Govt Asks for Continued Donor Support

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By Catherine Sasman WINDHOEK The World Bank and other international financial institutions should create a special window for Middle Income Countries (MICs) to access affordable funding. This came as a proposal by the Namibian Government at the Conference on MICs in Madrid, Spain on Thursday and Friday last week. The proposal was presented at a joint conference with the UN Department of Economic and Social Affairs and the Spanish Agency for Cooperation. It dealt with questions related to the development agenda of these countries, as well as their global inclusion, democratic governance and international cooperation. The government in its position paper proposed an increased volume of quality investment in the economy, as well as improved grant aid and concessional loans as “appropriate means of support”. It called for direct budgetary support as the most preferred mode of external assistance for its flexibility in the allocation and utilisation of official development assistance (ODA). Aid in Namibia has seen a steady decline from US$110 per capita in the 1990s to US$60 per capita in 2005, according to Namibia’s position paper at the conference. The number of bilateral donors active in the country has declined from 22 in the 1990s to 17 in 2006. There are indications that a further three donors might leave the country by next year, with no significant inflow of foreign direct investment (FDI) to compensate for the loss of ODA. Moreover, donor support in the form of technical assistance (TA) and other areas is “not as enthusiastic and effective as it should be”. Namibia is classified as a lower middle-income country and had to contend with biased donor intervention in favour of Least Developed Countries (LDCs). At present, MICs receive US$17 billion of net development assistance, notwithstanding the fact that 40% of the world’s poor live in these countries. With its recently launched preparation of its Third National Development Plan (2007/08 to 2011/12), the government thus requested that donors align their country assistance strategies and interventions to the priorities identified in this development framework. In addition, it put forward that donors utilise Namibian Government institutions and systems and procedures in areas such as procurement and financial reporting rather than soliciting new institutions and procedures for aid disbursement and management. “[The] donors should ensure predictability of aid flows in the medium-term and flexibility in the utilisation of aid to enable the government to plan the development programmes and pursue their implementation, monitoring and evaluation.” The Namibian economy is dogged by sharp inequalities and grinding poverty. An estimated 35% of its population of 1.9 million lives below the poverty line of US$1 a day. This translates into a gini-coefficient of 0.6 as opposed to an average of 0.43 of other MICs. Since independence, the country has undergone a moderate average economic growth of 4.1%. But, says the report, the “growth has not been rapid enough to substantially reduce poverty rates”. The overall unemployment rate in 2004 rose to 36.7% from 33% in 2000, with the unemployment rate among the youth (15 to 24-year-olds) at 60%, one of the highest in Africa. Above and beyond that, Namibia is not considered as a particularly favourable destination for potential foreign investors. The World Economic Forum’s latest Africa Competitiveness Report points to the country’s inadequately trained workforce as one of the most problematic factors. Furthermore, international trade forms a dominant part of the economy, its future depends on foreign aid, hence the call for ‘aid for trade’. “[Namibia] has a long way to go in order to achieve its goals of expanding trade and integrating into the global economy. In this regard, the country needs both technical and financial support from the international community,” says the report.