The Road Fund Administration (RFA) has suspended plans to introduce toll roads in the country until further notice.
“Due to the prevailing economic climate, coupled with high-interest rates and inflation, the RFA has decided to defer the planned stakeholder and public consultations on the implementation of toll roads in Namibia until further notice,” the fund announced on Tuesday.
A feasibility study conducted by the RFA had identified 21 roads that could potentially be tolled, generating N$5.8 billion in revenue. This revenue, the RFA said could be used to fund capital and maintenance expenditure over five years, resulting in N$7.5 billion in additional revenue to subsidize roads across the country.
“Empirical research indicates that tolled roads are better maintained, leading to more job opportunities, economic growth, and reduced vehicle costs. Additional econometric analysis reveals that tolling would contribute N$1.7 billion to the Namibian economy, with a yearly increase in GDP growth of 0.4%. This positive impact will be achieved through the creation of new jobs, reduced vehicle operating costs, and the effects of toll infrastructure investments.”
The RFA also highlighted the impact of electric and fuel-efficient vehicles, which has led to a 2% annual decline in fuel demand over the past 15 years, with fuel contributing approximately 54% to the RFA’s revenues.
“Fuel-powered vehicles and associated fuel demand will eventually phase out, rendering the current road maintenance funding model unsustainable. Relying heavily on the fuel levy for road maintenance is not viable in the long run,” the fund explained.
According to the RFA, the collections from road user charges are insufficient to fund the maintenance of the country’s road network.
“The total funding needs for the current financial year 2023/2024 amount to N$4.2 billion, resulting in a funding gap of 22% of the allocated budget.”
Last month, the Ministry of Mines and Energy approved an increase in the road user charge from N$1.48 to N$1.78, aiming to assist the RFA in meeting its funding requirements for road rehabilitations, upgrades, and maintenance.
Namibia possesses a road network of approximately 49,000 km, valued at N$101 billion, of which about 90% is unpaved.
Since its inception, the RFA has invested over N$20 billion in road infrastructure. Namibia ranks first in Africa and 21st globally in terms of the quality of its road infrastructure.
