History

Background

The Road Fund Administration (RFA) was established on the 1st April 2000 by the Road Fund Administration Act (Act 18 of 1999), with the primary aim of managing the road user charging system, to secure and allocate sufficient funding for a safe and efficient road sector in Namibia. The RFA's line ministry is the Ministry of Finance and it reports directly to the Minister. The overall governance of the RFA is vested in the Board of Directors.

The establishment of the RFA came about as part of the institutional restructuring and reform of the road sector in Namibia which also saw the parallel emergence of two other parastatals; the Roads Authority (RA) and the Roads Contract Company (RCC).

The core functions of the RFA are the management of the road user charging system and management of the Road Fund.

RFA Mission

To manage Namibia's road user charging system to provide funds for a safe and economically efficient road sector, for the benefit of all road users.

RFA Core Values

The RFA has committed itself to the following core values:

Efficiency: promote efficient use of resources
Equity: apply principles of equity in determining rates of road user charges
Effectiveness: implement monitoring and control mechanisms to enable us to achieve our objectives
Transparency: act fairly and openly in our operations by subscribing to ethical standards
Accountability: ensure reporting to all stakeholders on utilization of resources
Integrity: apply truthfulness and consistency in all our operations
Safety: promote and contribute towards a safe national road sector.

Namibian Road Sector Reform

Namibia was fortunate to inherit an extensive and well maintained road network at its independence from South Africa, on the 1st March 1990. The road network was funded from the national government budget and the institutional setup was similar to those in most countries, with the Department of Transport within the Ministry of Works Transport and Communication (MWTC) being responsible for:

planning
designing
building, and
maintaining the national road network.

The urban roads were and currently still lies within the responsibilities of the local authorities (e.g. Municipality of Windhoek).

(a) Developing the road sector reform:

The Road Sector Reform in Namibia has developed in two phases. In the first phase, from 1990/91 to 1994/95, the focus of work was mainly on road taxation and road funding issues. However, once Government gave its support to the idea of a road fund in 1995, the work on reforming the road sector was widened to cover all relevant aspects of the road sector, including its organisation and management.

A road taxation study in December 1992 found a reasonable balance between actual annual average levels of expenditure on road maintenance and construction and revenue from road-related taxes, such as fuel levies and vehicle license fees. This confirmed that a de facto system of road user charging was already in existence in Namibia, although this was a fortuitous rather than intended. The findings, nevertheless, constituted an important motivation to introduce a system of road user charging. The report hence recommended the implementation of a system of road user charges, which would recover costs related to economically justified road construction and maintenance works in Namibia. The Cabinet approved the report recommendations in principle, and further approved the appointment of an Inter-ministerial Committee of Technical Experts (ICTE) to formulate final policy recommendations concerning the implementation of a system of road user charging for Namibia. The ICTE submitted its recommendations, including that a road fund should seriously be considered, to Cabinet in July 1995, which accepted all of the ICTE's recommendations.

In the course of 1994, the MWTC formulated a broad and comprehensive approach to the restructuring of the Ministry, which was translated into a project named the MWTC2000 Project. The project document for the MWTC2000 Project presented a vision of a new arrangement for the road sector, including the establishment of a road fund, the introduction of road user charges, and the reform of all operational units of the Department of Transport in the road sector, Le. the force account units and the plant pool.

The MWTC2000 Project's proposals initially envisaged the creation of two new agencies of the state; the Road Fund Administration (RFA) - to manage the road fund and the road user charges, and the Roads Authority (RA) - to manage the national road network. This was later extended to include transforming the plant pool, together with the force account units involved in road maintenance and construction in the Department of Transport, into create a commercially viable entity, the Roads Contractor Company (RCC).

(b) Implementing the road sector reform:

One of the early decisions made was to establish the three new entities in terms of three separate pieces of legislation. One reason for this was that the three entities fall under different Ministers. Another, more important, reason was to separate the road funding function, which is regulatory in nature, from the road management function, which is operational in nature. Consequently, the Road Fund Administration Act, the Roads Authority Act and the Roads Contractor Company Act were promulgated in October 1999.

The features of the three new independent organisational entities established by the three acts are as follows:

The RFA has the task of managing the road user charging system and administering the Road Fund "with a view to achieving a safe and economically efficient road sector". The board of directors of the RFA is appointed by the Minister of Finance and is autonomous in being able to take decisions about the level of road user charges. The RF A furthermore has autonomous powers to determine the expenditure on roads regarding both maintenance and investment.
The RA is responsible for managing the national road network. However, all maintenance and construction works must be let on contract subject to tendering, with the exception of work to be given to the RCC during the first three years of its existence. The Minister responsible for Transport appoints the board of directors and supervises performance of the Authority.
The RCC, which has evolved from the departmental roads maintenance and construction units, is a Companies Act company. The legislation affords it preferential treatment during the first three years after its establishment for the award of roads contracts within its capabilities, but thereafter it must compete on the open market for such work. The board is appointed by the shareholding minister, who is designated by the President. Initially, the minister responsible for transport was designated as the shareholding minister.

(c) Concluding remarks:

Conditions for bringing about a change in the road sector arrangements in Namibia have been favourable for a number of reasons, including that the road network was well developed and relatively well maintained at the time of introducing road user charging. The approach used to reforming the road sector also proved effective, including policy being developed systematically, and Government and stakeholders being kept apprised of each step in the development process.

A further contributing factor was that the process of transformation of the Namibian road sector since 1990 has consistently been supported by Sida, the foreign development aid agency of Sweden. A characteristic of the Swedish support was that it has allowed for local procurement, and therefore for the involvement of consultants and expertise from the region. Sida's rules of operations have greatly facilitated the effective implementation of the reform process.

It is difficult to assess what other countries could learn from the road sector transformation process in Namibia. Some of the policy principles inherent to the Namibian road user charging system might not be acceptable to the governments of other countries.

Firstly, many countries have a serious road maintenance backlog, which might be regarded as unfair to devolve on road users.
Secondly, not all countries subscribe to the principle that all road costs should be carried by road users.
A more serious policy implication, thirdly, would appear to be the fact that the current tax revenues on fuel products may have to be more generously redirected to their source, namely the road sector.

The above problem is more difficult to solve in countries with low traffic levels, since the charges to be imposed on individual road users in the form of fuel levies, are much higher in such countries. These considerations suggest that other countries may have to design their road sector reforms in ways that differ from the Namibian approach.