Evaluation of national road network funding in Namibia: the curse of efficient road user charges

Abstract

Infrastructure development, including roads, requires large capital investments coupled with proper financial administration to ensure sufficient financing and funding. Insufficient or uncertain budget allocation undermines the planning and execution of road maintenance, which results in deterioration. The search for stable funding solutions for road maintenance and rehabilitation reinforces the establishment of second-generation road funds. Namibia established the Road Fund Administration (RFA) in 2000 to manage the Road User Charging System (RUCS) and the Road Fund. Although Namibia has established a Road Fund and implemented the RUCS, the current funding system appears to have run into serious problems. Revenue generated by the current RUCS presents limited capacity to meet the required demands of roads expenditure. This paper sought to evaluate the relationship between the road-generated revenue and its allocation towards national road network expenditure in Namibia. The research utilised data from the road agencies to evaluate road revenue generated from the RUCS. The evaluation shows that financial deficits occur on funds generated from the RUCS and the government must thus subsidise the road sector. This finding may indicate the dilemma facing many developing countries, where revenue from road users does not cover total road costs due to limited capacity and economy of use. Additional funding sources are therefore required to fund these deficits.