustainableindustrythan any other form of economic development inNamibia." l4 See NamibiaCEAPER Volume I1(Appendix 1, table B). I5 State land here means "land inside and outside of protected areas that belongs to the State and it includes national parks, gameparks, recreational areas, communal land, conservanciesand 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,andwildlife), which will enhance objectivity and transparency to the process. It i s complementing the legislative framework based on the Nature Conservation Amendment Act (1996) and the Forest Act (2001), both authorizing the Minister to grant concessions but lacked, untilnow, formalized standards and procedures. The Policy sets out a standard and a robust procedural framework for awarding and managing concessions, indicates what supporting documents andprocedures are requiredto 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 fthe goals is to generaterevenue for the State through concessions as a means o frecovering 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 still pending Policy on Parks and ResidentNeighbors. 2.1.2 Maincfindingsrelated to theLegislative Framework 41. A milestone achievementhas 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 inpreparing the EMA must be sought inthe weak institutional capacity o fthe Ministrybut also inthe fact that it 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 uponby all stakeholders. 42. Further bills are requiredto enhance the Ministry's effectiveness to promote the sustainable utilization of naturalresources; however, the process in developing and adoptingimportantsector bills is 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 andWaste Management Bill, but these are still at an advanced stage o fpreparation. Delays with the Parks andWildlife 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 approvalof these bills and draft policies over the past years i s seen as the main obstacle to enforcementof current regulationsand laws, and the promotionofharmonizedandsustainableutilizationof naturalresources. 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 LandReform Act. While these bills have a sectoral focus, they generally recognize that sectors cannot work inisolation, that they need to promote sustainable practices and diversified land-use options andthat institutionalpartnerships 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 is the conflict between the policies and legislation of the different sectors." As in many countries, there is 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 in2005. 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), andbe implementedeffectively and efficiently. 46. The implementation of the EMA will have resource implications for MET andincreasethe needfor cross-sectoralcoordinationon environmentalissueswithin Government.The Act calls for the appointment o fan Environmental Commissionerwith 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, includingthe coastal dune belt between Swakopmundand Walvis Bay, and the Walvis BayNature Park. The Pollution and Waste Management Bill provides for sustainable environmental management of urban developmentissuessuch as water andwaste management. Namibia's environmental sector 1990-2007: progress and challenges Activity of the Enviro PRE (Participatory Reviewand Evaluation)September 2007. 11 47. On coordination, all ministries are required to prepare environmentplans for their operations, to be sent to the Commissioner, who in turn recommends approval o f the plansbythe 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, landuse planning, andnatural resource development projects, are required to apply to the Commissioner for a clearance to proceed with the project; the Commissioner determines whether an EIA is 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 inthe case o fpublic investment programs. A key challengefor the Ministrywill be its rapid readinessfor the implementationof the EMA. Donor assistancefor this key area has been earmarked. 48. The implementation of the concession policy will also have resource implicationsfor 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 planswill 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 inconsultation with the MOF in case MET's resource envelope is inadequate. 49. Implementation of MET'S policies on community-based management of wildlife and tourism remains under-resourcedin terms of funding and personnel. The elevation o f CBNRM to a major component o f MET's SP should lead to a re- assessment o f the role o f MET in CBNRM and help generate the resources it requires to fulfill its mandate o f supporting conservancies and monitoring their compliance with legislation. This i s particularly important if CBNRM i s to reduce its reliance on donor funding. 2.2 InstitutionalAnalysis 2.2.1Mainfindings related to the Institutional Analysis 12 MET's SP 50. The Ministry recentlyfinalized its first SP (2007/08-2011/12) that will be the Ministry's implementationplan of NDP3 (2007/08-2011/12). It is 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 it to scale up its programs. 51. The process of developing MET's SP and its final result has been qualified bythe OPM as abest practice andmodel for other line ministries. MET'Sorganizational structure 52. MET is responsible for policy development, planning, environmental regulationsandenforcement. MET's mandateincludesthe following objectives: 53. The implementation of its mandate i s translated into five strategic areas and four crosscutting programs identified inthe Ministry's SP. It 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 of the usual top structure of 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, andAdministration and Support Services. 