The government has challenged the World Bank over its interest rates, saying they are too high for developing and small countries like Namibia.
Prime Minister Saara Kuugongelwa-Amadhila said there is a need to address “unjust interest” charged to borrowing members, including the issue of developed nations being charged less, while the underdeveloped and middle class are charged more.
“This drains nations in the long term after repaying the loan. In fact, the interest rates are in US dollar denomination, which makes it even worse on our economies, thus affecting our ability to repay, and in cases where debt relief is given, one still fails to honour the payment, because it is just too much,” she said.
“Some of the developed nations were able to recognise the special challenge that Namibia is faced with, that is why they came here with developmental programmes such as the United States Millenium Challenge Account and USAID, knowing that we are an upper middle income and won’t qualify for donor funding and so forth,” said Kuugongelwa-Amadhila.
The World Bank’s Regional Vice President for Eastern and Southern Africa, Victoria Kwakwa, disputed the interest rate but acknowledged that there is a need to review policies and broaden the funding criteria beyond just the GDP per capita indicator.
Kwakwa told President Hage Geingob that the World Bank no longer imposes conditions on loans, grants, or concessional loans it offers, in terms of what projects are to be funded and how to implement them.
Instead, the Bank’s Vice President for Eastern and Southern Africa, said they have modified their approaches by working based on priorities the receiving countries have set.
“I can also agree with you that the state of income does not measure well the economic status of a country. It is unfortunate that there are no comprehensive indicators to be used to measure other underlying factors. However, the Bank is entering a new revolution, in which we are looking at offering concessional loans to upper-income countries that do not qualify to receive grants or soft loans, but do make global contributions,” she said.
This comes following a meeting with President Hage Geingob at State House who also repeatedly asked during an engagement whether the World Bank has reviewed its classification of countries.
“Have you reviewed your conditions? There is a need to change how you rate countries, how can Namibia be classified as a rich country whereas the majority are disadvantaged and only a few groups are rich? How fair can that be?” he questioned.
“Our country is battling poverty, unemployment and also having come from a dark past of apartheid, therefore, these are some of the factors you should also consider instead of just dividing GDP against the population. That is not a fair representation,” Geingob said.
In turn, Kwakwa acknowledged that some policies back in the years were stringent, but over time the World Bank has listened, learned and made adjustments.
Namibia is a higher-middle-income country according to the World Bank classification, with an estimated annual GDP per capita of US$5,828 but has extreme inequalities in income distribution and standard of living.
The classification has disadvantaged Namibia, as it does not qualify for grants and soft loans since it is regarded as a rich country, which is not a true reflection on the ground.
