Contacts In Washington: Issam Abousleiman (202-458-0865) Iabousleiman@worldbank.org In Pretoria: Mmantsetsa Marope (+27-12-431-3113) mmarope@worldbank.org Mallory Saleson +27-12-431-3100 msaleson@worldbank.org WASHINGTON, July 18, 2008 – The World Bank (International Bank for Reconstruction and Development, IBRD) for the first time has disbursed a loan in one of Africa’s local currencies. The 58.2 million South African Rand (ZAR) loan is to support the Government of Namibia in its educational improvement program. The South African and Namibian currencies are equivalent. The loan was possible thorough a conversion of the originally dollar denominated USD 7.5 million loan which took place on July 15, 2008 and is the first time the World Bank has provided a Rand-denominated financing to any country. World Bank financing in local currencies is available to all IBRD-eligible African countries at variable or fixed rates, where there are swap markets or alternative funding instruments for IBRD to hedge itself. African countries benefit from the fact that IBRD accesses the market on behalf of its clients, leveraging its strong credit rating to obtain favorable pricing, and passes it on to the borrower countries. The transaction is part of the World Bank’s ongoing efforts to respond to requests from its borrowing member countries to provide flexible financial products in support of their risk management objectives. “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. As borrowers have become more sophisticated and financial markets have evolved, IBRD's role has also broadened. “In addition to a full range of banking and risk management tools, IBRD now offers services such as liability management advisory, asset management and advisory, capital markets advisory and treasury management services to meet the changing needs of client countries,” said Gloria Grandolini, World Bank Director of Banking and Debt Management. It is also the first IBRD lending operation for Namibia. The World Bank last May approved the IBRD loan to support the Government’s education and training sector improvement program. The World Bank program will contribute to Government efforts to equitably increase the immediate supply of middle to high level skills required to meet current labor market demands, to lay a foundation for a sustainable supply of skills required for future equitable growth and to facilitate Namibia’s transition to a knowledge-based economy. The First Development Policy Loan specifically supports the first implementation phase of Namibia’s Education and Training Sector Improvement program (ETSIP1), a five-year sector program estimated to cost about US$357 million. The Development Policy Loan (DPL) is an instrument that provides direct budget support and disburses funds against policy and institutional reforms already achieved by the government. The loan constitutes about 14 percent of the funds required for the first year of ETSIP1. The rest will be financed by the Government of the Republic of Namibia, national development partners and international development partners. This loan is the first of two single-tranche sector Development Policy Loans (DPLs) of US$ 7.5 million each. The DPL will support (i) the development of specific policies and policy instruments to guide and give effect to planned sector reforms; (ii) legal instruments to enforce policy implementation; and (iii) institutional capacities required for effective implementation of planned sector reforms. This program is consistent with the Bank’s Africa Action Plan (AAP) flagship goal of building skills for competitiveness in a global economy that supports activities that accelerate the attainment of education MDGs, build skills to promote growth, strengthen partnerships, and strengthen partner countries’ capacity to design, implement and monitor their own sector development plans and programs. Program preparation benefited from inputs from a broad base of stakeholders from the public, private and parastatal sectors, academics, civil society, teachers’ unions and international development partners. A memorandum of understanding between the Government and international development partners designates the Bank as the lead technical agency during the implementation of ETSIP1 and the European Union as the lead coordinating agency.
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