Namibia has no plans of borrowing money – estimated at N$70 billion – needed for its industrialisation ambitions, contrary to reports that the country was planning to secure loans and bonds from the United States of America, China, India and Japan for this purpose.
Speaking to Bloomberg in New York on Monday President Hage Geingob said the N$70 billion figure was a conservative estimate and hastened to point out that industrialisation is a duty of both government and the private sector.
He told Bloomberg editors that if Namibia wants to borrow money in future, for any purpose, it would make South Africa its first port of call, because of low exchange rates between the two countries.
“Rand bonds would be much better than dollar-denominated Eurobonds,” Geingob was quoted as saying. The Namibian dollar is pegged to the South African rand and, therefore, the exchange rate between the two currencies is the same.
“The president’s view is that borrowing from South Africa – if at all – is the same as borrowing locally, because the currency is the same. So it’s safer to borrow locally, or from South Africa, because we use the same currency, which – in the context of exchange rates – is a better option,” Geingob’s economic advisor, Dr John Steytler, told New Era from New York yesterday.
Bloomberg, after interviewing Geingob, reported that Namibia would seek to raise about US$5 billion (N$69.5 billion) in loans and
bonds over the next decade to help diversify and industrialise its economy with debt sales likely to take place in South Africa.
The Presidency said yesterday that President Geingob was misinterpreted in his analysis, as Namibia has no plans of borrowing such money and that he was only commenting on how much the country would need to fully realise its industrialisation goals.
“The conservative figure that the president mentioned includes private capital investment, so industrialisation should not be seen as a sole government responsibility only. This is just a growth estimate. We’re not in New York to beg for money from anyone,” Steytler said.
With a gross domestic product per person of about US$5000, Namibia is considered one of the wealthiest nations in Africa.
While the rand has appreciated 12 percent against the dollar this year, since the start of 2015 it has been one of the worst-performing currencies among major emerging markets, weakening 17 percent. That caused the Namibian dollar to drop in tandem and made its debts payable in the U.S. currency more expensive to pay off.
The rand gained 0.9 percent to reach 13.7876 per dollar by 09h01 on Monday.
Namibia does not have any plans to sell another dollar Eurobond, said Geingob, who came to power last year. The country has tapped the market twice, most recently in October 2015, when it sold $750 million of securities due in October 2025. Yields on those fell 2 basis points in Windhoek on Monday to reach 4.44 percent by 15h23.
Yields fell from a peak of 6.95 percent on January 18, which gained bondholders 24 percent. That compares with an average gain in that period of 15 percent for emerging market dollar bonds issued by governments, according to Bloomberg indexes. Namibia has issued three rand bonds since 2012. In July it sold 492 million rand (US$36 million) of debt maturing in August 2023 and August 2026.
Geingob said the Namibian government would also seek German investment, including in renewable energy, as a form of reparation for the massacre of Ovaherero and Namas in the early 20th century, when Namibia was a colony, known as German South-West Africa.
“Germans will come in a big way,” he said. “We are telling them, you are the power here. You killed many of our people. Help us to change that. Now they have agreed,” he said, adding that if Namibia can get aid in kind, it would help improve the conditions in the country.
– Additional reporting by Bloomberg