Training Levy No Fools’ Day Prank

SIX years after the law calling for its establishment was passed in Parliament, the Vocational Education and Training (VET) Levy on employers came into effect on Tuesday, 1 April (Fools’ day) and was implemented by the Namibia Training Authority (NTA).

After years of debate on the negatives and positives of the levy, employers who have not been exempted will pay their first levy instalments at the beginning of next month.

The former education permanent secretary, Vitalis Ankama, is one of those people in support of the levy. He says if vocational training institutions are well-funded, this help the government’s desire for industrialisation and contribute to the country’s economic development.

Ankama says some of the shortcomings of the current system are that colleges can not accommodate all the young Namibians wishing to enrol and that those who were enroled faced many challenges including the difficulty in finding job attachments.

“The levy will go hand in hand with the new educational policy,” says Ankama. The government recently introduced free primary education and plans to introduce free secondary education next year.

The NTA runs seven vocational training centres at Eenhana in Ohangwena, Nakayale in Omusati, Okakarara in Otjozondjupa, Rundu in Kavango, Valombola in Oshana, Windhoek in the Khomas Region and Zambezi in the Zambezi Region.

Vision 2030, the country’s economic blue print has put emphasis on producing a skilled labour force as a precursor for growth and competitiveness. However, vocational training in Namibia is lagging behind.

Under the Vocational Education and Training Act of 2008, the Ministry of Education imposed the VET levy by way of a notice in the Government Gazette of 27 January this year. This means every employer with an annual payroll of N$1 million or more must pay a levy of one percent of their payroll as VET Levy. Institutions that will be exempted from paying the levy include the State, regional councils, charitable organisations, public educational institutions not for gain and faith-based organisations.

NOT EVERYONE

IS HAPPY

Although the Namibian Employers’ Federation (NEF) welcomes introduction of the levy, it has reservations about its implementation.

In February, NEF secretary-general Tim Parkhouse, said the federation was alarmed on the cash flow implications on companies which are already engaged in training.

“We are concerned at the cash-flow implications on companies who are engaged in training, and remember that there are some companies already investing heavily in training. They will now have to pay the one percent levy upfront and only be able to claim back their 50 percent after one year. We would have liked this to have been effective after a maximum of six months, perhaps even every four months,” he said.

The federation was also concerned about the restrictiveness of the reclaimable expenses, as only Namibia Qualifications Authority (NQA) registered courses will be considered.

The NEF also requested that the levy be reduced to 0,5% instead of the one percent of the payroll.

Last month, the Construction Industries Federation of Namibia (CIFN) said the levy would be pointless if employers are not clear on what is in it for them.

CIFN general manager Baerbel Kirchner said employers need to understand which costs can be reimbursed, since training does not end merely with the delivery of content, but involves a spectrum of indirect costs.

Kirchner said instead of using tax credit, which is the sum of money deducted from the total amount an employer owes the country or use the train or pay approach, the NTA has chosen a payroll formula.

FULLY LOADED

Some observers have blamed the squabbles between suspended CEO Maria Nangolo-Rukoro and the NTA board last year as a sign that the levy will turn the NTA into one of the most resourced State institutions.

Acting NTA CEO, Anna Nghipondoka says the amount of the money to be generated will depend on the number of companies that will register and the size of the annual company payrolls. Simple mathematics on the number of companies that are eligible for the levy indicates that the NTA will be awash with money. This has raised questions whether the NTA will have capacity to collect and adequately utilise the levy.

But Nghipondoka counters this saying the NTA has developed a web-based IT system called the Levy Collection, Disbursement and Reporting System to cater for the collection and disbursements of funds.

“Tests have revealed this IT system is robust and capable of handling large transaction volumes. To ensure that funds are properly accounted for, regular reports on the performance of the fund will be prepared for scrutiny by the National Training Fund Council,” she said.

DODGERS

Nghipondoka said the NTA working with state agencies such as the Receiver of Revenue, will have a database that will be used to identify potential levy paying companies and their payrolls.

“In addition, the NTA will use annual reports of companies and audit firms to identify eligible companies,” she said.

She said since vocational training is very expensive and requires that the country keeps abreast with technology, the levy will supplement current funding for vocational training provided under the national education budget.

Nghipondoka says vocational training needs workshops of acceptable standards, which demand heavy financial and recurrent capital to meet the demands of the labour market.

“Training centres seeking to recruit competent staff must compete with the private sector, which has a better capacity to pay experienced professionals.”

Research conducted by the Namibian Employers Federation in 2011 highlighted the lack of training conducted within the industry, which in turn has resulted in a deficiency of skills and in turn constrains company growth and job creation.

“The VET levy can finance programmes and activities aimed at addressing these shortcomings,” says Nghipondoka.

Source : The Namibian