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Credit extension slump signals recession – PSG

Changes in the Credit Agreement Act which requires a deposit of 10% on all vehicle loans and limits repayment periods to 54 months will have to be made to prevent an economic slump.

PSG, a financial service provider said this week that the yearly private sector credit extension (PSCE) growth fell for four straight months, mostly due to the growth in total mortgage credit, which accounts for more than 50% of total PSCE.

Growth in credit extended to households ticked lower to a yearly 9.3% in December from a yearly measurement of 9.4% in November.

PSG said in a statement said that the decline in overall credit demand during this period reflects a slump in economic growth, a higher inflation environment which is likely to lead to tighter monetary policy. The slower growth in corporate credit was mainly reflected in all of the sub-categories, with the exception of mortgage loans.

We, tentatively, maintain our baseline expectation that the BoN will raise its repo rate by 25 bps during 2017.” PSG said however that future economic forecasts are forward looking as economic recovery in 2017 could lead to growth thanks to higher mineral exports and commodity prices.

Possible downside risks to an economic recovery are mentioned as risks include persistently high food inflation, higher taxes, higher interest rates, higher administered prices (fuel, water and electricity prices) and a weaker Namibian dollar.

PSCE growth declined further in December, mainly as a result of a decline in demand for credit from the corporate sector, according to the Bank of Namibia’s (BoN) recently released Money and Banking Statistics report. Lower growth in corporate credit in total credit extended to the corporate sector decreased to 8.5% yearly in December from 9% in the previous month.

According to PSG the signals of an economic recession started in March 2015 when the demand for credit during this period showed a recession in overall credit demand and economic growth.

Yearly measurement by PSG shows how the PSCE growth sloped to 8.9% yearly since December from 9.3% in November. This lead to a broad downward trend since March 2015.

Since March 2015 the growth has been ongoing, corporate credit demand peaked at 25.6% yearly.” PSG said.

Although the Rand which equally is pegged to Namibia has strengthened compared to 12 months ago, the currency has been volatile and susceptible to shifting perceptions about South Africa’s creditworthiness and political risk as well as the uncertainty over the future trajectory of US interest rates.

PSG is of the opinion that this volatility is likely to fizz out and divisive policies have added to the US Federal Reserve’s interest rate decisions.

About The Author

Freeman Ngulu

Freeman Ngulu is an Entrepreneur, into data journalism and is an aspiring content marketer. He tweets @hobameteorite.

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.