Shafudah defends N$1.5bn German loan over ‘costly’ local borrowing
Finance minister Ericah Shafudah has defended Namibia’s decision to secure a N$1.5 billion loan from Germany’s development bank, Kreditanstalt für Wiederaufbau (KfW), saying it offers more favourable terms than domestic borrowing.
Responding to concerns raised by lawmakers over the €75 million loan – equivalent to approximately N$1.5 billion – Shafudah stated that the interest rate is up to 3% lower than what the government would have paid on the local market.
“When we converted the terms, including the interest rate, and compared them to what we offer locally, it turned out to be 2% or even 3% cheaper,” she told MPs on Wednesday.
‘Just pay it back’
“The only condition, as I’ve said, is that you have to repay it - both the interest and the capital,” Shafudah added.
The loan will fund a wide range of water infrastructure projects, including the upgrade of the Direct Potable Reclamation Plant, enhancements at the Gammams and Otjomuise Wastewater Treatment Plants, and the extension of purification facilities in Oshakati and Rundu. It will also support the replacement of the Ohangwena II Well Field, the expansion of the Katima Mulilo water system, major pipeline replacements, and the installation of desalination units.
Crucially, the entire loan is denominated in Namibian dollars—a strategic move that shields the government from foreign exchange risks.
“The good part is that it’s in Namibian dollars, or the equivalent. That’s a major win for us in terms of cost predictability,” she said.
No collateral, local focus
Shafudah confirmed that the loan requires no collateral. “There’s no security required for this. We just need to be prepared to pay it back,” she said, adding that job creation and execution of projects will prioritise local employment and be implemented entirely within Namibia.
In response to criticism that the project benefits might favour the northern regions, the minister insisted that the developments will be distributed nationally.
“When I started reading my statement, I mentioned projects already funded. I’m not sure whether Otjomuise or Gammams are in the north. I’ll need help with that. But this is happening across the country. A full water infrastructure master plan covering all 14 regions will soon be presented by the Ministry of Agriculture, Water and Land Reform,” she said.
Track record on repayment
Shafudah also reaffirmed the government’s commitment to responsible debt management.
“Since 1990, this responsible government has been borrowing, but none of us here can say that we defaulted in a single year. Never,” she emphasised.
She also addressed past criticism regarding the Eurobond.
“Someone said I was boasting when I mentioned we’d repay it. In fact, I should continue boasting. Because on 29 October 2025, we are going to settle it. So yes, I can still boast about that.”
20-year term, 5-year grace period
Clearing up confusion, Shafudah stated that the loan term is 20 years, not 10, as previously suggested by some MPs. It carries an interest rate of 10.09% and includes a five-year grace period.
To accelerate implementation and avoid bureaucratic delays, the government has granted procurement exemptions to the executing agency.
“For all these critical projects, we have granted exemptions so there are no delays. And we can hold the implementers accountable,” she said.
Contact: [email protected]
Responding to concerns raised by lawmakers over the €75 million loan – equivalent to approximately N$1.5 billion – Shafudah stated that the interest rate is up to 3% lower than what the government would have paid on the local market.
“When we converted the terms, including the interest rate, and compared them to what we offer locally, it turned out to be 2% or even 3% cheaper,” she told MPs on Wednesday.
‘Just pay it back’
“The only condition, as I’ve said, is that you have to repay it - both the interest and the capital,” Shafudah added.
The loan will fund a wide range of water infrastructure projects, including the upgrade of the Direct Potable Reclamation Plant, enhancements at the Gammams and Otjomuise Wastewater Treatment Plants, and the extension of purification facilities in Oshakati and Rundu. It will also support the replacement of the Ohangwena II Well Field, the expansion of the Katima Mulilo water system, major pipeline replacements, and the installation of desalination units.
Crucially, the entire loan is denominated in Namibian dollars—a strategic move that shields the government from foreign exchange risks.
“The good part is that it’s in Namibian dollars, or the equivalent. That’s a major win for us in terms of cost predictability,” she said.
No collateral, local focus
Shafudah confirmed that the loan requires no collateral. “There’s no security required for this. We just need to be prepared to pay it back,” she said, adding that job creation and execution of projects will prioritise local employment and be implemented entirely within Namibia.
In response to criticism that the project benefits might favour the northern regions, the minister insisted that the developments will be distributed nationally.
“When I started reading my statement, I mentioned projects already funded. I’m not sure whether Otjomuise or Gammams are in the north. I’ll need help with that. But this is happening across the country. A full water infrastructure master plan covering all 14 regions will soon be presented by the Ministry of Agriculture, Water and Land Reform,” she said.
Track record on repayment
Shafudah also reaffirmed the government’s commitment to responsible debt management.
“Since 1990, this responsible government has been borrowing, but none of us here can say that we defaulted in a single year. Never,” she emphasised.
She also addressed past criticism regarding the Eurobond.
“Someone said I was boasting when I mentioned we’d repay it. In fact, I should continue boasting. Because on 29 October 2025, we are going to settle it. So yes, I can still boast about that.”
20-year term, 5-year grace period
Clearing up confusion, Shafudah stated that the loan term is 20 years, not 10, as previously suggested by some MPs. It carries an interest rate of 10.09% and includes a five-year grace period.
To accelerate implementation and avoid bureaucratic delays, the government has granted procurement exemptions to the executing agency.
“For all these critical projects, we have granted exemptions so there are no delays. And we can hold the implementers accountable,” she said.
Contact: [email protected]
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