WINDHOEK - Finance Minister Calle Schlettwein has explained the U$60 billion (approximately N$900 billion) package of aid, investment and loans to Africa offered by China during the just ended Forum on China-Africa Cooperation (FOCAC), against a backdrop of growing concern about rising debt distress on the continent.
Schlettwein during a media briefing at State House yesterday said out of the US$60 billion, included US$15 billion in grants, interest-free loans and concessional loans, US$20 billion in credit lines and a US$10 billion special fund for development financing. Chinese companies also will be encouraged to invest at least US$10 billion in Africa over the next three years.
The minister revealed in the economic sphere, projects to be funded with any of the packages include agriculture, energy, infrastructure development, natural resources, industrial capacity and trade.
He said concession loans from China come at an interest rate of 2 percent and has grace period of five years.
Further, he said the Namibian government is borrowing “responsibly” and is mainly for capital projects and not for public expenditure.
“For now, we have not signed any loan agreements. What we have done now during this FOCAC meeting is that we have indicated the projects we believe are priority projects,” he noted.
Among them he mentioned include the Hosea Kutako International Airport upgrade, which he says is a priority area.
He singled out that Namibia is currently exporting more to China which is a good sign.
“China is the second largest economy in the world. China is the factory of the world. China is the largest developing country and to not cooperate with China in the globalised world would be a missed opportunity. Let’s use these facilities offered to fend our own interest,” he said.
Chinese President Xi Jinping has announced a US$60 billion package of aid to Africa, saying that the money came with no expectation of anything in return.
Beijing pushed back on criticism that it was shackling poorer countries with heavy debt burdens they will struggle to pay back, portraying the Chinese government as a magnanimous one motivated only to share its experience of rapid industrialisation.
“China’s investment in Africa does not come with any political conditions attached and will neither interfere in internal politics nor make demands that people feel are difficult to fulfil,” Xi said during a keynote address to the Forum on China-Africa Cooperation last week.
The money will be focused on infrastructure to help speed African countries’ development, not on “vanity projects,” Xi said.
The announcement was made during the FOCAC in Beijing, a triennial meeting between senior Chinese leaders and their counterparts from across Africa where President Hage Geingob also attended among other African leaders.
The financial package is the same amount Beijing pledged at the previous FOCAC summit in 2015, and is in line with analysts’ expectations that Xi would not vastly increase the amount of Chinese money flowing into Africa.
Over the past nearly two decades, the numbers coming out of FOCAC have generally risen with each event. The pledge in 2015 was three times the figure announced at the 2012 forum.
South Africa has been overtaken by the world’s second largest economy, China, as Namibia’s single biggest export market.
This is according to the Namibia Statistics Agency (NSA) trade statistics for the first quarter of 2018, which indicated that Namibian exports to China grew by an astounding 779 percent compared to the previous quarter, while exports to neighbouring South Africa only increased by a meagre 2 percent.
Even exports to Belgium, Italy and Botswana increased more than exports to South Africa, with growth in exports of 188 percent, 110 percent and 20 percent, respectively. “Together, these countries made up 67 percent of the value of all exported goods, with China lodging on top of the list as the largest export destination, subsequently making up 18.3 percent of the total exports,” reads the NSA report.
The NSA figures also showed that South Africa remained in second place, with 18 percent, followed by Belgium, 13 percent, while Botswana and Italy absorbed 10 percent and 8 percent respectively of Namibia’s total exports.