Namibia's Finance Minister Erica Shafudah. (@MICTNamibia/X)
Namibia is shifting the balance of its borrowing from foreign to domestic markets as it redeems the $750 million (about N$13.8 billion) eurobond issued in 2015.
The move, while meeting the country’s most significant single debt obligation to date, marks a broader pivot in the government’s financing strategy toward local-currency instruments and home-based investors.
According to the finance ministry, the redemption — due on 29 October 2025 — was financed through a combination of the sovereign sinking fund and short-term local borrowing.
A portion of the funds has been accumulated in the sinking fund over several years, while the balance — estimated at around N$6 billion — was covered by a syndicated facility with domestic banks, coordinated by the Bank of Namibia.
In addition to the sovereign sinking fund, several local commercial banks played a critical role in closing the funding gap.
The finance ministry secured about $306 million (approximately N$5.7 billion) from a consortium of Namibian lenders, including Standard Bank Namibia (≈ N$3 billion), First National Bank Namibia (≈ N$1.5 billion), and Bank Windhoek, which partnered with ABSA Bank Namibia (≈ N$1.5 billion).
This local participation ensured that the eurobond was redeemed without straining the country’s foreign reserves or compromising fiscal stability. Eurobonds — debt instruments issued by a country in a foreign currency — have risen to prominence in Africa, allowing governments to diversify their funding sources.
Finance Minister Erica Shafudah said the combined approach allows Namibia to settle the external bond without straining social spending or foreign-exchange reserves.
The repayment will also rebalance the country’s debt composition, shifting it to around 85% domestic and 15% external debt — a significant structural change from the ratio a decade ago, when foreign borrowing dominated.
“This redemption is not just a payment — it is a repositioning of how Namibia manages its sovereign obligations,” Shafudah said in Windhoek.
“We are deepening our domestic capital markets, reducing foreign-exchange exposure, and keeping more interest payments within the Namibian economy.”
The $750 million eurobond, issued in 2015 at a 5.25% coupon, was the country’s second foray into global capital markets.
The proceeds were used primarily to finance infrastructure projects, support the national budget, and refinance short-term domestic debt.
At the time, Namibia was expanding its public investment in roads, energy, housing, and water infrastructure, while also seeking to stabilise its fiscal position amid declining revenues from the Southern African Customs Union (SACU).
Since that 2015 issuance, however, Namibia’s public debt has risen sharply, driven by slower economic growth, fiscal deficits, and emergency spending during the Covid-19 period.
Public debt has expanded from about N$33 billion (roughly 25% of GDP) in 2015 to approximately N$171.5 billion by mid-2025, equivalent to around 62–64% of GDP, according to Bank of Namibia and finance ministry data.
Much of the increase has been funded through domestic borrowing, reflecting both limited access to affordable external loans and the government’s shift toward local financing instruments.
The bond therefore served a dual role — as a source of long-term capital for development spending and as a mechanism to ease pressure on domestic markets by substituting short-term, high-cost borrowing with longer-term external funding.
Namibia, however, still has other external bond obligations to manage. The country’s first eurobond, a $500 million issue issued in 2011 at a 5.5% coupon, was fully repaid on 3 November 2021.
Together, the 2011 and 2015 issuances represented Namibia’s two primary international debt instruments, both listed on the London Stock Exchange.
In addition to these, the government continues to service a mix of bilateral and multilateral loans, including financing from institutions such as the African Development Bank (AfDB) and KfW Development Bank for energy, health, and water projects.
Both eurobonds were structured with annual coupon (interest) payments and bullet principal repayments — meaning interest was paid each year.
At the same time, the full face value was repaid in one lump sum at maturity.
For the 2011 eurobond, Namibia paid annual interest of $27.5 million (5.5% of $500 million) from 2012 to 2021.
Over the 10-year life, this amounted to $275 million in interest, plus the $500 million principal, bringing the total repayment to $775 million.
For the 2015 eurobond, the country has been paying $39.375 million annually (5.25% of $750 million) from 2016 to 2025.
Over 10 years, total interest payments amount to $393.75 million, and Namibia will now repay the full $750 million principal, for a total outlay of $1.143 billion over the bond’s lifespan.
These payments illustrate the long-term fiscal commitment created by external borrowing, even when structured for a single repayment at maturity.
The finance ministry has acknowledged that foreign-currency debt servicing, while manageable, exposes Namibia to exchange-rate volatility and global interest-rate movements, reinforcing the rationale for the current shift toward domestic borrowing.
Its repayment now, a decade later, completes that cycle and comes amid global monetary tightening and heightened scrutiny of African sovereign debt, making Namibia’s orderly exit a notable achievement.
However, economists warn that the pivot toward domestic borrowing, while prudent in foreign-exchange terms, could carry liquidity and crowding-out risks.
With the government now the largest borrower in local markets, commercial banks may have less room to lend to the private sector, potentially tightening credit for businesses.
At the same time, the eurobond repayment will draw down foreign reserves — projected by the Bank of Namibia to decline from N$63 billion in 2024 to around N$47 billion by the end of 2025.
Still, analysts see the shift as a necessary step in Namibia’s evolution of debt management. The government plans to issue more treasury bills, fixed-rate, and inflation-linked securities locally to diversify funding sources and stabilise debt costs over time.
By retiring its only outstanding eurobond and tilting financing inward, Namibia is signalling confidence in its domestic capital base — and a new chapter in how it funds its development ambitions.