EDITORIAL: Learn from your guarantee mistakes
20 September 2021 | Opinion
Government guarantees are as old a practice as time itself. They are necessary in some instances, especially where real opportunity for the country exists.
In Namibia the trend is worrisome for many fundamental observations. One of them is how poorly and disadvantageously such agreements are set up.
The freshest example is how government backed Air Namibia to sign a devastating aircraft lease contract with American lessor Castlelake, for which a mind-blowing N$1.6 billion was paid in July after the airline – even before its unceremonial demise – failed to honour its end of the bargain.
Saara Kuugongelwa-Amadhila, then finance, bonded government to the guarantee of the pricey lease, which required Air Namibia to pay N$32 million monthly for the lease of two Airbus A330 aircraft. She and then attorney-general Pendukeni Iivula-Ithana blindly allowed this proposition to go through – even when they had first-hand information on the airline’s chronic inability to stand on its own financial feet.
We are grateful that the Geingob administration eventually saw Air Namibia for what it truly was – a bottomless pit that, even posthumously, is able to bite N$1.6 billion off our national cake.
Some of these guarantees have personal self-aggrandisement hidden in them. Many SOE executives acquired these guarantees so that these institutions could continue to pay them fat salaries and not necessarily to speed up the effective delivery of their mandates.
In Namibia the trend is worrisome for many fundamental observations. One of them is how poorly and disadvantageously such agreements are set up.
The freshest example is how government backed Air Namibia to sign a devastating aircraft lease contract with American lessor Castlelake, for which a mind-blowing N$1.6 billion was paid in July after the airline – even before its unceremonial demise – failed to honour its end of the bargain.
Saara Kuugongelwa-Amadhila, then finance, bonded government to the guarantee of the pricey lease, which required Air Namibia to pay N$32 million monthly for the lease of two Airbus A330 aircraft. She and then attorney-general Pendukeni Iivula-Ithana blindly allowed this proposition to go through – even when they had first-hand information on the airline’s chronic inability to stand on its own financial feet.
We are grateful that the Geingob administration eventually saw Air Namibia for what it truly was – a bottomless pit that, even posthumously, is able to bite N$1.6 billion off our national cake.
Some of these guarantees have personal self-aggrandisement hidden in them. Many SOE executives acquired these guarantees so that these institutions could continue to pay them fat salaries and not necessarily to speed up the effective delivery of their mandates.
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