54. The function of managing and operating tourism establishments within proclaimedparks has been outsourcedon a commercial basis to the Government- owned company NWR", while tourismpromotionand quality assuranceis 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 andregulationof accommodationestablishments. Institutional issues 55. MET's institutionalcapacity is constrainedby its limited qualifiedstaff. The Ministry's staffing temporarily more than doubled in2001 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 of 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 low priority posts (55 percent) but also for highpriority 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 Directoratesrelatedto qualifiedstaffing,resources,and co~rdination'~: First.takinginto account MET's core functions ofpolicy andplanningcarriedout bythe 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 NWR 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. It also made a substantial financial commitment o f a two year N$120million loan guarantee to upgrade tourism facilities, especially in Etosha, to international standards. The 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 didnot 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 inlate 2007).21 Third, the understaffing of 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 CBNRM 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 CBNRM program has not yet been mainstreamed (from a technical, institutional, and financial point o f view) at central and regional levels. Fifth, there is 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 Ministrydoes not have a management information system or a monitoring and knowledge management system and lacks a planningunit. 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 highsenior management further exacerbates the situation. A system is neededthat 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. 2oIfthe in-house capacity isnot sufficient, appraisals areoutsourced (at the expenseofthe applicant, untilrecently ona voluntary basis inline with the Environmental Assessment Policy o f 1995). "ThismeansthattheMinistryhastodevelopthecapacitytoassessproposedpartnershipsbetweentheprivatesector, 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 hasdeconcentratedsome administrativeservices to the regions,though its effectiveness on the ground is 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 still managed at the central level. The main responsibilityfor national parks in the region has been shifted from the region to centrally located Windhoek. Only the handling o f problem animals is 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 placeto regulateactivitieson state land, (ii) littlecapacity exists within the regionto handletrespassers, and(iii)politicalinterferenceexists inthe grantingof permission to host events on state land. Current decentralization status 59. MET is 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.24MET set up a taskforce in2005 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 is prepared based on a SP to indicate the necessary institutional restructuring. Achievements and main challenges o f this decentralization process are summarized inBox 11.2. 22This was the case at a recent international quad bike championship that was granted by the governor and held on state land inthe vicinity ofWalvis Bay, despitethe objectionofthe regionaloffice to grant permission. 23Volume I1includesadescriptionofNamibia's decentralization process. 24Following the slow progressin delegating finctions to the regions across most Ministries(with the exception of the Ministry of Agriculture, Water and Forestry, the Ministry of Education and the Ministry of Works, Transport and Communication), the Governmenthas acknowledgedthat the magnitudeand complexityofthe implementationprocess has been underestimatedand that line ministries and sub-national Governments need substantial capacity building in conceptualizing, implementing,andmonitoringthe decentralization implementationprocess. 16 implementationprocess; (viii) substantial process support and technical assistance to support regional councils and A case study of decentralization: theErongo 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 its functions to the sub-national level. This i s reflected in the RC's administrative structure, its planning, law enforcement, and sector coordination and its financial basis: (i) the Erongo Regional Council is charged with the regionalplanningbut no adequate attention is given to environmental planning; (ii) ERC's enforcement the 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 its budget; and two that the ERC is still largely dependent on centraltransfers. However, the Erongo region still 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 andSwakopmund. The SwakoDmund MuniciDality is comprised of an Envi responsible for the promotion of public health and the monitoring o f the environmental impact on health as well as the provision of solid waste management services. The Department leads an Environmental Committee, attendedby representative of MET, the Ministryof 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 is relatively weak. A large majority of EIAs inNamibia 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.25Around 79 fill 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 25SAIEA, 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 Challengesrelated to theInstitutionalAnalysis 62. The implementationof the SP will probably constitute a major challenge when held against the current implementationcapacity and magnitude of required funds. As mentioned above, the SP is 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 of 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 is a severe constraint for MET's service delivery (notably the DEA) butdepends on negotiationswith OPM andMOF. 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'Sdecentralization agenda would require additional humanand 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., hightourism potential o f some regions versus the undevelopedpotential o f others). 64. A main challenge regarding the implementation of 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, its 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 its new responsibilities. ~~ ~~ 26Tarr, 1999 and SAIEA, 2003. 27Namibia's environmentalsector 1990-2007:progressandchallengesActivity ofthe Enviro ParticipatoryReviewand Evaluation, September2007. 19 65. MET is often guided in its tasks by a bias towards rural areas and communities, though environmentalneeds related to increasedurban 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 urbanrelatedissues. 66. Barrierson privatesector investmentin the Namibiatourismsector needsto be addressed but are beyond MET'Smandate. 