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Central bank well placed to support economic recovery with monetary policy

Central bank well placed to support economic recovery with monetary policy

Holding interest rates steady to support the nascent economic recovery, is the consensus view among all analysts polled by the Economist. Sharing this view is the Market Research Manager at First National Bank, Daniel Kavishe.

In the broader scheme of monetary policy, Kavishe said “As a policy tool across the world, [short term] interest rates remain central banks’ main lever to impact monetary policy within a given country. Theoretically, central banks hike interest rates when they feel that inflation is increasing at an unstable rate and if credit appetite is too high. Conversely, they will lower interest rates to stimulate borrowing, which will increase spending, investment and boost growth.”

“Central banks can also keep rates unchanged as they observe the behaviour of their current policy in action,’ he said.

On the local scene, Kavishe said Namibia follows a similar pattern but added “Our country is also unique as we form part of a greater monetary policy area, the Common Monetary Area. This means the Bank of Namibia tends to monitor general movements of interest rates within the area.”

Looking at the minutes of the latest Monetary Policy Committee meeting, he said the Bank of Namibia expects [real] growth to recover over the course of this year to 2.2% but because several indicators still point to a gradual recovery only, it opted to keep rates flat until the economy gathers steam.

The central bank expects inflation to continue trending down this year following the curve from 2016 to 2017 when average annual inflation decreased from 6.7% to 6.2%. “It is therefore this lower inflation forecast that potentially informed the decision to keep rates flat for longer,” Kavishe speculated.

On the collapse of new credit to the private sector in 2017, he expressed the hope that Private Sector Credit Extension will normalise, supporting the central bank’s notion to hold interest rates steady.

With foreign reserves at a healthy level, Kavishe said these are more than sufficient to maintain the Namibia Dollar’s external value link to the South African Rand.

Finally, keeping a keen eye on long term interest rates in the United States, he reckons the Bank of Namibia is in a good position to support local economic growth through monetary policy.


 

 

About The Author

The Staff Reporter

The staff reporter is the most senior in-house Economist reporter. This designation is frequently used by the editor for articles submitted by third parties, especially businesses, but which had to be rewritten completely. - 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.