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2018 real GDP growth of 3.5% will have minimal impact on deposits and private sector credit – BMI forecast

2018 real GDP growth of 3.5% will have minimal impact on deposits and private sector credit – BMI forecast

Credit growth will accelerate in Namibia over 2018 relative to 2017 as the economy picks up steam, according to a Fitch Group company, Business Monitor International (BMI) Research.

BMI this week in their Industry Forecast said however, slowing deposit growth and the fact that the recovery in real Gross Domestic Product will be driven by the agriculture and mining sectors that do not typically rely on bank funding, mean that the firm believes that lending growth will still remain below the recent average.

“Credit growth in the Namibian banking sector will remain below the average rate from the previous decade in 2018 while deposit growth is likely to slow relative to 2017 as interest rates fall,” the research firm added.

According to BMI, the loan-to-deposit ratio remains near 1.00 suggesting little capacity for additional lending on the existing deposit base and although banks have alternative avenues through which they could finance credit growth, BMI said “We do not believe that credit demand will be strong enough to warrant tapping these sources.”

BMI is forecasting credit growth of 7% year on year in 2018, up only marginally from an estimated 5% in 2017 while they expect deposit growth to come in at 8%, down from an estimated 10% in 2017.

“We expect deposit growth will slow in 2018 relative to 2017 largely due to our expectation that deposit rates will fall in line with an expected 25 basis point reduction to the benchmark interest rate. Furthermore, we believe that inflation, which came in at 5.2% in December 2017, has bottomed and that it is likely to rise to average 5.5% in 2018, meaning that savings rates will fall even more in real terms than in nominal terms, discouraging saving in the form of deposits,” BMI added.

In terms of economic growth though, BMI in their forecast said it will accelerate to 3.5% in 2018, up from an estimated contraction of 0.6% in 2017, but this growth will be driven by the mining and agriculture sectors, which have not historically relied on funding from the domestic banking sector for expansion.

“Indeed, despite together making up around 12% of output in 2016, the two sectors accounted for less than 6% of outstanding credit as of September 2017. The increase in economic activity is likely to be accompanied by some increase in demand for credit, hence our expectation that lending growth will accelerate more rapidly in 2018 than it did in 2017. However, we doubt that it will reach anywhere near the 14 .4% annual,” BMI said.


 

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Musa Carter

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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.