Government is toying with the idea of selling some state-owned properties in a bid to free up capital that can be used to prevent the country from drowning financially. Finance minister Calle Schlettwein is pushing ahead with the introduction of revenue generation and cost-cutting measures as he tries to raise money to keep the country’s struggling economy afloat. Namibia’s economy shrunk by 1.2 percent in the second quarter of 2016 compared with a revised 3.4 percent expansion in the first three months of the year, the latest data from the Namibia Statistics Agency’s shows. Construction, hospitality and mining sectors were the largest contributors to the decline, contracting 19.9 percent, 15.5 percent and 13.2 percent respectively in the quarter. Discussions about asset sales had already been taking place within the government since the recession period in 2009, but they were shelved after the economic situation improved. But last month those discussions surfaced again when Schlettwein wrote to his Cabinet counterpart, Works minister Alpheus !Naruseb requesting for the list of central, regional and local government buildings. In the official letter, seen by The Patriot, dated 16 August 2016 Schlettwein said: “The Ministry of Finance wishes to assess the extent to which Government could better leverage its assets.” “For this reason I wish to request your office to share with us, to the extent possible, the list of Central Government Buildings together with their title details by town and region and a similar list for Regional and Local Authorities,” Schlettwein requested in the letter. Such a sale will be the first on such a grand scale in an independent Namibia. There are however concerns that any moves that could be interpreted as privatisation could face internal resistance from the public and opposition parties. “Comrade Minister, I intend to seek consultation with you, upon receipt and consideration of the afore-said information,” he said.
Although Government has over the years sold off government properties, many have been sold way below market value. Earlier this year, The Patriot reported that Government last year sold 62 houses for N$6 million to government employees, meaning each house was sold for an average price of N$98 000. The Deputy Minister of Works and Transport James Sankwasa announced the windfall sale while presenting his budget speech when he announced that the works ministry will require N$312 million to maintain government properties during the 2016/17 financial year. “The exercise on the sale of government pool houses is an ongoing process. During the Financial year 2015/2016, Sixty two (62) Government Pool Houses have been sold to the occupants and an amount of N$6.08 million has being generated,” said Sankwasa at the time. He said the ministry continues attending to subdivisions of affected properties countrywide and the valuations of the various properties. Most of the state-owned residential properties are also in a dilapidated state while many are also occupied illegally by tenants not employed by government. The decision to consider the sale/lease of government assets marks a significant shift in policy and comes as Namibia faces funding gap. Namibia plans to raise about $5 billion in loans and bonds over the next decade to help diversify and industrialize its economy with any debt sales to take place in South Africa. Plans are afoot to issue rand-denominated bonds and get funding from countries including the U.S., China, India and Japan.
Namibia, one of Africa’s wealthiest nations with a gross domestic product per person of about $5,000, pegs its currency to South Africa’s rand on a one-to-one basis. While the rand has appreciated 12 percent against the dollar this year, since the start of 2015 it has been one of the worst-performing currencies among major emerging markets, weakening 17 percent. That’s caused the Namibian dollar to drop in tandem and made its debts in the U.S. currency more expensive to pay off. Property expert and Senior Manager Research and Development at FNB Namibia Holdings Namene Kalili said it is unlikely that Government would use its assets as collateral or security to borrow money. “I do not think they[government] will use them[assets] as collateral to raise debt. It is very unlike government to do that, I am sure they are looking at assets to offload, those that are not necessary or those that are under-utilized. This can be office blocks, residential property or those rented out to the private sector because there is not a strong case to hold onto them with the ongoing pressing revenue issues,” he said. With Government being the biggest land owner in the country and owner of multiple properties, Kalili noted that offloading some properties will be the quickest way to raise money. “Obviously those occupying the property will have the first option to purchase but the price has to be reasonable to ensure that it is affordable. Selling these properties is more of a compromise for Government because ideally they would not want to sell below properties below market value but politically it is also not right to put people out in the streets. If you look carefully, most government properties are under-maintained so most of the value is tied to the land instead of the property itself,” he explained. Even if some state properties are sold, Kalili does not expect government to make billions.
“Under the current circumstances, Government can even sell some of the properties to the private sector and rent the very same property for now just to free some capital and build again once the situation normalizes,” he suggested. In recent months, Treasury has invoked emergency measures to cut expenditure and enhance revenue collection. One of those include Inland Revenue Department’s directive towards government agencies and parastatals to demand that any invoice issued by contractors for payment should be accompanied by a valid certificate of good standing issued by inland revenue before any payment is made.