Africa-Press – Namibia. Namibia is exposing itself to potential revenue losses from one of its most valuable mineral resources.
Auditor General (AG) Junias Kandjeke has warned of serious weaknesses in how the country’s gold mining royalties and taxes are verified and collected.
In a performance audit covering the 2020/21 to 2022/23 financial years, Kandjeke found the then Ministry of Mines and Energy (MME), now the Ministry of Industrialisation, Mines and Energy (MIME), and the Namibia Revenue Agency (NamRA) “did not fully meet their responsibilities” in revenue collection from gold mining, citing gaps in risk management, production verification and tax auditing.
The AG’s audit found that the MIME’s Directorate of Mines (DM) did not provide evidence of risk identification for gold mines as required by the ministry’s risk framework. This, the AG stated, could lead to under-reported production and sales, resulting in a loss of revenue for the State.
“The absence of risk management procedures, according to the audit’s findings, impairs the DM’s ability to foresee, reduce, and address risks unique to the gold industry, jeopardising its ability to maintain compliance, openness, and maximum revenue generation in the gold mining sub-sector,” the AG’s report states. The AG, therefore, recommends that the executive director in the mines ministry should operationalise their Risk Framework and Policy of 31 August 2019 and identify risks that could affect collection of expected State revenue.
Namibia’s mining sector accounts for about 7% of the country’s economy. Gold mining companies reported a combined turnover of N$19.6 billion between 2020 and 2022, while royalty income rose from N$219.7 million in 2020 to N$234 million in 2022. Against that backdrop, the AG’s report warns that oversight weaknesses could undermine the integrity of Namibia’s mineral revenue management.
At the mines ministry, the audit found that the DM’s failure to operationalise the Risk Framework makes it virtually impossible to anticipate or mitigate threats such as underreporting of production and sales. This exposes the State to possible royalty under-recoveries.
Also concerning, the AG’s report states, there are deficiencies in verifying production volumes. The AG asserts that the DM did not consistently apply its own Standard Operating Procedure for monthly gold-stock reconciliation. The required formula, closing stock equals opening stock plus production minus sales, was not systematically used, and supporting documents such as stock records and sales documentation were not consistently reviewed. The AG recommends mandatory application of the reconciliation formula for all submissions, the introduction of a structured verification checklist, and independent validation of production, sales and stock data before royalty assessments are finalised. Strengthening these controls, the AG’s report states, is critical to ensuring accurate royalty calculations and safeguarding national mineral wealth.
On the tax side, the Namibia Revenue Agency (NamRA) told auditors it conducts transfer-pricing risk assessments and comprehensive tax audits on gold mines. However, the AG remained adamant that no evidence was provided to substantiate these claims. The audit found that no thorough tax audits, thin capitalisation reviews or transfer-pricing audits were conducted during the review period, weakening the agency’s ability to detect profit shifting and illicit financial outflows.
Kandjeke further recommends that the NamRA Commissioner Sam Shivute establish a systematic, risk-based tax audit programme targeting high-risk industries such as gold mining, develop sector-specific audit guidelines, and improve coordination with the mines ministry to cross-verify production and royalty data. Without urgent reforms, the AG’s report cautioned, Namibia risks undermining transparency, weakening fiscal oversight and forfeiting revenue from a high-value national resource. “The audit comes to the conclusion that NamRA’s failure to perform a thorough tax audit constitutes a serious revenue assurance oversight and reduces the efficacy of NamRA’s procedures for monitoring tax compliance,” the AG’s report states.
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