RFA, RA rescues Government with N$470m

02 June 2017
The Road Fund Administration (RFA) was early this year forced to dig deeper into its reserves to help out the Government with N$320 million at the height of a cash crunch, which saw treasury introduce austerity measures across ministries, public offices and agencies, the Windhoek Observer has established. 
The Roads Authority (RA), which is funded both through the RFA and Government coffers, also made cuts and savings from its RFA budget and paid the contractors N$150 million, bringing the total the two companies paid to help the Government to N$470 million.
Government is said to have used the money to partly settle outstanding invoices of companies that had worked on road rehabilitation projects since 2015.
RFA Chief Executive Officer, Ali Ipinge, said in an interview last week that the State-owned entity had no choice, but to use its reserves to help the Government.
“The RFA is an agent for Government. As a result, the funds were directed towards this cause to address the long-outstanding invoices to the benefit of the road sector and road users,” Ipinge said.
RA CEO, Conrad Lutombi, also confirmed that the authority had paid N$150 million to settle invoices submitted to the Ministry of Works and Transport, but said it would be wrong to say the money was a “bailout or that the RA was lending money to the Government”.
He explained that some projects are directly funded by the Government while others are funded by the RFA. “We have control over the RFA budget, so that is where we made cuts and savings to pay out the invoices that were submitted to the Government by road contractors,” Lutombi said.
The RFA payment was used to settle part of the N$800 million that the Roads Authority owes contractors from the 2015/16 financial year, which Government had not budgeted for in the 2016/17 fiscal year. Government is yet to reimburse the money, but Ipinge said this was not a problem since RFA is a Government-owned institution.
The revelation comes at a time when RFA has announced a business plan that would require about N$16 billion in funding, which would be raised through increased road-user charges, improved revenue collection through the introduction of automated systems and the integration of the RFA’s management system with the e-Natis operations of the Roads Authority.
Other funding alternatives being considered include toll gates on national roads and taking over the collection of traffic fines on national roads. South Africa, Zambia and Zimbabwe have all introduced toll gates on their national roads, and the money raised is used for road maintenance.  
Ipinge said RFA, which has just repaid a 10-year bond on the Namibian Stock Exchange, has no plans to list another bond in the foreseeable future.
The Road Fund Administration also urgently needs to raise at least N$170 million to sustain its current minimum maintenance activities.
“The amount of N$170 million relates to additional funds required for the maintenance of the gravel road network that is rapidly deteriorating. At this stage, the entire funds have not been secured. However, RFA remains confident to raise the funds through proactive mechanisms [yet] to be explored,” Ipinge said.  Putting things into context, he said Namibia’s road network has grown from 30,000 km when RFA was established 17 years ago to 48,000 km today, which means it has to fund more projects with fewer resources.
The growing number of cars on the roads is also affecting the lifespan of roads. Namibia has about 350,000 cars registered and this number grows by about 10 percent every year.
With railway transport in shambles, only 5 percent of heavy cargo is transported via railway, increasing the pressure on the road network. In the past, up to 20 percent of heavy cargo was transported by rail.
This, according to Ipinge, has increased pressure on the road network, with the increased heavy load reducing the lifespan of the roads by as much as four years.


The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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