We recently read a story in a local daily about a spectacular ‘donation’ of N$657 billion for infrastructure development from a company called African Experts Federation (AEF) that was just lying on the table for Namibia to simply pick it up, sign some papers, and review the details ‘later’. Ostensibly, the dinner bell is ringing, “Come and get it!”
In the end, Finance Minister Calle Schlettwein announced that this offer was ‘too good to be true’ and after ‘scrutinizing’ the proposal, rejected it. We want to cautiously give a nod to the finance minister. We believe that Schlettwein is nobody’s fool and has a sound reason for his actions.
Tough financial times can make anyone desperate, but that doesn’t mean that any fat, smiling white bearded man carrying a sack is always Santa Claus. Namibia cannot afford more costly judgement mistakes; our track record is not good: GIPF, Avid, Kora, SME Bank, Ramatex and so many more. How many law suits have there been for contracts signed and then unilaterally cancelled because we found out too late that the pie-in-the-sky deal, wasn’t OK or that we couldn’t afford what we had purchased.
Minister Jooste is in the USA with a delegation right now, trying to extricate Namibia from leasing deals for aircraft that seemed a good thing at the time the ‘bargain’ was signed. Shall we forget rolling stock purchased by TransNamib that didn’t fit the size of our train tracks or the billion dollar airport renovation deal signed, cancelled and then battled with legal action because the small print wasn’t initially understood or the case of a former tourism minister that was convinced by a salesman to sign an enormously expensive advertising contract with CNN without even realizing the impact of what he was doing. Nightmare stories of supposed deals like these can fill this entire newspaper.
While we have not read this particular AEF deal and we do not intend to cast aspersions on that specific group, it remains a fact that in Namibia’s past, bad deals have been accepted and the supposed ‘gift’ ended up costing this country dearly. All the beautiful things promised, ended up just being words.
Could our silver lining in the massive thunder clouds of this economic depression be that Namibian decision-makers are finally paying attention to the fine print, vetting people/offers properly and asking the hard questions? We hope so.
We believe that when fake state funded ‘deals’ are uncovered (or worse, signed) this information must emerge. We need more transparency to learn from the experience and not keep making the same mistakes.
Of course, decision-makers mixed up in such embarrassing messes have their pride on the line. No leader wants to announce to the world that they are gullible. Therefore, these situations tend to be swept into the institutional memory dustbin until another nonsense deal hits the fan.
The finance minister in his response about why he has rejected the reported AEF ‘donation’ mentioned “government guarantees” as a no-go area. He may be referring to actual cases in the past where government has been asked to supply letters or assurances, put up initial cash deposits or allow regulatory free passes to get these business deals moving. There have been too many ‘deals’ put forth where everything looks very rosy and easy at first, but when the ‘negotiations’ begin, the bottom line is that government has to shoulder the risk or sacrifice some level of its sovereignty or national dignity for money.
Those offering these deals place all focus on what Namibia gains, but after the launch party, the second shoe drops. The devil is always in the details.
For example, there have been deal brokers that may say they will ‘give’ Namibia money or build a factory, hotel or whatever, AFTER they get a bank loan for that amount which they can only get if the Namibian government gives them a guarantee letter, pays their administrative expenses, and of course, pays their commission upfront.
Sometimes donors want Namibia to bow down to their regulations (while subjugating our own) just to get access to funding. Adding insult to injury, that cash must be spent according to outside people’s absolute dictates regardless of our national priorities, systems and realities.
Also, in the case of private ‘donors’ or ‘investors’ Namibia has witnessed many times when these companies offering huge amounts, don’t even have a bank account IN NAMIBIA containing the hundreds of millions they are dangling. And usually, these are ‘briefcase’ companies fronting the deal, unless one of the local ‘partners’ has an existing shell company that is used. Too often, these companies are fronts for other companies who in turn, are shells for others who in turn are owned by Trusts, CCs or foreign businesses.
There have been donations or juicy investments offered to Namibia, where all that the government had to do to receive N$1 billion for a needy project was to put up N$25 million, and the ‘investors’ claim they will put up the rest. Of course to get the funds, Namibia must immediately deposit the N$25 million in the company’s outside account and then, the supposed ‘other’ investors would follow suit.
There was once a donation that offered co-funding of N$10 million for a particular government project (N$20 million was needed to complete it), but after reading the paper work, N$8 million of their money was earmarked for their staff’s salaries and administrative costs, with only N$2 million destined to actually implement the project!
The current financial crisis is forcing decision-makers to do their homework; we think that is a good thing. This country doesn’t have a single cent left to risk on foolish agreements as has been done so many times before; the bar has to be higher and the finance minister knows it.