26 June 2019

Namibia, Germany Seal Financial Deal

Namibia and Germany have signed a financial cooperation agreement on low-interest loans aimed at boosting the country's economy.

The agreement worth N$1,3 billion (€80 million) signed on Monday, is the second phase of the financial cooperation between the two countries.

The cooperation is meant for priority areas outlined in the national development plans, which include water, transport and micro-finance sectors.

The agreement was signed by finance minister Calle Schlettwein and outgoing German ambassador to Namibia, Christian Schlaga.

Schlettwein said the funding secured is for water supply projects, given the current drought in the country.

"It reflects the outcome of the government-to-government negotiations and provides preferential loans for, inter alia, potable water supply and support programmes for national road maintenance and rehabilitation. Notably, the funding for secure water supply is especially important, given the current pressing needs, which are exacerbated by the prevailing drought," the minister said.

The minister further said the agreement will allow the two governments to apply for preferential debt from the Kreditanstalt für Wiederaufbau (KfW) Development Bank.

"The agreement is a continuation of an existing agreement and not a new loan. The targeted loans uptake does not constitute additional borrowing, but means funding for budgeted projects. The disbursements provide for local currency arrangement, which eliminates foreign exchange risks," said Schlettwein.

Schlaga gave an assurance that the two countries will remain committed to working together on developmental projects.

He said the agreement gives Namibia the option of paying back in a favourable currency, in particular the rand or Namibia dollar.

One of the projects is the road rehabilitation and maintenance programme estimated to cost N$320 million.

This project is the second phase of the Swakopmund-Walvis Bay road, which will open up the free way. It is a continuation of the NDP5 support programme on road maintenance and rehabilitation.

In addition, N$$640 million was set aside for securing water supply in Windhoek.

The funding is meant for upgrading the water infrastructure for Windhoek, including the construction of an additional water reclamation plant.

An amount of N$320 million has been set aside for lending to micro and small business enterprises and low-income households. This will be provided as a long-term financing facility to NamPost for on-lending to micro and small business enterprises and low-income households through NamPost Financial Brokers.

To date, the German development cooperation with Namibia has reached about N$15 billion (more than €1 billion).

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