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.28There are also a number o f bureaucratic hurdles that make tourism investment time consuming and burdensome. MET, through its 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 involvedpublic agencies andministries. 28 A major constraint that manifests itself currently relates to the reluctance of Namibian financial institutions to lend towards communal tourism investments. There are mainly three sets o f constraints to the financing o f tourism investments inthe 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. Inthe 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 by 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 (upto 24 months) and a longer maturity (upto 10years). 20 111. Financingof the EnvironmentandTourism sector 3.1 FiscalAssessment of the Environment and Tourism Sector 3.1.1 Mainflndings 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$29.9 million in 2005/06, thus representing 2.8 percent o f Government's planned non-tax revenues in the same year. This substantial increase in revenues can be mainly attributed to MET'S takeover o f the collection o f park entrance fees from Namibia Wildlife Resorts (NWR) in 2004 and increases in fee tariffs in 2005/06. The overall contribution from the sectors to Government's revenues is higher but not known since the amount o f the tourism and environment sectors' contribution to Government's tax revenues is not specifically identifiedinthe budget or not included. Figure III.l: Contributions of the environment and tourism sector to non-tax revenues 2002/03-2006/07 (YOandN$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 NWR 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 of total revenues) 100.0 Application fees gambling licenses 90.0 Serwces renderedto Ministnes 80.0 0 DepartmentalFines Unclaimed cheques 70.0 Miscellaneous 60.0 Pnvatetelephonecalls Wildlife utilization permits 50.0 Wildlife registrationsand licenses 40.0 cl Film fees 30.0 Registrationof culling teams Registrationof professionalhuntel+ 20.0 Sale of trophies 10.0 Tounsm concessions 0.0 Park entrancefees 2000101 2001102 2002103 2003104 2004105 2005106 Source:MOF 69. Despite important increases in the collection of park entrance fees, the capacity of MET to effectively collect revenues is constrained by a number of 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, low salaries, as well as the absence o f a computerized system) has resulted inthe delays o f transferring information and there are shortcomings in data reliability. Third, estimation o f revenues are in general based on 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 inplace. Unpredictable natural events such as drought or flooding affecting the flow of 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. While most of the collected revenues are transferred to the State Revenue Fund (around 70 percent), some can be 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.31Likewise, the Environmental 30Inthe form oftheft on the roador the corrupt practicesofsome 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. It aims to provide grants to emerging public wildlife organizations and protected areas, and to persons and institutions approved to the Minister. A board, appointed by the Minister o f MET, manages the Fund. Though the act makes provision for outsourcing, MET currently administers the Fundin order to save cost. 22 InvestmentFund(EF), i s a similar instrument at the disposition o f MET but has not been capitalizeduntiltoday. 71. GPTF has grown over the period 2000/01-2005/06. As shown in figure 111.3, the fundhas been growing over the past years by 139percent inreal 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 it 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 of 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 hnds mid-yeardisbursement 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 in2001, 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 32Namibia'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 is deposited into the Fund. Over the period 2000/01 to 2004/05 the main source of revenues derives from hunting concessions, while in2005/06 the park entrance fees providethe largest contribution. 33There is aneed for improvingaccess to anddissemination of informationon the GPTF functions andresults as well as administrativeprocesses. 34EnvironmentalInvestment FundAct (No.13 of2001). 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 fundthrough this mechanism. 3.1.2 Challenges related to the Fiscal Assessment 73. A range of measures has been identifiedto increasethe 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 May 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).36A detailed costing o f these measures has not yet been undertaken. However, constraints inMET'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 inresources 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 Ministryhas 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 resourcesconstitutesa challengefor MET. 35Following a cabinet decision it was approved that the EIF could be either capitalizedwith N$15million over three financial years through a budgetary appropriation, or alternatively through revenue earned by MET, in consultation with MOF. (Cabinet Decision23d/24.08.04/004) 36Such a system is practicedby nationalparks in South Africa. The purchaseof the card entitlesthe user to unlimited free access to specifiedparks for aspecifiedperiod.The price depends on the group of parksthat the purchaserchooses to include. 