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Analysts get it right on SARB move

The decision by the South African Reserve Bank to hike the repo rate by 50 basis points came as no surprise to Bank Windhoek analyst Suta Kavari and RMB South Africa analyst John Cairns who correctly predicted that the SARB would hike interest rates this week.
Motivating the Reserve Bank’s decision to hike the repo rate, its Governor, Lesetja Kganyago said in a statement, “From a monetary policy perspective, a key risk to the inflation outlook is not only the possibility of further depreciation, but also the extent to which there is a change in the pass-through dynamics, which have been relatively muted in recent years.”
Added Kganyago, “the MPC still views the stance of monetary policy to be accommodative. Despite the rate increase, the real repurchase rate remains low given the higher expected inflation over the period. The MPC will remain focused on its core mandate of containing inflation within a flexible inflation targeting framework.”
Commenting on the expected move before the announcement was made by the Reserve Bank, Kavari said of the anticipated move, “for the South African Reserve Bank’s rate decision later today, we feel that the Bank will take a bold step. A 50 basis point hike, largely priced in, is on the cards. I am prepared to put a wager on that. The 50 basis point hike will be justified given that inflation is expected to breach the upper band of the SARB’s target range for an extended period of time and remain elevated.”
Added Kavari, “risks to the inflation outlook have significantly increased and we expect the SARB to revise upwards their inflations forecast, taking account the rand’s sharp depreciation and acceleration in food prices. The rand remains the biggest risk to the inflation outlook, having depreciated by around 15.5% to the dollar since the last MPC meeting in November.”
For his part, Cairns said, “we expect that they will revise their inflation numbers significantly upwards and this will prompt them to accompany the hike with a hawkish statement. Our expected outcome would probably lead to a steepening of the curve. A 50 basis points move, by contrast, would build confidence in the SARB, flattening the curve. Similarly, the rand would be disappointed by 25 basis points but inspired by 50 basis points. But remember the rand usually does not respond very aggressively to rate changes, and the threat of an outsized move this time around because of edginess in the market has been reduced because of the rand’s stability this week.”

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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.