Government this week signed a Guarantee Agreement with Kreditanstalt fur Wiederaufbau (KfW) that will enable the Road Fund Administration (RFA) to obtain a South Africa Rand denominated loan of approximately N$447 million, at interest rate of 7.8% from KfW.
The funds are to be used to cover the funding gap for the upgrading of the Windhoek to Okahandja Road to a dual carriage-freeway standard. The massive project is currently being implemented by the Roads Authority (RA).
According to Minister of Finance Calle Schlettwein, who signed the agreement on government’s behalf, the Guarantee Agreement will enable the RFA to enter into financial cooperation under the programme, called Sector Wide Approach Road Transport 2 and 3. Schlettwein said interest on the loan is far below the equivalent local domestic bond (2.2 percent less) and he encouraged other State-owned enterprises (SOEs) to leverage their balance sheets to fund projects of national importance.
“This is another milestone achieved in strengthening the friendly relations and promoting economic development between the Federal Republic of Germany and the Republic of Namibia. It is worth stating that from the road sector, this is a fifth road to be funded by KfW during our existing relationship with the Federal Republic of Germany. I feel greatly honoured and privileged that our relationship continues to provide greeter benefits to the Namibian citizen,” said Schlettwein.
The Windhoek-Okahandja road serves as a vital entry point to the capital city, Windhoek, and forms part of the Namibian road network connecting high traffic volumes from the northern parts of the country, as well as the coastal towns. Over the years traffic volumes on this route have increased substantially, thereby placing excessive pressure on road infrastructure.
Other upcoming road projects include the Windhoek Hosea Kutako Airport road, the B2 Walvis Bay to Swakopmund road, and the Swakopmund to Kamanjab road, among others.
The upgrading of the Windhoek-Okahandja road to a dual carriage freeway standard has been divided into four stages. The entire project is anticipated to be completed over a five-year period (2014 to 2019) at an approximate cost of N$2.92 billion.
“This is a clear testimony that the N$450 million financial support provided by the KfW will help contribute to the realisation of this project. The balance is expected to be funded through government budget allocation,” Schlettwein noted.