24 3.2 Assessment of MET's PublicExpendituresandBudgetManagement3' 3.2.1 Mainfindings related toMET'SPublic Spending i) Financing of the Environment and TourismSector3` 75. MET's spending has declinedand fluctuated over the past years. Table 111.1 shows the overall structure o f the budget and so, MET'Stotal expenditures over the last few years. Table III.1: Overall Structure of the Government Budget - Summary Estimate of Operational,DevelopmentandStatutory Expenditure,2005106-2007108 (N$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 ForeignAffairs 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 ChildWelfare 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 MinesandEnergy 90,3 139,9 96,4 Justice 169,7 202,2 246,l RegionalandLocal Government 431,9 459,5 518,3 Environmentand 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 173,9 201,2 212,2 Fisheries and Marine Resources 107,8 133 163,7 Works 292,7 311,l 357,5 Transportation and Communication 246,l 645,l 713,2 Lands and Resettlement 130,l 124,7 140,l National PlanningCommission 50,7 53,3 50,4 37 InNamibia, budget information is documentedin the State Revenue Fund(SRF), the development budget, and the MTEF. The SRF is comprisedofdetailedestimates of income, revenueand expenditure.The MTEF is the mainpolicy 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 is not inscribed in neither the SRF nor the development budget, but documented in the MTEF. These funds do not enter throughthe Government budget, which makesit more difficult to derive accurate estimatesofavailable anddisbursedresources. 38 The following analysis is based on the data documented in the SRF and therefore does not include the off-budget donor aid andGPTF which is 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 intable 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 explainedby 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 in2005/06. Table III.2: Ministry of Environment and Tourism - central Government expenditures, 2001/02-2005106 2001102 2002103 2003104 2004105 2005106 ACTUALEXPENDITURES Totalexpenditures (N$) 118.5 140.3 172.9 149.1 139.3 Total spending (as a % of total budget expenditures) 1.7 1.7 1.7 1.2 1.1 Total spending(as a % of GDP) 0.4 0.4 0.5 0.4 0.4 Real growth 7.4 15.8 -16.8 -9.3 NationalBudget (inrealgrowthas a%) 12.2 13.9 19.6 -2.6 Memo CPI (end-of-period) 9.3 11.3 7.2 4.1 2.3 National Budget (estimate) 7,273 8,485 10,116 11,999 12,772 National Budget (actual) 6,797 8,413 10,201 12,642 12,679 GDP (at market prices, inmillions N$) 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 of 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 US$ 43 million), accounting for 2.3 percent o f the total Namibianbudget 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 and2009/10). 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-incomecountries of Latin America, Colombia is perhaps the best comparator since it has similar levels of income per capita and share of Governmentexpendituresin GDP.Namibianexpenditures on environmentalprotection 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 is no `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. It 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 highlevel o fdonor support for biodiversity conservation. 27 Table III.3: Environmental expenditure as share of GDP and central Government expenditure Yo of GDP YOof CentralGov.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 of 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 LatinAmerica 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 US$ 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 low sector capitalization means many prime tourism areas of the country remain vastly underdeveloped. 80. A comparison of appropriations among different natural resource managementministriesshows that the Ministryof Agriculture, Water and Forestry (MOAWF) receives the largestshare 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 of the total national budget. The large budget for MOAWF can be explainedby it's the national development importance to its rural population and Government's role inproviding large investment related services. In contrast, Government has more o f a regulatory and oversight function inthe other natural resource management sectors. 39MillenniumChallengeAccountNamibia,draft proposal,2007. 28 Table III.4: Namibia central budget allocations to Natural Resource Management Ministries (as a YOof nationalbudget) 2001102 2002103 2003104 2004105 2005106 2006107 2007108 Budget Budget Budget Budget Budget Budget Estimate Environment and Tourism 1.3 1.2 1.3 1.1 0.9 1.o 1.7 Mines and Energy 1.o 0.9 0.8 0.8 0.8 0.9 0.5 Agriculture, Water and Forestry' 5.4 4.9 4.4 4.4 5.2 4.2 3.7 Fisheries and Marine Resources 1.1 1.1 1.o 0.9 0.9 0.9 0.9 Source: MOF Appropriations Acts; MOF-SRF' Prior to 2005/06, the Ministry o f Agriculture and Forestry includedRural Development while Forestry was under the aegis of MET. ii)Sources offinancing4O 81. Domestic resources represent the main source of financing of MET'Sbudget. MET relies on three types of sources of 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 of MET'S budgetary allocations. Though most of the domestic resources derive from Government's fiscal revenues, the Ministry also receives a small amount of domestic resources available through GPTF, amounting to 5.2 percent ofMET'S total domestic resources in2005/06.41 MET has an important amount ofdiscretionary influenceonits spending which gives the Ministryadegree offlexibility inmanagingpublic finance. Figure III.5: Sources of financingof METbudget,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 Plannedexternal assistance Source: MOF, State Revenue Fund, MTEF, MET GPTF data base Note: The figures related to planned external assistance take into account only programs executedby MET; others, for example funded by WWF andUSAID are not included. ` OInorder to present all sources of the Ministry's financingtogether, 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 investmentsinprivate and communal conservancies, or, for example, on the coast which directly contributes to achieving MET's objectives. iii) Spendingby 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 infavor 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 still insufficient to ensure adequate maintenance o f the parks infrastr~cture.~~ FigureIII.6: Actual spendingofMETdivisions2001/02-2006/07 (YO) 100% 80% 60% 0Science Services 40% 20% 0% 2001102 2002103 2003104 2004105 2005106 2006107 Actual Actual Actual Actual Actual Revised budget Source :MOF(StateRevenueFund) 42Other programs of MET's other programs include the protection and management of key species and natural resources, CBNRM and tourism, regulation of environmental protection and sustainable resource management, tourism development, and improving the economic value of natural resources and protected areas under MET's jurisdiction. 