EU Aid Phaseout Worrying


By Surihe Gaomas WINDHOEK The Government is concerned that some European Union (EU) member states are phasing out developmental aid from the country. Deputy Foreign Affairs Minister Lempy Lucas said this was happening at a time when the country needs financial assistance to deal with pressing social and economic imbalances. She was speaking at a function to mark the 56th anniversary of Europe Day. “It is our hope however, that the European Union as a multi-lateral body will make up for the vacuum created by those member states who have decided to pull out of Namibia,” said the deputy minister. According to the European Commission, countries intending to pull out of Namibia over the next four to five years are Sweden, Finland and the Netherlands. Recently, Namibia has been appealing to be accorded the Least Developed Country (LDC) status in order to deal with its high HIV/Aids prevalence rate and increasing poverty. Currently, as a middle Income country Namibia does not qualify for soft loans and cannot access benefits offered by donors and other international agencies. In addition, Namibia has one of the highest income disparities in the world, which presents a very different picture on the ground. Lucas appealed to the European Union for more support under the 10th European Development Fund, within the framework of the EU Strategy for Africa, adopted and launched last year by the EU. Over the years, there has been a shift from grants to borrowing from international bodies. In light of this, the Permanent Secretary in the Ministry of Finance, Calle Schlettwein said because Namibia as a Low Middle Income country now has to borrow at fixed commercial rates rather than receive soft loan rates. “As a country, we can’t borrow at high rates and are still in need of development finances at more acceptable rates,” explained the PS. In an interview with New Era, Head of the European Commission to Namibia Antonius Brueser said that Namibia does not really have to worry about being classified as a Low Middle Income country as long it can set its priority projects clearly from the onset. “The only disadvantage is that Namibia cannot borrow at lower rates from the IMF and World Bank, but the country can look at the value for money factor,” said Brueser, adding that government can look into assistance in certain specific projects for development for the next 10 to 15 years. He noted further that the focus should be on declaring big social projects like education for instance, and determine the value for money. “Questions that need to be asked are whether these projects are worthwhile for the country. With loans people have a much bigger interest, but are they using it or not for cash benefit at the end of the day,” he added. In his official address, the Head of the European Commission stressed that Namibia can be proud of its small dependence on international assistance, but should keep in mind that politicians and beneficiaries have to understand that taxpayers around the world have become more and more reluctant to support policies and activities which do not show minimum results and measurable outputs. Meanwhile, government and the commission have already started discussions over the use of future funds under the 10th European Development Fund, available from the year 2008 onwards.