Windhoek
President Hage Geingob has once again called on world leaders to review the criteria whereby upper middle-income countries access concessional funding and grants.
Addressing the United Nations’ Third Financing for Development conference in Addis Ababa on Sunday, Geingob said the upper middle-income classification has been a burden to Namibia, as it is stifling the young republic’s economic and developmental aspirations due to restricted access to soft loans and grants.
The World Bank’s classification of Namibia as an upper middle-income country is a “flawed definition and calculation”, he said, calling it “an unfair definition” that prevents Namibia from accessing concessional funding that the country needs to pursue its developmental objectives.
Geingob joined world leaders, including UN Secretary General Ban Ki-Moon in Ethiopia this week to look for ways to fund the UN’s ambitious Sustainable Development Goals (SDGs), which include ending poverty and achieving food security throughout the world by 2030.
President Geingob asked leaders at the conference “to take as one of its resolutions that concessional funding, including grant funding, should be extended to upper middle-income countries.”
Need better terms
“We need access to funding on better conditions. Without a change in approach, our efforts to develop will be curtailed. This is why I have come to Addis Ababa with a full team of our experts in order to engage the international community,” he said. Geingob also took the opportunity to thank the administration of former US president George W. Bush, for making an exception by waiving Namibia’s upper middle-income status, thus making it possible for the country to access funding through the Millennium Challenge Account.
“The timely and supportive gesture went a long way in helping us achieve several of our developmental objectives. We are grateful for this humble gesture by the Bush administration.”
Citing Namibia’s commitment to the UN development goals and the country’s achievements in sustaining strong macro-economic fundamentals, such as economic growth averaging at 5 per cent per annum, maintaining a 25 per cent debt ceiling as a ratio of GDP [Gross Domestic Product], he pointed out that the Namibian government has been able to fund its operations entirely with its own capital budget from domestic resources.
“We minimally borrow externally and when we do so, it is only to fund developmental projects. Our financial system is well-developed, our banks are well-capitalised, and we enjoy an investment rate grading of BBB+ from rating agencies, such as Standard and Poor’s, as well as Moody’s,” he said.
“Although we have made tremendous progress in terms of governance, I hope you can forgive my fellow Namibians and I for thinking that instead of being supported for these achievements, we are now being punished and our developmental aspirations are being stifled,” Geingob said.
Structural Imbalances
To define Namibia as an upper middle-income country, the World Bank simply took the GDP of a country and divided it by the country’s population.
Geingob says the result – because of Namibia’s small population – is “a higher per capita income, without considering how that income is distributed, and without considering the structural imbalances of our economy, especially income distribution.”
He said the social development deficit in Namibia remains high for a so-called upper middle-income country, with the last census showing that 30 per cent of the population lives below the poverty line. Namibia would nevertheless continue tackling poverty in the quest to reduce the income gap and accelerate economic growth through trade and investments.
“However, there can be no growth without financing. In addition to targeted social safety nets, we have to create wealth-generating opportunities for our people. This means we must grow the economy at a rate higher than 5 per cent.
Infrastructural investment needed
“To do this we need significant investment in various sectors of our economy. These include investment in critical growth-supporting infrastructure, energy, road, rail and telecommunications. “Without the supporting infrastructure, our firms cannot be competitive. Without it, our people cannot bring their products to market and as a nation we cannot connect smoothly and efficiently to international markets.
“We, therefore, need significant financing in order to develop our critical infrastructure as a step towards taking Namibia to the next level of development,” Geingob told the assembly of world leaders.
The specific targets for each of the SDG’s, which have not yet been formally agreed, will replace the Millennium Development Goals (MDGs) at the end of 2015. It will require as much as US$11.5 trillion a year or US$172.5 trillion over the 15-year timeframe to meet the new targets, according to UN estimates.
The conference, which brings together more than 50 Heads of State and Government, more than 100 Ministers of Finance, Foreign Affairs and Development Cooperation and over 1,000 high-level representatives from civil society and the private sector, ends on Thursday.