30 iv) Composition of MET expendituresby economic category43 84. As shown in table 111.4, recurrentexpendituresaccount for almost the entire MET spending (on average for 95 percent between 2001/02 and 2005/06). Expenditure on personnel i s the largest spendingitemwithin MET's budget, representing on average 48 percent o f total MET spending over the period 2001/02 to 2005/06. Inthe context o f Government's reintegrationprogram o fNamibia's ex-combatants, MET had to take over 500 ex-combatants in2000 and 500 in2001. The salaries o fthis 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 in2005/06 i s related to the transfer o f the Forestry Directorate with all its 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 andtransfers 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 Developmentbudget 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. In 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 it had not sufficient finds to maintain the park infrastructure, equip their staff (e.g., with uniforms), and carry out law enforcement. 43The figures do not include off-budget financing by the development partners which limits the assessment of the distributionbetweenrecurrent anddevelopmentexpendituresto domesticresources. 31 86. Internal funding of development expenditures is 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 Etoshapark celebration and the World Cup in2010), MET succeeded insignificantly increasingbudgetaryprovisions for development for the last two years, 2006107 and 2007/08, by 192 percent and 760 percent in real terms respectively. While 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, it raises the questions: (i) whether the Ministry will be in the position to increase its 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. It is 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 its institutional capacity. v) Assessment of MET'Sbudget execution 2001/02-2005/06 87. MET experienced significant budget overruns over the past years. Over the past years MET overspent its budget significantly, resulting in an execution rate o f 113 percent on average over the years 2002/03 to 2005/06 (Table 111.5 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 low level o f adequate financial control by the Directorate's headquarter on spending carried out bythe 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 of spendingstronglyendorses the call for budgets that are more realistic, budgetingdiscipline, and the use of a contingency fund in caseof emergencies. 88. MET'S execution performance related to capital and development expenditures is very weak. This low level o f capital and development spending is a characteristic across all directorates. It can be explained by three factors: first, delays in budget approval by Parliament resulting indelays inbudgetimplementation(the 2005/06 national budget was approved in August 2005/06, most other years the budget was approved inJune); second, cumbersome procurement procedures; and third, inthe 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 is 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 low 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 underspendingacross 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 andtransfers 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 regionaloffices are underfundedand 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 limitedas 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 implementingunits 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 budgetoverruns. 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 inturn impacts strategic budgetplanning. 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 is 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$37.8 million in 2007/08. Some o f the main donors in providing financial assistance constitute the GEF funded by the Bank and the UnitedNations Development Programme (UNDP) and the German cooperation. As mentioned above, most o f the donor assistance to MET consists o f technical assistancebut is also combined with infrastructure components inthe area o f climate change, capacity building at MET, support o f the Northeastern parks, clean production technology, National Protected Area Network, coast conservation and management, as well as integrated community based ecosystem management. 94. There are concerns about the sustainability o f Government programs on environment and tourism, given the high degree o f donor funding compared to Government funding for the sector. This concerns inparticular the CBNRMProgram that has been largely supported by donor funding for the last 10 years and requires a long- term sustainable fundingstrategy. 44These figures are based on the information provided in the MTEF and therefore do not include the Namibia-Finland Forestry Programthat is documented inthe NPC. 35 95. The tourism sector will obtain substantial funding through MCA over the nextyears that provides an opportunityto maximizethe contribution of tourism to economic growth and poverty reduction in Namibia. The Namibia M C A seeks to support the tourism sector with a total estimated budget o f US$ 96.9 million over a five- year period (2008-2013).45The 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 CBNRM Program but it 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 initself andwill requireprior planningwithin MET. 3.2.2 Challenges related to MET'SPublicSpending and Budget Management i) Issues related to MET'Sbudget management 96. MET made some good progress in the preparation of its MTEF, but key challenges in budget planning remain.46Weaknesses exist in budget planning at the regional offices, the centralized planningprocess, 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 planningcan only be addressed by Government's reform agenda (e.g., the dual budget preparation on program and line- itembasis given that the accounting system i s still on line-item basis). 97. There is also a need to strengthen financial control, accountingprocedures 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 it impossible to integrate the cost centers o f all directorates, to ensure 45 The focus of the MCA Namibia Program is twofold: (i) poverty reduction through economic growth and (ii) economic transformation. The program is comprised of four components: resource development and management, marketing, barriersremoval, empowerment andcapacitybuilding. 