WITH very little doubt, Foreign Direct Investment (FDI) and other private financial flows have declined across developing countries since the 2008 financial crisis. In 2012, only six percent of total global FDI to developing countries went to countries on the fragile states list. This was an average investment of N$465 per capita compared to an average of N$2200 per capita in other developing countries. Among those on the fragile states list, the majority of FDI is attracted by resources-rich countries, with 72 percent concentrated in 10 countries in 2012.
Essentially, this clearly marks a gap in investment and for this reason the European External Investment Plan announced by the European Union in recent weeks presents a developmental opportunity for Namibia at large.
Investors have always been difficult to get but the fact that the European Union has given indication that as a start, African and EU Neighbourhood countries are eligible and can be supported, with the objective of addressing investment bottlenecks and contributing to sustainable development and job creation, it’s an opportune time for local prospective project developers to push for a chunk of the availed funds.
Notably public and private sector bodies are eligible counterparts and may submit investment proposals under the investment windows and sign guarantee agreements with the Commission, subject to the relevant financial assessments being carried out by external, independent experts, for the Commission.
The funding which will be used to finance and attract investments from other sources will come from the EU budget and other sources, including the European Development Fund. It will consist of EU funds totalling EUR 3.35 billion until 2020.
Additional funds could be from Member States and other partners. If Member States match the EU contribution to the guarantee, this would bring the total investment volume to EUR 62 billion. If they also match the EU contribution to the blending, it would generate total investments of up to EUR 88 billion which Namibia could immensely benefit from.
The EIP will improve the way in which public funds are used and the way public authorities and private investors work together on investment projects. The EIP provides, for the first time, a coherent overall framework to improve investment in Africa and the Neighbourhood, in order to promote sustainable investment.
Holistically, the European Union already supports investments in modern infrastructure and access to finance for Micro Small and Medium Enterprises (MSMEs) in partner countries. Knowing that the EIP will draw on these lessons and enable the EU, international financial institutions, donors, public authorities and the private sector to cooperate fully in a coordinated way, Namibia should
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