Select Page

Go slow on that delink talk

Go slow on that delink talk
Namene Kalili, Senior Manager Research and Development at the FNB Group

Namene Kalili, Senior Manager Research and Development at the FNB Group

“Ever since the Rand’s nose-dive there have been questions and queries as to why our Namibia Dollar should remain linked to the Rand, especially as it seems to pull us down as well” said Namene Kalili, Senior Manager Research and Development at the FNB Group. “De-linking a currency, however, is much easier said than done and entails numerous considerations” he cautioned at the same time.
Kalili explained that the Rand, to which the Namibia dollar is pegged has depreciated following dramatic policy mistakes in South Africa. But he advised that before anyone becomes overly concerned, “we should also remember that the US dollar has appreciated against most currencies across the globe and the rand is not its only victim.” “Essentially the depreciation will pass through in the form of higher prices for certain consumer goods such as electronics and vehicles.”
FNB Namibia has therefore increased their inflation expectations to 5.8% in 2016 rising to 6.1% in 2017. Said Kalili: “We expect faster interest rate hikes this year to contain inflation below 6% and reduce aggregate demand. It is possible for Namibia to delink from the Rand, but I do not believe it will be in our best interest. Reason being, persistent dollar strength is likely to depreciate the value of the free float Namibian dollar. Current fundamentals suggest that the Rand is undervalued and is therefore likely to recover from 2017 onwards (see graph below).”
He added that currencies are determined by a host of fundamentals and market sentiments. Given Namibia’s limited FX reserves, a free float Namibia dollar is likely to be more volatile than the Rand. Event risks such as drought, the energy fiasco or struggle kids unrest, would in all likelihood weigh down on the free float currency, leading to more depreciation.
Kalili said that launching a new currency is a long term project during which countries need to show the global community that they are able to manage interest rates, inflation rates, balance of payments, government expenditure and economic growth, amongst other things. “Then the country must have adequate reserves to back the currency in circulation. Where our money gets printed and determinants of money supply become important considerations. We also need to consider our trade partners. Trade between Namibia and South Africa, our biggest trading partner, would become more complex as foreign currency translation now enters into the equation. Therefore, this is not a decision to be taken lightly and has to be taken with a long term view.”
He still feels Namibia is better off under a linked currency regime. “We do not have the market size to influence the price for our currency, neither do we have the human capital to manage a free float currency.” He encouragingly stated: “The Rand will recover, it’s only a matter of when, as the fundamentals point to an undervalued Rand. So as traders take advantage of the price advantage, the Rand will appreciate and normalize. Furthermore, markets have now factored in the Zuma effect into Rand pricing and as soon as his term runs out, the currency should normalize.”

About The Author

Typesetter

Today the Typesetter is a position at a newspaper that is mostly outdated since lead typesetting disappeared about fifty years ago. It is however a convenient term to indicate a person that is responsible for the technical refinement of publishing including web publishing. The Typesetter does not contribute to editorial content but makes sure that all elements are where they belong. - Ed.

Following reverse listing, public can now acquire shareholding in Paratus Namibia

Promotion

20 February 2020, Windhoek, Namibia: Paratus Namibia Holdings (PNH) was founded as Nimbus Infrastructure Limited (“Nimbus”), Namibia’s first Capital Pool Company listed on the Namibian Stock Exchange (“NSX”).

Although targeting an initial capital raising of N$300 million, Nimbus nonetheless managed to secure funding to the value of N$98 million through its CPC listing. With a mandate to invest in ICT infrastructure in sub-Sahara Africa, it concluded management agreements with financial partner Cirrus and technology partner, Paratus Telecommunications (Pty) Ltd (“Paratus Namibia”).

Paratus Namibia Managing Director, Andrew Hall

Its first investment was placed in Paratus Namibia, a fully licensed communications operator in Namibia under regulation of the Communications Regulatory Authority of Namibia (CRAN). Nimbus has since been able to increase its capital asset base to close to N$500 million over the past two years.

In order to streamline further investment and to avoid duplicating potential ICT projects in the market between Nimbus and Paratus Namibia, it was decided to consolidate the operations.

Publishing various circulars to shareholders, Nimbus took up a 100% shareholding stake in Paratus Namibia in 2019 and proceeded to apply to have its name changed to Paratus Namibia Holdings with a consolidated board structure to ensure streamlined operations between the capital holdings and the operational arm of the business.

This transaction was approved by the Competitions Commission as well as CRAN, following all the relevant regulatory approvals as well as the necessary requirements in terms of corporate governance structures.

Paratus Namibia has evolved as a fully comprehensive communications operator in Namibia and operates as the head office of the Paratus Group in Africa. Paratus has established a pan-African footprint with operations in six African countries, being: Angola, Botswana, Mozambique, Namibia, South Africa and Zambia.

The group has achieved many successes over the years of which more recently includes the building of the Trans-Kalahari Fibre (TKF) project, which connects from the West Africa Cable System (WACS) eastward through Namibia to Botswana and onward to Johannesburg. The TKF also extends northward through Zambia to connect to Dar es Salaam in Tanzania, which made Paratus the first operator to connect the west and east coast of Africa under one Autonomous System Number (ASN).

This means that Paratus is now “exporting” internet capacity to landlocked countries such as Zambia, Botswana, the DRC with more countries to be targeted, and through its extensive African network, Paratus is well-positioned to expand the network even further into emerging ICT territories.

PNH as a fully-listed entity on the NSX, is therefore now the 100% shareholder of Paratus Namibia thereby becoming a public company. PNH is ready to invest in the future of the ICT environment in Namibia. The public is therefore invited and welcome to acquire shares in Paratus Namibia Holdings by speaking to a local stockbroker registered with the NSX. The future is bright, and the opportunities are endless.