The Board of Directors of the African Development Bank has approved a loan of $217.8 million to finance the second phase of the Namibia’s Economic Governance and Competitiveness Support Programme (EGCSP II).
The loan facility, second of a two-year programmatic series, will support the budget for the fiscal year 2018/19. It aims at strengthening public financial management and improving the quality and efficiency of public sector spending, while laying a solid foundation for industrialization through support to critical business environment reforms.
The program builds on Phase 1 approved last year, which has achieved positive results. These include reduction of the budget deficit from 8.2% of GDP in 2015/16 to 5.4% in 2017/18. It has also helped to improve the country’s liquidity situation at a time when domestic market liquidity was low, occasioned by constrained cash flow; and funding to retire pending invoices in critical ministries, including education and health, which helped to avoid a looming crisis of private credit crunch.
The first budget support also helped operationalize some transformational policy and legal frameworks, including the Public Private Partnership Act, Namibia Revenue Agency Act and the Public Procurement Regulations.
Guided by Vision 2030, the 5th National Development Plan, the Harambee Prosperity Plan and other sector policies and strategies, the Government has embarked on fiscal consolidation and wide-ranging public financial management and business environment reforms to address emerging challenges.
The Bank was, therefore, satisfied with progress made by the Namibian government under the Phase I of the program, despite the significant economic challenges caused by declining commodity prices, persistent drought and subdued economic activity in South Africa and Angola.
The Bank’s intervention will support measures to improve revenue collection, enhance efficiency in public spending, and improve debt management. It will also improve public procurement, internal and external audit functions and the governance framework for state-owned enterprises; as well as enhance investment facilitation framework for industrial and MSME development.
The operation is aligned with the Bank’s Country Strategy Paper for Namibia, two of the operational priorities of the Bank Group’s Ten-Year Strategy; and the High 5s agenda on ‘Industrializing Africa’ and ‘Improving the quality of life for the people of Africa’.