15 March 2019

Namibia: 'Strategic Importance' Is a Ruse

opinion

Over the past four years, finance minister Calle Schlettwein has built a reputation as a prudent custodian of taxpayer funds.

Prudence does not win popularity contests. And the imagination won't be stretched to think Schlettwein is not popular with his Cabinet colleagues and their cronies.

Moreover, Schlettwein is arguably one of few truly transparent ministers, who regularly explains his ministry's decisions, albeit with flawed semantics.

But his confirmation to The Namibian last week that he would prefer Chinese loans (more than N$3 billion) to upgrade the Hosea Kutako International Airport rather than use private investors' money is a deviation from his reputed prudence. Sounds like something someone would do to be loved by the powers that be (elections fever?).

Schlettwein's rejection of a public-private partnership (PPP) deal is nothing short of strange, and raises more questions than he has answered.

"A public-private partnership will result in outsourcing the airport," Schlettwein told The Namibian. Indeed, a PPP would amount to "outsourcing" the airport to private operators. After all, investors need to recoup their money.

Schlettwein further argued: "Do we want to outsource our strategic asset to private companies? No," adding that the government needs to be in charge of such a "strategic asset".

This is where some of us would question why Schlettwein and some of his colleagues are hell-bent on taking on more Chinese loans.

The argument that the airport is a "strategic asset" that should not be outsourced is as dubious as when government leaders evoke "national security" to keep citizens in the dark about their dealings.

How difficult is it to justify property as a "strategic asset" of the state?

Taking more foreign loans, especially from other governments, at a time when Namibia does not have money and the economy is in a depression should concern us more than getting into PPPs, which often have to raise funds on their own (with some government backing).

But China has a reputation of forcing governments (for example in Zambia and Sri Lanka) to part with "strategic assets", which the capitalist-driven communist state takes full control of for several generations until the debt is paid.

Namibia should have learnt some lesson by now over the past two decades of feeding off Chinese money. Chinese companies get the projects, ostensibly because they are cheaper to hire; Namibia ended up losing more either because the "cheap money" was misused; or that the eastern super power has sharpened exploitation prowess.

The ministry of finance, under Saara Kuugongelwa-Amadhila, could not have so soon forgotten construction projects such as the fuel storage facility at Walvis Bay that was considered of urgent "strategic importance". It was given to a joint venture of China Harbour Construction Engineering and Namibian businessman Vaino Nghipondoka's Babyface Civils.

Apart from the ballooning cost from N$3 billion to N$5,5 billion in a space of two years, hardly any Namibians with expertise in building fuel storages were employed. A common complaint is that Chinese firms import their own machinery, building materials (including cement and steel), and labour, such as bricklayers and truck drivers.

What "strategic" importance is Schlettwein talking about?

The risk of struggling to pay Chinese loans back is high. And China is in a much stronger position to set terms than would private investors.

Actually, private operators are much more likely to make efficient use of the airport than leaving it in the control of government bureaucrats. And apart from saving taxpayer cash-flow, a PPP will force deep research and analysis of airport upgrades, and the spending will be in line with an estimated return on investment.

Would the prudent Schlettwein please step forward?

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