Analysing the fiscal sustainability of Namibia`s old age grant

Countries across the globe strive to address and achieve the welfare goals, one of which is the right to income security and sufficient social security pension in old age. In Namibia, Article 95 of the Constitution guarantees all senior citizens a regular pension sufficient to maintain a decent standard of living. The provision of a universal non-contributory social pension is critical in addressing elderly poverty. However, this provision comes at a cost and has fiscal ramifications if the necessary parameters are not kept in check and balanced on time. The thrust of this study is to analyse the fiscal sustainability of Namibia’ Old Age Grant. It is concerned with three main objectives; first, to ascertain the relationship between Old Age Grant expenditure and its independent variables namely: benefit cost, funeral benefit and number of beneficiaries; secondly to determine the expenditure of the Old Age Grant for the next 20 years, from 2021 to 2041, and finally to determine whether the projected expenditure is fiscally sustainable. The study employed a quantitative approach with data derived from a number of secondary sources. An econometric model (Old Age Grant Expenditure Model), simulation, and forecasting techniques were used in analysing data in the study. The main finding of the study is that, 99% of Old Age Grant expenditure variation is explained by the independent variables. On scenarios tested, Old Age Grant is found to be fiscally sustainable in the future provided that future-benefit amount adjustments are informed by the economic situation and with the inflation rate serving as a guide. The results further show that Old Age Grant expenditure as a percentage of government revenue is approaching the doubling point which can impose a fiscal burden on government expenditure. It is recommended that future adjustments of the grant benefit amount be informed by economic conditions, and that no political interference be used to influence the grant amount, as high political influence could render the grant expenditure unsustainable.

Grantor dc:publisher

University of Namibia

Year dc:date.issued

2022

Author dc:creator

• Kanyama, Marta Ndahafa

• Benefit amount,
• Expenditure,
• Fiscal sustainability,
• Forecasting,
• Grant,
• Model, old age grant,
• Namibia,
• Simulation

Language dc:language.iso

en

Handle dc:identifier.uri

http://hdl.handle.net/11070/3185

OAI identifier oai:identifier

oai:repository.unam.edu.na:11070/3185