18 February 2019

Namibia to Borrow More From Germany

FINANCE minister Calle Schlettwein says Namibia will consider borrowing more money from Germany to fund several developmental projects.

Schlettwein said the loans would be sourced through German development bank KfW, which has some cooperation agreements with the government.

He made these remarks last week in an interview on the sidelines of a meeting between president Hage Geingob, Bank of Namibia governor Ipumbu Shiimi, and the president of the German central bank (Bundesbank) Jens Weidmann at State House.

The minister said Namibia and Germany already have a loan cycle agreement that covers the development envelope and is evaluated every two years.

The two countries meet biennially to discuss and agree on new projects under the development envelope, managed by the National Planning Commission and the finance ministry.

Although the minister did not mention the size of the loans to be sourced from Germany, he said the two governments will meet in March to discuss and agree on new projects to be financed.

Schlettwein said at the moment, the KfW was already funding several developmental projects in the country, including roads infrastructure development through soft loans. Namibia wants to deepen this cooperation with Germany, he added.

"We are not only considering, but we are already taking loans through their agent, which is the KfW, and they have been with us for many years. We have a cycle with Germany, and every two years, we agree on the development of the envelope, and every second year, we discuss new projects. That [arrangement] will be continuing," he stated.

According to the minister, Namibia has since 2015 borrowed a total of N$815 million from Germany to fund several road construction projects, and the programme for community land development.

He said the German bank has also given loans to the Windhoek municipality, the Development Bank of Namibia and the Roads Authority, amongst other institutions.

The N$815 million previously acquired does not include loans given to the City of Windhoek and several state-owned enterprises.

Schlettwein said the government will identify the projects to be funded under the new arrangement after March's meeting.

The minister, however, said the government would be cautious when taking up the loans to make sure that "our total indebtedness is not reaching ceilings that cannot be breached".

Despite his concerns, Schlettwein said the interest rates on the loans from Germany were lower than those incurred through domestic borrowing.

This means German loans are cheap, and they are "good loans".

"The interest rates we pay from borrowing from them [Germany] are below what we would pay in loans from the domestic market. So, they are cheaper than what we get from our bonds, so they are good loans," he explained.

Apart from the loans, Schlettwein said Namibia wants to partner with the German Bundesbank to address the issue of illicit financial flows between the two countries.

The Bank of Namibia would also utilise this experience as well as use the double taxation agreement, which includes information-sharing provisions with the German central bank.

"Illicit financial flows, whether it is money laundering, tax evasion or avoidance, are serious matters. We can gain from their experience and information exchanges to get the information of those who took money out of Namibia and put the money in their jurisdiction.

"We will be in a much better position to follow that money and recoup it because that is where the transactions take place," he noted.

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