46Namibiaintroduceda range of reforms over the past six years, the most importantare a MTEF, mediumterm plans (MTPs) for each vote andPEMP. (See NamibiaCEAPER Volume I1for amore in-depthassessment.) 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 throughthe treasury single account. The centralizedcontrol system seeks to prevent the emergence of off-budget funds, budget overdrafts, and the misuse o f funds. This system had been strengthenedsignificantly with the introductionof IFMS. IFMS was introducedfor all sector ministries by the MOF in 2006/07 and seeks to eliminateoverspendingand enforce spendingdiscipline. 36 timely coherence between data collected by the Directorates and data available in the IFMS 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 in2007/08, 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 Ministrybut constitutesa key challengerelatedto the Ministry's aid management.Onthe 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. On the other hand, the varying disbursement and monitoring requirements from multiple donors, poses substantial management costs for the ministry. As a result, currently, the ministrymanages to monitor donor aid for only the purpose o f reporting to donors. Less monitoring is 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 beentaken into account and will needto 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 is 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 of assistance in the budget. 101. Another challenge for MET is the monitoring and evaluation of the sector programs' performance, which is important in view of the reinforcement of its programs, and planned in the context of the SP. While MET has made significant 48 These programs include in particular: the Community Tourism Lodge Development (N$ 20 million) and the Communitybasedtourismdevelopment program(N$21 million). 49 In the Namibian SRF, project assistance in form of grants is subject to the same Governmentprocedures as budget support and therefore is not inscribedin the budget as a separate budget line. Certaindonors are not comfortablewith this system as it makes it impossibleto earmark funds inthe budget of the beneficiaryministry as well as to track the utilization of external aid. At the same time, given the overall limited contribution of donor assistanceto the national budget, inthe pastyears the inclusion of donor assistanceinthe nationalbudget hasnot been apriority for the MOF so it made it possiblethat arange ofdonors assistancewas not includedinthe developmentbudgetor inthe SRF. 37 progress over the past years in improving its database and capitalizing on some o f its indicators established under PEMP, monitoring and evaluation o f the sector programs' performance and impact i s still weak." Inthe context o fNamibia'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 implementthe 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 opportunityfor the sector under the MCA, a main challenge for the sector is its capacity to implement the large investment program(on average US$l9 millionper year). According to the investmentproposal, the activities will be fundedina 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 is 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 US$ 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 implementationrecord, it i s questionable that any o fthe public sector implementationagencies will be able to keep up with the speed and scope o fthe M C A implementationover 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 NamibiaCEAPER Volume I1for amore in-depthassessment. USAID funds havebeenimplementedthroughNGOs with the World Wildlife Fund(WWF) beinga key co-investor and the NamibiaNature Foundation(NNF) being the main subcontractor. Though these funds are not documented in the MTEF, importantfundingwas providedby USAID over the past years to support Namibia'sCBNRM 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 of this program will require intensifiedefforts by NTB and the private sector to build on existing mechanisms andincreasethe scope oftheir existingmarketingapproach. 52MCA 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 ininfrastructureto unlock private sectorhusinessopportunities, and d) revolving funds. No grant or equity fundingwould be made directly availableto companies or private individuals.However, equity support to community owned ventures (for example conservancies) could be considered. Technical assistance and research could be consideredbut only when ofan immediate supportive naturefor the main action. 39 IV. Recommendedactions 105. This study presents an important opportunity for GoN, inparticular MET and all relevant stakeholders in the sector, to bring to mind again the importance o f natural resources innational economies, the achievements and current constraints inthe sector's legislative and policy framework, MET'Sinstitutional capacity to accomplish its mission, as well as the effective and efficient utilization and management o f the Ministry's public expenditures. The main objective of the report is to assist the Government in the implementation of MET's SP as well as in reinforcing its dialogue with MOF and the developmentpartners. 106. Now that MET has finalized its SP, the Ministry would need to appoint a task force (under the SP) to launchthe implementationof the Planand 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 andmonitoredprocess. 4.1. Recommendations 107. As the CEA 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 intable 1.3. that the Ministry may wish to embark 0d3: 1 1.Improvingand implementingMET's policyand legislativeframework I 108. With the tourism sector being one o f the fastest growing sectors, there is 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. It would be important that MET'S senior management approves the tourism draft policy so that it can be submitted to Cabinet andParliament in2008. 109. Finalizethe draftingof the outstandinglegislation.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 actionplan that is comprised of the CEA recommendationsand proposedactions. These are grouped according to a short- (up to 1 year) and medium-term(up to 3 years) timeframe and are attributedto the responsible ministry or public or privateagency. 