Tuesday 18 May 2021
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More debt for?

In a rather expected move, government has turned to the African Development Bank for a cash injection of N$10 billion to meet some of its financial obligations.
In the ongoing debate over the billion dollar loan that was approved by the AfDB this week, young people particularly continue to express concern over the repayment of the loan, which in all likelihood will have to be settled by them.
Namibia is cash-strapped but some of the departments in government continue to operate as if Treasury is filled to the brim.
Just a few years back, Namibia was an icon for many developing states both from a political and economic point of view, a situation that has slowly but surely changed.
Critics have long pointed out that thousands of Namibians are mired in poverty and that prudent management of resources can do wonders to ease their plight. Many say that the country would be better off using the money to build roads and classrooms, or pay its debts. But now government has taken up more debt to plug the holes.
The controversy surrounding the latest financial assistance is not simply a matter of perspective, but the nation needs to know in detail what the money will be used for.
What we know so far is that the money will be used to finance the Namibia Economic Governance and Competitiveness Support Programme (EGCSP).
This programme is certainly new to many Namibians, perhaps government can come clean and explain point by point what the programme entails and why it is only being made public now.
Namibia registered one of the highest average growth rates in Africa over the past 20 years and made some good progress in reducing poverty, however it now seems that growth was not sustainable.
AfDB clearly points out that more progress is needed to further reduce unemployment, and income inequality and indicated that challenges are compounded by bottlenecks in public financial management (PFM) and the business environment, which limit the pace of industrialization and economic diversification.
These challenges are not new to government, in fact, local experts have long pointed them out but it fell on deaf ears. Let’s hope now since it is being pointed out by outsiders, our leaders will do something about it.
In 2016, Namibia recorded a sharp slow-down in real gross domestic product (GDP) from 5.3% in 2015 to 0.2%.  As a share of GDP, the fiscal deficit at 8.3%, the current account deficit at 13.7%, and public sector debt at 39.8%, had also markedly increased, while international reserves at 2.8 months of imports were below the international benchmark of 3 months.
One has to ask where it all went wrong for this once-promising country because the growth has been so promising over the years that we forgot to prepare for the dark days ahead.
The saying ‘if you fail to plan you plan to fail’ best describes our governments over the years.
But buried in the debate is the fact that this lending is actually nothing new to Namibia, even when times were rosy. And it’s not a little ironic that it took the AfDB to tell us what we already knew but were too proud to acknowledge the need for change.
At the end of the day, the Geingob administration has to make the people understand why the government is getting N$10 billion from AfDB while reckless spending continues unabated in some quarters of government.
The administration has to convince the people that it will be able to strike a good balance between meeting the country’s loan conditions and uplifting their[populace] welfare. For a while it may take pride in the fact that lending institutions still have confidence in Namibia to lend us money, but we must double our efforts to build our reserves again so that we can sustain our own affairs.

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