Tuesday 18 May 2021
  • :
  • :

Namibia eyes BRICS to bankroll stimulus

The government wants to roll out financial packages to stimulate growth and is looking to BRICS to be one of its funders.
This was revealed during a media briefing session where the Minister of Information and Communication Technology Stanley Simataa briefed the media on decisions taken at the Cabinet meeting held on 21 August 2018.
At that meeting, Cabinet resolved that Namibia should explore the possibility of sourcing BRICS funding.
“Cabinet directed that Namibia explores the possibility of sourcing funds for the BRICS New Development Bank to finance the development of intra-regional infrastructure projects promoted by the Ministry of Works and Transport through the New Partnership for Africa’s Development(NEPAD) Presidential Infrastructure  Champions Initiatives,” reads the statement.
These projects include the Grootfontein-Rundu-Katima Mulilo Railway-line, Baynes Hydro-Power Project, Trans-Kalahari Railway-Line Development Plan and the Trans-Orange River Highway and Railway.
The announcement comes at a time when government sourced a N$10 billion loan from the African Development Bank.
It is also in the process of concluding another N$10 billion loan deal from China.
Finance minister Calle Schlettwein confirmed the move saying at this stage “we are just exploring”.
Speaking to The Patriot on Monday, Schlettwein said there is nothing wrong with sourcing funding from BRICS provided that “the conditions around it are well thought through”.
China is also part of BRICS, despite the fact that it is pushing its own African economic agenda.
China has promised African states that it will implement eight major initiatives with African countries in the next three years and beyond, in the fields of industrial promotion, infrastructure connectivity, trade facilitation, green development, capacity building, healthcare and people-to-people exchanges.
At a forum of African and Chinese leaders in Beijing earlier this month, Chinese President Xi Jinping pledged $60 billion in financial assistance for Africa over the next three years. The plan includes aid, investments and loans.
China had also promised the same amount to Africa at 2015’s business summit. Chinese companies will also be urged to invest an additional $10 billion into the continent.
Experts have expressed concern about potential debt issues arising from the financial relationship between Africa and China. Some have even claimed China’s loans are actually “debt traps” intended to gain leverage over Africa’s economy.
But a top Chinese official says the funds are helping Africa develop, and China says the deals come with “no political strings attached.”
China/Namibia ties
While the Namibian government is under pressure to be fiscally prudent to avoid further downgrading by rating agencies, its recent overdrive for loans has experts worried.
Official national statistics indicate that Chinese concessional loans make up only 2.6% of the total debt the country is sitting on.
The total amount of debt the country has on its back stands at N$76.6 billion at the moment.
As per the bilateral arrangement between the two countries, Namibia has benefitted from China in grants to the tune of N$1.3 billion, interest free loans at N$302 million and concessional loans worth N$1.7 billion.
At the same time, Namibia sourced a total of N$1.99 billion in loans from the China Export Import Bank.
The terms for the concessional loans are as follows; 2% interest, 0.5% commitment fees on undisbursed balance of the loan, 5 years’ grace period before repayment of principal starts and a 15-year repayment period.
Government officials who regularly attend Cabinet sessions said Geingob is hands-on during meetings, especially on issues of the economy, and demanded well-thought-out presentations, particularly in the current bleak economic climate.
Reportedly, he did not hesitate to ask that those that were unsatisfactory should be redone.
Last month, China declared its commitment to invest more than $60billion in Africa’s economy.
Asked about approaching China for money, Government insiders said China was among the countries that had been singled out during treasury’s presentation on the stimulus packages.
Economists have warned, however, that besides financing, Namibia needs a clear long-term plan to resuscitate the economy and create jobs. The government is also hoping that China will help to boost its infrastructure development plans.
Namibia and China have had close relations and Geingob’s administration appears to be drawing the East Asian giant even closer, amid cooling relations with the west. Geingob last month led a delegation of government officials and businesspeople on a state visit to China.

Leave a Reply

Your email address will not be published. Required fields are marked *