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Savings and growth, two partners, one marriage

Savings and growth, two partners, one marriage

“Economic growth is a country’s capacity to increase the productivity of goods and services in comparison with a previous time period. This is done either by either increasing consumption, investment, savings and government expenditure or by growing nett exports,” Namene Kalili, Senior Manager Research and Development at FNB Namibia Holdings said this week.

Explaining the delicate balance, he said “Consequently, economic growth and savings are closely related in the sense that an increase in savings accelerates economic growth. In our case, a 4% increase in savings, can accelerate investment growth by 1%, which in turn accelerates economic growth by 0.5%. For each percentage point the economy grows, [an estimated] 2300 new jobs are created. New jobs in turn accelerate national income growth which accelerates savings – according to the theory of marginal propensity to save which states that as income increases, savings increases disproportionally faster.”

The FNB economist advised that against a backdrop of rising interest rates (FNB expected rates to increase by 125bps in 2016), a nation that saved could enjoy the benefits of higher interest income, over and above inflation, thereby encouraging a second round of accelerated savings. He said encouragingly: “Higher savings implies higher capital investment which fosters economic growth through capital accumulation and innovation. The magnitude of the capital accumulation can be estimated by the Picketty second fundamental law of capitalism, which states that the ratio of national capital to national income is defined by the savings rate net of depreciation divided by the growth rate of the economy – and which by the way, is not grounded on widely accepted economic theory.”

Employing Piketty’s second fundamental law of capitalism, it is suggested that Namibia’s future capital would accumulate by 133% over the next decade from N$259bn to N$603bn. “More importantly it will attract intellectual capital and much needed innovation into the local economy. This is most likely to occur in the mining, construction and manufacturing sectors, as these are the sectors currently enjoying the highest levels of capital accumulation. Since capital tends to be unequally distributed, this implies higher inequality,” adds Kalili.

He continues by saying that unfortunately, not many households had direct exposure to these sectors and therefore the benefits have been skewed, leading to unequal distribution of income from the capital accumulation.

When it comes to Namibia Kalili says that in our country, households typically saved and invested in livestock, which unfortunately had accumulated only at a measly 1.1% growth per annum. He states: “While it is important to protect and encourage the continuation of cultural norms, it surely makes sense to also accelerate savings in order to participate indirectly in sectors which enjoy higher levels of capital accumulation.”

In conclusion he indicated that options for smarter savings for individuals ranged from short to medium to long-term opportunities across a range of deposit-taking instruments. “In turn individual and company investments passing through financial institutions can be channeled (at a current favourable interest rate to you) to (1) Government to construct schools, hospitals, roads, dams, railway lines and ports to help build a better economy (2) businesses to expand their businesses, create jobs and grow the economy, as they lend to expand and grow according to national need. That’s your savings and investments helping to create a better Namibia, all while you earn higher interest income.”

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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

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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.