Central Bank Puts Infrastructure Financing Under Spotlight

To attach importance to this, the Bank of Namibia last week hosted the 16th Annual Symposium: Financing of Infrastructure for Sustainable Development in Namibia. Figures released by the central bank during the symposium showed that the country needs N$223,5 billion in the next five years for infrastructure development.

Tom Alweendo, Director-General, National Planning Commission said infrastructure that was important to the Namibian economy include roads, bridges, water installations, electricity grids, telecommunications and harbours.

“The importance of infrastructure in support of economic growth has long been recognised, however the provision of infrastructure services to meet the demand of businesses, households and other users is one of the major challenges of economic development,” he said.

Alweendo said on average the investments in the country has been a 3070 split in favour of private investment. This also is reflected in the contribution to GDP by government and the private sector.


The mining and quarrying sector has been receiving more investments than any other sector in the country since independence, followed by the general government. While investment in agriculture has been low, it has shown consistent positive growth at an average of 4%. Given that this sector employs the majority of the labour force, such investment is extremely low.

“The level and pattern of investment in the country, therefore, deserves much attention and pro action to change the status quo,” he said.

He said the Public Private Partnership (PPP) model holds some promises in delivering the country’s much needed quality infrastructure.

“Although PPPs are not cheap by themselves, the study done by the University of Melbourne comparing 25 PPP projects and 42 government owned and funded projects in Australia, indicated that average cost escalation under PPP contracts during construction was 4,3%compared with 18% for traditional procurement contracts, while average delay during the same period was 2,6% of PPPs compared with 25,9% of traditional cost,” said Alweendo said.

He said other innovative ways of financing infrastructure is through pension funds, sovereign wealth funds, community infrastructure bonds and infrastructure development funds.


Alweendo said the consideration of any infrastructure financing model in Namibia should first and foremost originate from the realisation that Namibia needs a large amount of both public and private investment to address the economic, social and environmental infrastructure deficit.

“The solution lies between government and the private sector working together towards a common goal of increasing economic returns in a win-win scenario,” he said.

Alweendo said studies show that infrastructure produces US$$10 or more of benefit for every US$1 spent.

Central bank governor, Ipumbu Shiimi said Namibia faces various socio-economic challenges including poverty, income inequality and high levels of unemployment.

“Therefore, the expansion of infrastructure in Namibia will apart from the long term benefits mentioned already, also make a meaningful contribution towards the eradication of poverty and creation of jobs,” he said.


He noted that the government has invested in various infrastructural development projects.

Financing of these projects was mainly done, directly and indirectly, through the annual budgetary allocations, funded with income collected from taxes and debt.

Of late, SOE’s were encouraged to raise funds on the capital markets, either through their own balance sheets or backed by government guarantees, and more recently to engage in public-private partnerships (PPPs).

Agreeing with Alweendo, he said to bridge the infrastructure gap, government needs to encourage private investment in infrastructure.

“Private sector participation does bring additional benefits other than capital. These benefits include among others the end-user benefits of a more competitive environment, mobilisation of the private sector’s technological expertise and managerial competencies in the public interest,” Shiimi said.

He said experiences have shown that private sector participation in infrastructure in recent decades helped boost both the coverage and efficiency of infrastructure services.

Namibia generated large private savings which continue to be largely invested abroad, particularly in South Africa.

Shiimi said savings that are outside Namibia could meet the infrastructure needs that the country faces.

Shiimi said currently, a significant portion of the local assets portion are invested in dual listed shares, while less than 2% of the pension and insurers’ funds are invested in unlisted investments.

“This means that there is still scope for institutional investment in infrastructure, which needs to be explored further,” he said.

Source : The Namibian