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Home / Joint ventures and a regional approach to capital-intensive projects
Joint ventures and a regional approach to capital-intensive projects
2016-07-15Staff Report 2 President Hage Geingob’s State visit to Botswana at the beginning of this week brought to the fore the sense of urgency with which the region needs to approach common developmental objectives. While addressing captains of industry in Botswana at a business seminar, Geingob challenged the business community in both countries to get involved in mutually beneficial projects. These cross-border projects include the construction of a railway line to export Botswana coal to the world markets via Namibia; the desalination of seawater for human consumption and to sustain the needs of our businesses; the development of electricity-generating capacity for own consumption, as well as for exports; and the development of regional value chains in manufacturing. Although the populations of the two countries are relatively small, it is precisely for this reason that embarking on joint national initiatives, such as water and energy security, has the potential to put both nations on a higher and sustainable growth trajectory. Some projects that Namibia and Botswana have jointly undertaken over the past few years include the Trans-Kalahari highway and the establishment of dry port facilities for Botswana at the Port of Walvis Bay. During his visit Geingob suggested through our own resources, as well as tapping into our regional developmental finance institutions and global initiatives such as the Green Climate Fund, countries in the region must find solutions for the common challenges we face. This makes sense, particularly for capital-intensive projects that have the potential to benefit more than one country in the region. In this regard a regional approach, either through joint ventures or bilateral agreements, can substantially reduce the capital requirements for massive projects, such as a desalination plant or a gas-to-power plant to provide the countries involved with cost-effective solutions that share the inevitable risks of such massive investments. However, in order to share the risk, all participants in regional initiatives should have sound democratic governance architecture in place, as is the case with Botswana and Namibia. Both these countries have low levels of debt exposure, in particular foreign debt, and both form part of a handful of African economies that can boast healthy investment grade ratings by international rating agencies, such as Fitch and Moody Namibia is rated as BBB positive and Botswana’s Moody rating is at A2 with a stable outlook, in part because they have the highest import coverage on the continent and one of the highest in the world. Moreover, Botswana’s growth trajectory over the past four decades has been phenomenal, which is a clear sign that the prudent and disciplined management of their economy has paid off. Therefore, it is only logical that Geingob requested more trade with and investment from our eastern neighbour. During his visit Geingob specifically requested investors from Botswana to fully utlise the opportunities offered in Namibia to intensify cooperation between the two countries in years to come. 2016-07-15Staff Report 2
