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The budget debate season has begun – sit back and enjoy the entertainment

Now that the debate over the budget has started in the National Assembly, one can expect the emphasis to fall on expenditure.

This has been the pattern for many years. Going by this week’s very first contributions, the tune is set to continue playing “What can we get out of it” with only a single contributor focusing on the bigger picture.

Fortunately, there is always at least one big gun among the weekly fray to save the debate.

It is all good and well that the vast majority of respondents always clamour for more, that a not-insignificant number wants to solve all the economic ills with their own budget, and that the average budget contribution is not worth the paper it is written on. These representatives come from a back ground of ingrained entitlement, and no matter how the budget is allocated, their share will never be enough.

I suppose if you call yourself MP, you have to sit through this voluminous drivel to get an opportunity to listen to the odd contribution based on knowledge, wisdom and common sense.

I hope that as the budget debate evolves, more people will come to realise that our immediate problem is a funding constraint and that there is nothing wrong with the Namibian balance sheet.

But I also sincerely hope that, through the few, better informed contributions, the majority of parliamentarians, or at leas a significantly bigger number than is currently the case, will understand that if you do not fix the cashflow problems, eventually they will turn into balance sheet problems.

If I say the immediate problem is about funding, then the logical question that follows is, How do we fix it? That may be oversimplified but it is crucial to realise that for us to resume meaningful economic growth, we have to have better access to funding mechanisms.

I have discussed our options in earlier commentaries. Suffice to say now is that we are not nearly at the end of our funding potential, which then implies that we can generate much more capital, if we grow the number and type of funding instruments.

My first proposal is that we aggressively launch more instruments in the South African capital market. Although we are only a fraction of the South African market, the government’s presence in the Windhoek capital market has become so overbearing, it dominates all other hopefulls into submission. Here I am not referring to parastatals but to pure private sector companies that are eager to tap into the Windhoek market but who are apprehensive since its direction and yields are overwhelmingly determined by government paper.

In the South African capital market, we are small fry. It really does not create a blip on their radar if our instruments are priced 50 or 150 basis points higher than their benchmark counterparts. The only aspect we need to watch out for is that our size does not penalise us leading to punitive premia.

In Johannesburg, we can list another eight bonds with comfortable maturities at rates that are determined by local conditions. Except for its size, the Namibian economy is not inferior to the South African, in fact I often think we have better short-term prospects and a much rosier long-term future. The biggest advantage though is that Namibian bonds on the JSE are same-currency bonds, making it easier to mitigate exchange rate fluctuations.

Locally, the obvious avenue to pursue is the proposed Public Private Partnership regime, but this will take a while to get off the ground.

For the time being, we have to contend with the Windhoek market, but even here, so-called private placements, especially with European sovereigns, will go a long way to improve local liquidity.

Remember, the government, at least for the foreseeable future, is the generator of an estimated 65% of all liquidity, directly and indirectly through its procurement and through its massive wage bill. To change that will take several years, so the most obvious solution to repair the impeded liquidity, is to get government spending rolling again.

If this sounds reckless, just look at the economic growth of the 2010 to 2015 period. That was solely built on government spending and it is a fruitless exercise now, to try and stop that too abruptly. Granted, over the medium term, government debt has to be managed, but only to keep it in check as a percentage of the output of the country as a whole. The nominal amount of outstanding government debt is academic, what is real and of great concern is how that debt functions in the broader economy to make the cake larger for everybody.

About The Author

Daniel Steinmann

Brief CV of Daniel Steinmann. Born 24 February 1961, Johannesburg. Educated at the University of Pretoria: BA, BA(hons), BD. Postgraduate degrees are in Philosophy and Divinity. Editor of the Namibia Economist since 1991. Daniel Steinmann has steered the Economist as editor for the past 29 years. The Economist started as a monthly free-sheet, then moved to a weekly paper edition (1996 to 2016), and on 01 December 2016 to a daily digital newspaper at www.economist.com.na. It is the first Namibian newspaper to go fully digital. Daniel Steinmann is an authority on macro-economics having established a sound record of budget analysis, strategic planning and assessing the impact of policy formulation. For eight years, he hosted a weekly talk-show on NBC Radio, explaining complex economic concepts to a lay audience in a relaxed, conversational manner. He was a founding member of the Editors' Forum of Namibia. Over the years, he has mentored hundreds of journalism students as interns and as young professional jourlists. He regularly helps economics students, both graduate and post-graduate, to prepare for examinations and moderator reviews. He is the Namibian respondent for the World Economic Survey conducted every quarter for the Ifo Center for Business Cycle Analysis and Surveys at the University of Munich in Germany. He is frequently consulted by NGOs and international analysts on local economic trends and developments. Send comments to daniel@economist.com.na

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.