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You want guarantee or you want cheap?

Overhearing this terse question in one of the dozens of shops in the smaller so-called China Town in Windhoek’s Northern Industrial Area, brought a discreet smile to my face. A shopper was arguing with the vendor over both price and quality when the vendor nonchalantly decided to settle the matter for good, just to make sure there is no misunderstanding in the (oral) version of the fine print.
To me it signalled something entirely different – the meteoric rise of the Chinese presence in Africa and the subsequent adjustments required from both newcomers and consumers.
During the week, a TV channel broadcast a programme on the travels of one Jonathan Dimbleby from Kinshasha in the Congo to Durban in South Africa. For me the highlight was Mr Dimbleby’s visit to the Chinese ambassador’s residence in Kinshasha. The ambassador informed the intrepid traveller that the Chinese government has earmarked US$6 billion for investment in the DRC, mostly in extractive industries, but also in infrastructure. Now, that is not an insignificant amount to invest in any single African country.

Another telltale remark to define Chinese intentions came from the ambassador when he boldly stated the Chinese are in every single country, world wide, so why would Africa be any exception?
Avoiding an ethical slant to this question, one has to pose the counter question: Why would the Chinese want to be in every single country in the world?
In 1998 at a business forum organised by The Economist, Chinese expansion and the opportunities it creates, was very much a feature of the programme. We advertised this widely and all sorts of interested parties subscribed to attend the forum. At that time Chinese operations were still under wraps and it was only in informed circles that one obtained information about their aggressive entry and expansion. The Chinese embassy ignored us flatly but, interestingly, three Chinese individuals registered and attended. To me they appeared very similar to all the other secret service agents from many other countries I have met in my life.
At that time, Chinese contractors, after successfully beating the powerful Stocks & Stocks on several large tenders, did not advertise their presence at building sites. It was only their building methods and their sloppy work, like the High Court for instance, that gave them away. It was only some years later that Chinese contractors, emboldened by their success in avoiding labour issues, suddenly started showing off on huge billboards and banners on their overhead cranes.
This is all fantastic for investment, particularly infrastructure investment but the Chinese will ask for their pound of flesh somewhere in the not-too-distant future. Our naive political leaders, defending all the underhand deals and dealings with Chinese individuals and companies, are fond of reminding us they gave Swapo guns during the war. But I doubt they ever used them to shoot because these were so unreliable.
Since 1998, China’s presence has become entrenched and publicly visible. The Chinese Embassy in Windhoek illustrates this point. In earlier commentaries I have asked the probing question why they need this armoured monstrosity if they only need to serve the visa requirements of a small number of building contractors’ employees.
But Chinese nationals and goods are forcing the rest of the world to make a reality check in terms of their own competitiveness and market share.
German companies have been doing this rather successfully, taking on Chinese products at comparable prices, but selling under the quality label. Yet it is common knowledge that German goods will not be able to compete indefinitely on price, and the Germans know this.
This game of chicken will come to an end, depending only on who flinches first.
On average, I believe European price levels are simply too elevated for the run of the mill stuff that ordinary consumers in Africa need. For this very simple reason, Chinese goods will only grow in popularity, trailing the expanding footprint as more and more small vendors penetrate Africa’s largely unserviced rural areas.
To the African home owner of a modest property somewhere in the bush, after-sales service and refundable guarantees are not important. The thing must just work, and it must be affordable. Local consumers are extremely price sensitive. Chinese vendors know this. That is why the only consideration during a sale is: You want guarantee or you want cheap?


About The Author

Following reverse listing, public can now acquire shareholding in Paratus Namibia


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.