The real challenge the president faces is not cancelling car purchases or termination of special advisors to regional governors, but how the Eurobonds taken in US dollar currency will be re-paid on time.
The US$500 million bond taken out in 2011 is due in October 2021. That means nearly N$9.3 billion will be payable to those holding the bonds in about 17 months. These monies borrowed during the presidency of Hifikepunye Pohamba have long since been spent. The meal has been eaten, now the waiter is hovering near the Namibian table with the portable swipe machine ready, watching us. The doors to the restaurant are blocked; there is no escape from paying that check.
Quite responsibly, there was a savings account established by the government to set aside funds to repay that huge bill. But, but unexpected COVID-19 bailout costs have forced government dip into those savings. The money being used to pay N$750 individual grants, bail out a few businesses, and finance the vital activities of the Ministry of Health, had to come from somewhere. The coffers were dry, so money that is owed to someone else had to be used. Those we owe will not ‘understand’ and say, “Comrade, forget about it. A luta continua.” The negative international repercussions that can happen if Namibia cannot meet its bond obligations are undeniable. This is a serious problem and there are no easy solutions.
To make a complicated situation worse, don’t forget that another Euro bond was floated in the first year of the Geingob Presidency. According to its media announcement at the time, the Namibian government issued a US$750 million Eurobond in 2015 to be used to increase the country’s international reserves, invest in industrialization activities, finance infrastructure development and fund initiatives in the education sector.
That second waiter will come to the Namibian table expecting payment of about N$14 billion in 2025. Many who took the decision to gamble on the country’s future economic growth in 2011 and 2016 will not be around when the bill comes due in 2021 and 2025. Back then our debt to GDP ratio was perhaps around 30 percent. Now, it is over 50 percent and will likely be worse in the short term.
In January 2011, one USD = N$7.1. In August 2015, one USD = N$13.27. This week, the exchange rate is one USD = N$18.33. Our unemployment numbers that were already dangerously high (near 30 percent) in 2019, will (unavoidably) get worse due to the State of Emergency rules. And, the pandemic is still a threat, though to what degree is arguable.
Sober decision-making in government is mandatory. This is no time for the usual politicking, favour seeking, nepotism, tribalism, or lackadaisical approach to managing the country.
It is encouraging to hear about cancellation of car orders (which we couldn’t afford anyway) and release of advisors that were superfluous in the first place. Now, we look forward to hearing the proposed plan to pay the waiter by October 2021. We believe this government has the ability to lead the nation through this crisis.
We want to hear about what happens to if Namibia defaults.
We want to see a high level team working on the bond repayment conundrum. We would expect to see the State House A-team and private presidential staff reduced dramatically, to pay the professional salaries of those with the technical skills necessary to focus on the bond repayment issue and help Geingob save the country.
In Namibia, we like doing things at the last minute. We think that having a deadline of 17 months or four years is “far away.” If we follow our usual modus operandi, we won’t worry about October 2021 until September 2021. Then, we will run around like small animals during a flash veldt fire.
The blame-game will start, national begging for extensions (that will not come) or special pardons (that will not be given) will start. We often do not take the time given to plan our moves with the best information possible. We react and waste time and resources instead of being proactive.
Now is the time for those making decisions to BE public servants. That means that they must serve the public, FIRST…not themselves. It could mean passing a law that is good for Namibia as a whole, even if it disadvantages their individual family members, comrades, business interests or friends.
Times are tough; this is the new normal. Adjustments are being forced upon us. Some will go bankrupt; many will NOT get the N$750 grant. Significant numbers of people/businesses will not qualify for various programs. Some will lose houses or cars or have to withdraw their children from university. And some will go hungry. It will be difficult, no doubt. But, the perception must be that the pain is spread evenly. ALL must stand in line; all must feel the pinch, entitled whites, tenderpreneurs, comrades, the family of leaders – no exceptions. If we cannot get in front of this Eurobond train speeding towards us, everything that has been so well built can fall apart.
We have eaten, now the bill is due. How shall we pay? Debit or credit card or cash?