The World Bank has granted a R58.2mn (US$7.7mn) loan to the Namibian government to support the country's educational programme. The South African and Namibian currencies are equivalent.
This loan was possible through a conversion of the original dollar denominated US$7.5mn loan which was carried out on July 15, 2008. It is the first time the World Bank has provided a Rand-denominated financing to any country.
The World Bank is able to offer financing in local currencies to eligible African countries at variable or fixed rates, where there are swap market or alternative funding instruments for the bank to hedge itself.
The multilateral developed this type of financing in response to the requests for more flexible financing products from borrowing member countries.
"This is particularly the case in Middle Income Countries, like Namibia, which are looking for additional flexibility from the World Bank in terms of lending instruments. Borrowing in Rand represents a lower risk for the country,” according to Mmantsetsa Marope, World Bank team leader for the Namibia lending operation.
The deal also markets the first World Bank lending operation for Namibia. Last May, the bank approved the loan to support the government's education and training sector improvement programme.
The loan is the first of two single-tranche sector development policy loans (DPLs) of US$75mn.
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