40 Bill, the Parks and Resident Neighbors, and the Human-Wildlife Conflict Policy) should constitute a priority for the Ministryas they represent together MET's empowering legal framework. In addition, a draft MET CBNRM Policy Framework and Implementation Guidelines i s available and should be endorsed in 2008 by MET. Additionally, new policies and legislationneeds 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 leadon 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 andnon-renewable basis. Private companies have investedincommunities 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 miningand tourism activities suggest a review and adjustmentof 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 takingon a more responsible self regulatory role; inorder to address cost-effectively andthroughpartnership arrangementsthe existingand fbture sector challenges. 111. Establish a process and set of procedures for policy development, implementation, and monitoring. A clear process is required identifying who is 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. ReinforcingMET's institutionalcapacity at the central level. The Ministryis currently conducting a study on reorganizing options for the Ministry. Following the outcomes o f the study and the expected DIP, it would be important for MET to establish a human resource management and development plan that is comprised of the training and other capacity building54needs related to: i)the new responsibilitiesunder EMA, ii) the tourism concession and wildlife concession policy, and iii)budget management. This plan should be part of MET's annual business plan. Furthermore, the reorganization o f the ministry constitutes an opportunity to address (i) institutional inefficiencies (e.g., a 54 Inaddition with a MET specific training and recruitment plan tailored according to identified needs, sub-sector specific(CBNRM) andmostlyon-the ground relatedtasks will continue to be outsourcedto NGOs. 41 review o f its 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 buildmore 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) installation o f a MIS, together with the (iv) the establishment o f a policy, planning, and monitoring unitwithin 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 assessmentreports, 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 andbetter information sharingbetweenthe 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. In 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, andthe dissemination o fthe appropriated budgetceilings. 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 its 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 its SP. T A I is a global coalition o f civil society groups that promote access to information, participation, andjustice in decision- makingthat affects the en~ironment.~~ 55The coalition works to hold national Governments accountable for their commitments to these ideas as expressed in Principle I O of the 1992 Rio Declaration and more recently in the 2002 Johannesburg Plan of Implementation. TAI partners use a common methodology to conduct national-level independent assessments o f both law and practice. 42 I2 a) Reinforcinglocal 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 legislationthat 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) pursuingacloseworkingrelationshipwiththeRCs; iv) improving environmental awareness amongst high-level decision makers at local, regional, andcentral 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) usingthe opportunity (with the recent approval o f the EMA)to vigorously strengthen the regularityandquality o f EIAs.~~ 117. Document and disseminate the "best practice" experience of Walvis Bay in other municipalities. Until today, only two Local Authorities (Windhoek and Walvis Bay) have started implementing Local Agenda 21. MET should encourage and actively supports local authorities throughout Namibia to establish Local Agenda 21 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. Decentralizingsome of the Ministry's functions. It is recommended that MET focus on 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 CBNRM 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 inbox IV.1below). '`See also SAIEA, Namibian Coast Conservation and Management (NACOMA) Project - Issues and options for institutionalmandates, policies and laws relatingto coastalmanagement, July 2007. 43 BoxIV.l: InterimManagementPlanbetweenWalvisBayand Swakopmund The establishment of the Interim Management Plan for the dune belt between Walvis Bay and Swakopmund is 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 of action that would help reduce the impact of holiday makers on the ecologically sensitive areas of the dune belt. The NACOMA Project actively supported the initiative. The example illustrates that civil society can manage the environment even inthe absence o f stringent laws. If such movements are officially supported, they can assume much of the non-core fhctions of METon 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 environmentalmanagement. I I2 b) Strengtheninginter-ministerial, NGO-Governmentaland donor coordination I andharmonization 121. The implementation of the Ministry's SP will need the participation of the development partners as well as other ministries (e.g., MOAWF, the Ministry o f Fisheries and Marine Resources, etc.) involved in the sector. It i s therefore important that MET establish regular discussion forums andmeetings. The Ministrycould 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 inthis 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'Sprograms 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 is 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 own specific modalities and procedures. The Ministry's efforts to strengthen its budget process and reporting while embarking on a comprehensive sector development program offer the opportunity to embark on a Sector Wide Approach Program (SWAP). Box IV.2 below i s an example o f how a CEA 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 andmonitoring o f different donor projects. Convincing donors to modify their project approach towards sector-wide medium to long term funding arrangements will require as aprecursor establishment of: i) a comprehensive, costed, and prioritized sector expenditure framework to operationalize the SP and to orient investment