November 01, 2024
Economy

Tollgates not feasible for Namibia – analysts

March 31, 2023
Tollgates not feasible for Namibia – analysts

Analysts say the introduction of a road tolling system in the country is not feasible highlighting that operational costs and decreased economic activity in smaller towns will outweigh potential revenue generation.

This comes as the Road Fund Administration has reiterated its stance that toll roads are a possible solution to collect taxes to fund road infrastructure in the country.

However analysts say there are alternative ways of raising funds to upgrade and maintain national roads.

Local economist, Gabriel Erastus, said the tolling system should not be introduced in Namibia yet as it will shrivel the economy of small towns with high reliance on tourist arrivals.

“The cost and benefits of the tolling system must be taken into account. The most important details of a tolling system in small towns are that it is not only a cost for the small towns, but also an additional cost for those using the tolled routes, creating a macro problem and cost that affects the people who benefit from the routes. It is critical to consider the economic development and diversification of the economy, as it can lead to wasted money,” he said.

He highlighted that the risk lies in the reduction of the flow of money and capital to specific places due to the additional cost placed on routes

“The cost of living in Namibia is already high, and any little addition to change the consumption pattern is not enough to burden the few people with purchasing power. This will lead to different routes and economic losses for smaller towns, such as Keetmans and Okahandja. It is very critical looking at the spread of economic development and diversification, you would not want to stop people from Opuwo going to Windhoek for instance, as Opuwo is already dry, with no sophisticated economic activity, as such they rely on tourists.” he added.

This comes as Road Fund Administration (RFA) CEO Ali Ipinge said his office has identified 23 road sections for the establishment of tollgates in Namibia as a sustainable source of revenue for ongoing road maintenance and improvement.

This was after the Fund had identified over 70 road sections across the country for tolling, with only 23 viable for setting up tollgates.

“The impact of it is that we are going to see a massive increase in our revenues, by about one third where we are now. This will translate to about between N$500 million to N$750 million per annum, just by tolling 23 sections of our road network,” said Ipinge.

Road tolling is when drivers pay a fee to make use of certain sections of the road, with funds raised used for the road's upkeep and maintenance.

“The impact of it is that we are going to see a massive increase in our revenues, by about one third where we are now. This will translate to about between N$500 million to N$750 million per annum, just by tolling 23 sections of our road network,” said RFA CEO Ali Ipinge.

Former Director at the Namibian Economic Policy Research Unit Professor Henning Melber asserts that the introduction of a toll system for Namibian roads is not a suitable instrument due to the limited options for road users who would prefer to seek toll-free alternative routes for financial reasons.

Melber said the toll system would add substantially to the expenses of people who are already hardly coping.

“If a functioning public transport system were an alternative, it would reduce CO2 emissions by encouraging more people to change behavioural patterns and use buses or trains instead of private cars. However, the introduction of a reliably functioning toll system, its maintenance costs, and the risk that road users would try to avoid paying the tolls might reduce the estimated/expected income generated,” he said.

The sociologist quizzed how road tolls would be best implemented with numerous smaller roads widespread across the country.

“Would there be checkpoints installed for example in Tses, Aus, the road to Dordabis, Wilhelmstal, Breakwater and so on, where cars will join or leave, to ensure a fair system of fares and control - not to mention the numerous farm pads along the way?” he questioned.

He emphasised that the practical side of implementation would merit some explanations.

“Could I join after Breakwater and leave before Okahandja the toll road without being registered? It might create entirely new routes with minor detours for those who are eager to avoid paying tolls,” Melber said.

Simonis Storm economist Theo Klein said the cost of setting up tollgate infrastructure and the ongoing operational costs will likely be outweighed by the potential revenue collected from all drivers passing through these tollgates.

“Government has often cited that they aim to make Namibia a logistics hub for the Southern African region, and Namibia needs proper roads and to expand national highways to dual carriageways in order to attract transport business for the local private sector,” Klein said.

“There are alternative ways of raising funds to upgrade and maintain our national roads for this purpose. The cost of setting up tollgate infrastructure and the ongoing operational costs will likely be outweighed by the potential revenue collected from all drivers passing through these tollgates.”

He however acknowledged that the RFA is seeing a decrease in its revenue as a result of Namibians buying physically less fuel.

To raise funds, Klein noted that the RFA should look at alternative ways such as raising driver licence application and renewal fees and increasing the fee that foreign drivers pay at border posts, amongst others.

“Introducing a levy for local truck companies, increasing the export levy on companies who export goods and giving a portion of this to the RFA, raising the RFA fuel price levy. Introducing a levy on commercial vehicles when purchased from dealers, and increasing the development budget request to the Ministry of Finance,” he said.

“These measures will increase the cost of living for the average Namibian, but roads are crucial in developing this country given the initiative of becoming a transport hub for the region. NamPort has already started benefiting from increased cargo coming our way instead of going to South Africa.”

RFA reports that 32% of bitumen surfaced roads are older than 10 years and are no longer able to protect the surface from water penetration and provide the required skid resistance for safer roads.

Klein noted that at least 49% of the gravel road network is in poor condition, and an investment of at least N$675 million per year is required for the next five years to reduce the backlog.

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Last modified on Monday, 03 April 2023 18:04
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