Geingob talks tough on Chinese loan

14 September 2018 Author   NYASHA NYAUNGWA AND KAULA NHONGO

President Hage Geingob has assured the nation that Namibia will not allow China to dictate or impose conditions on the N$10 billion that Windhoek wants to borrow from the Asian economic powerhouse as part of the US$60 billion carrot dangled to Africa during a two-day China-Africa cooperation summit held in Beijing recently. 

Speaking during a media briefing on Monday at State House, Geingob said whoever comes to Namibia must come at “our own terms” since Namibia is not desperate like other African countries.
“We told our Chinese friends that we are a credit worthy country and some other countries don’t have that so they can take anything, but we can pick and choose,” the president said. 
“We are a sovereign nation, but not an island. The world is globalising and we need partners. 
“The Chinese must come on our terms and if not, then we are the ones to blame. If they want to build an airport or whatever then we must stipulate the conditions. We have many other countries that we can go to, we can pick and choose.” 
Geingob said he was told by Chinese officials in Beijing that Western companies doing business in China invest in that country on Chinese terms something that Africa needs to learn from. 
“Don’t accuse other people (Chinese) if they come and do something wrong here, because we allow them. If we are the ones that give things away, don’t blame the Chinese, but blame Namibians or other African countries who allow them to do that,” the president said. 
He took a swipe at the Western world for suggesting that China was using the US$60 billion loan offer as a ploy to colonise Africa.
 “The Chinese are now offering US$60 billion to Africa, but instead of saying why are you doing that, why can’t anyone or the US say we are offering US$80 billion to Africa, so we can pick and choose the countries that we deal with.”
Geingob also allayed fears that Namibia will fall into a debt trap by accepting loans from China, arguing that Namibia’s debt has always been controlled. 
“The SADC average is 60 percent. We are moving to 43 percent, but we are not being swallowed by debt. American debt is at 100 percent of GDP and Japan’s debt is over 100 percent. 
“We are not going to borrow money to buy cars or to pay salaries; otherwise we will be in trouble. We want to jump start our economy. So far, we have proven to be very careful with how we manage our affairs and we have been respected for that. 
“Instead of speculating or wishing us to be corrupt, hold us to what we are saying – transparency, accountability - hold us to that. Let’s not speculate because of Sri Lanka. Let’s not prejudge. I would have hoped that you will give us a chance.”
Finance Minister Calle Schlettwein also defended the loans from China, saying they are significantly cheaper than “what we have now in the books”. 
Schlettwein said Chinese concessionary loans come with a 2 percent interest rate, compared to 7.7 percent on local Treasury Bills, 9 percent on local bonds and 7 percent on the Eurobond and loans from the African Development Bank.
He also said the loans, if granted, will not be used for operational expenditures.  
Schlettwein said Beijing has already indicated that it is willing to fund upgrades to the Hosea Kutako International Airport, but there is no agreement on how much will be made available. 
He also said indications are that the Chinese are interested in PPPs so the country needs to prepare projects that fit into that. 
According to the finance minister, Chinese loans to Namibia amount to 2.6 percent of total foreign debt or 7.9 percent of foreign debt, so the exposure to Chinese loans is very low. 
“We are very happy to hear that the Chinese are open to hear what we will put on the table. We will try and get maximum economic benefits not only after the projects have been completed, but also during the construction phase.
“We need to put conditions upfront including the use of local labour and local sourcing of goods and services,” Schlettwein said. 
Deputy Prime Minister and Minister of International Relations and Cooperation, Netumbo Nandi-Ndaitwah, told journalists that a workshop will be held in November to identify projects that will be taken to China for funding consideration.
Analysts have, however, criticised government’s decision to borrow money from China as well as its plans to utilise the bulk of the loan on infrastructure development.
PDM President, McHenry Venaani, complained that the infrastructure projects will not create sustainable jobs.
“Borrowing is not the problem, but where are you spending the borrowed money? Instead of borrowing this money and spending it on value addition on our commodities so that we create jobs on our shores, we are spending it on infrastructure, building bridges and roads. That we need, but it will not sustain jobs on the continent,” Venaani said.
Political analyst, Henning Melber, questioned government’s sincerity regarding the conditions of the loan.
“My concern is that the president and the finance minister might be rather economical with the truth since they are in dire need of more cash infusions to shore up the public purse. 
“One would like to see the contract to verify if this is the case. Debt to China is indeed not yet dramatic, but on the increase. Generally, debt should not increase, but the borrowing continues. Not least the AfDB loan adds another huge debt. But debt servicing is already high and negatively impacts on the budget,” Melber said.
UNAM lecturer Ndumba Kamwanyah said it is not enough for the president to say that government has everything under control, adding that there is need to invest in projects that will directly impact the lives of many. 
“Upgrading one airport is not going to do it for us,” Kamwanyah said.
“Show us the evidence. Show us the details. Show us the priorities. Show us the plan how the government is going to implement the identified projects. Show us the impact. And convince us that the money will not end up lining the pockets of the few.”
He also expressed concern about the president’s comment that Namibia would be the one to set out terms of the loan from China. 
“The relationship between a lender and a borrower is unequal. The lender always has the upper hand, and dictates the terms of borrowing.  We are in an unfavorable position because we are the one borrowing (or begging for that matter), therefore I do not see how the president will not allow China to dictate the terms. 
“Yes, those loans may not come with political conditions, but they come with clear economic and commercial conditions dictated by China as the lender. You take it or leave it. 
“My fear is about the long-term effects of those debts on the future generation. We are setting them in a trap that they will find difficult to escape. What we are really doing is shifting the burden to the next generation,” Kamwanyah said.

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