inthe sector, and ii) an improveddonor coordination framework. At the same time, improvements in MET'Sbudget management provides incentives for the donor community to focus on enhancing aid alignment andharmonizationinline with the Paris declaration. into discussion around Natural I f Resources Management, The CEA %\ 8 \\ provided a rationale for involving \ e11 *r c 6 all partners in a broader dialogue 1 and approach, moving to e ~ v i ~ o ~~eon~~e l~ aThrough n c e ~ the process shown here, the Government and its partners decided to prepare and implement a new Natural Resources and Environmental Governanceprogram. Three key areas of governance were defined as we31 as the following objectives: (i)improving revenues management and transparency in forestry and mining, (ii)securing livelihoods in 45 13. Improvingthe financialandbudgetmanagementat MET 124. The Ministry o f Environment and Tourism's Medium Term Expenditure Framework (2007/08) shows a returnto the trend in the Ministry's funding after special budgetaryallocations in 2006 and 2007. The question o f options for funding Ministry's activities inthe context o f the Strategic Plantherefore 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 regardingthe future operations andmaintenance 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 it does not deal with the institutional and capacity issues o fthe ministry and seems to be disconnected from the activities plannedunder the Strategic Plan. 125. Hence, a key priority should constitute the preparation of an annual implementationplanthat derives from the Strategic Plan. This planwould 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 MCA) and embedded in MET's MTEF 2008/09. This, inturn, 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. It can be assumed that the annual implementationplanwill stillresultin a (more realistic)fundinggap. 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 accordingto MET'Sprioritiesand responsibilities: 127. Increasing revenue efficiency. A periodic review and revision of 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 ''Assessingthe levelof GDP financedbythe sector shouldprovidefollow-up funds for identifiedgaps. 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 of 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 IT system to better monitor collection at park entrances, accompanied with respective training. 128. Strengtheningbudgetefficiency.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 recommendationsaim to assist MET in strengtheningits capacity in aid management: 9 MET and National PlanningCommission 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 METwill be also effectively registered. ii) ItwouldbedesirableforthedonorcommunitytoassisttheMinistrytoinstalla 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 inthe sector to improve overall donor aiddocumentation andharmoni~ation.~~ iii) TostrengthentheunityandtransparencyofMET'sbudget,theimplementationof 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. It would be important for MET to strengthen its budget planningto better identify its needs and to defend well its funding position at the M O F and the development partners. Some o f the key measureswould be: (i) strengthening the budgetingcapacity o f the Parks and Wildlife, (ii) continuing to reinforce MET's budget programming and (ii) 58See Volume I1o f the CEAPER. 59 Iti 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 by MET nor if this process will continue. 47 improving the preparation o f the recurrent and development budget (e.g., by introducing a budget costingmodel).60 131. Lastly, it would also be important to establish a comprehensive and operationally- focused monitoring system to allow the Ministryto monitor and evaluate the efficiency and effectiveness o f its programs. There is a need to strengthen PEMP indicators by linkingthemto MET's budget andprograms. 132. Increased support for MET'S key function, park infrastructure, and institutional gaps. The implementation o f the SP constitutes an opportunity for the Ministryto reallocate some o fits resources; particular attentionshouldbe givenherebyto the DEA and the CBNRM 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 DEAmore efficient. The same case canbemade for DOT andthe CBNRM sub-division. The CEA report flags the inadequate funding for operating and managing national parks infrastructure. Moreover, as mentioned above, the implementationo fthe SP (inparticular the EMA and the new Concession Policy) as well as the M C A investment program require METto train its staff and conduct capacity-building measures. I4. Areas of future advisorv services and analvticalwork 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 humanresources management, inparticular at the level o f the regional offices, and lastly (iv) conducting a similar exercise inthe other natural resource management sectors (including forestry, fishery, water, etc.) which all contribute to the national economy. 6o SeeVolume I1ofthe CEAPER. 48 0 v, 3 VI E I I N m m m 4 4 4n m v, 6 N d: N %xa M - 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 A N G O L A Z A M B I A Lubango OSHANA OHANGWENA Kunene Oshikango Uutapi TI Oshakati Lusaka Katima Ondangwa oT Opuwo Okavango Rundu KongolaMulilo OSHIKOTO Bagani N OMUSA K AVA N G O Etosha CAPRIVI a Pan mSesfontein To Okaukuejo Tsumeb Maun i Mts. Omatako b Otavi Grootfontein D K U N E N E Ulavi Tsumkwe 20°S Outjo O T J O Z O N D J U PA e 20°S Khorixas s Otjiwarongo e Eiseb Kalkfeki Okakarara r Brandberg t Ugab Epata Uis (2,606 m) To Omaruru O M A H E K E Livingtsone E R O N G O Okahandja B O T S W A N A Karibib Swakopmund WINDHOEK Gobabis K H O M A S To Gaborone Walvis Bay Rehoboth K a l a h a r i ATLANTIC Kalkrand Aranos Stampriet D e s e r t OCEAN NH A R D A P Nossob Maltahohe Mariental a 25°S m 25°S ib Fish D Keetmanshoop Luderitz es e r Bethanien K A R A S Great Karas To Kimberley 0 50 100 150 200 Kilometers t Mts. Grünau Karasburg To 0 50 100 150 Miles Gaborone NAMIBIA Oranjemund Orange This map was produced by the Map Design Unit of The World Bank. S O U T H The boundaries, colors, denominations and any other information 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 A F R I C A endorsement or acceptance of such boundaries. Bitterfontein 15°E 20°E MARCH 2007