Select Page

SADC Summit to focus on implementation of industrialization strategy

SADC Summit to focus on implementation of industrialization strategy

The 38th Summit of Heads of State and Government of the Southern African Development Community (SADC), which is taking place in Namibia on 17-18 August, is expected to address a wide range of issues of importance to the SADC region, most notably the status of implementation of the SADC Industrialization Strategy and Roadmap, as well as the current political situation and its effect on investment.

According to Wildu du Plessis, the Head of Africa at global law firm Baker McKenzie in Johannesburg, there is a common theme of political uncertainty having a detrimental effect on investment amongst all members of the SADC region, with the exception of the Botswana economy, which appears to be behaving differently.

“Sometimes this political uncertainty in Africa has been successfully addressed, for example Kenya appears to be back on track after uncertainty surround its elections last year. However, the political issues that surfaced around the recent elections in Zimbabwe has put the country back in a cycle of uncertainty. The same applies to South Africa, where there was positive sentiment around the appointment of Cyril Ramaphosa as the country’s new president, but now reality has set in and investors are realising that Ramaphosa has to deliver on a very tall order,” he said.

Du Plessis noted that with regards to the SADC Industrialization Strategy and Roadmap, which will be discussed at the Summit, there appears to be a big gap between the planning and implementation stages.

He explains that to-date, there has not been a big change in the levels of industrialization in the SADC region. For example, an important element for improving industrialization would be to bring manufacturing back to the region, which hasn’t happened yet,” he noted.

“One hopes that the Summit will focus on the ways to move from strategy to implementation,” he said.

A good example of an industrialization strategy that is being implemented effectively, is the Zimbabwe Government’s partnership with commercial farmers to increase agricultural production in the country.

“This looks like it is working and that might produce a solution that could be implemented in other sectors as well,” he noted.

Kieran Whyte, Head of Energy, Mining and Infrastructure at Baker McKenzie in Johannesburg explains further that there has not been enough clarity around SADC’s Industrialization Strategy.

“I am not sure everyone is up to speed with what is proposed in the plan,” he said.

“Industrialization will be a priority agenda item at the upcoming Summit, considering the urgent need to foster economic growth and increase employment in the region. Industrial growth has to take place having regard to advancements in technology, the movement to digitisation, the decarbonisation agenda and automation. It is also important for countries to ensure they have the required workforce that is skilled in the right areas, as opposed to skilled people in operations that are unlikely to last,” he said.

Whyte said that an example of the process involved in implementing an industrialization strategy is the role the Department of Trade and Industry in South Africa is playing a role in fostering industrialization, especially with regards to projects that increase youth employment and the creation of special economic zones and industrial parks. The Black Industrialists Scheme and the commitment to localisation, which involves the uptake of locally manufactured goods and services, are all part of the process to increase industrialization in the country.

The theme of this year’s SADC Summit is “Promoting Infrastructure Development and Youth Empowerment for Sustainable Development”. At the recent BRICS Summit in Johannesburg the importance of industrialization and the need for Africa to address its infrastructure deficit, including power, was also discussed.

Whyte says that developing infrastructure is vital for the improvement of economic growth , employment opportunities and the socio-economic conditions in the region. An example of a proposed power infrastructure project in Namibia, the SADC Summit hosts, is the mooted Kudu Gas Project . The Namibian Minister of Energy recently referred to this project when he spoke at the African Energy Forum in Mauritius.

“This project is offshore, and they have to bring the gas onshore and find power or industrial offtakers not only in Namibia but in neighbouring countries as well. As such, industrialization will work only if there is an increase in intra-regional trade and dependency,” he said.

Whyte noted another key challenge of industrialization is raising finance on acceptable terms.

SADC noted when it launched the Industrialization Strategy and Roadmap that one of the biggest challenges to the growth of industrialization in the region was inadequate funding, and that they needed to consider innovative ways of financing industrialization.

Whyte notes that investments in infrastructure in particular are often big ticket, long term commitments with fixed locations, fixed revenue streams and structures, which will require substantial financial buy-in from all parties and stakeholders.

“Because of market volatility, coupled with low credit ratings and a lack of exposure to private investors, emerging markets, and Africa in particular, require innovative financing solutions to bridge the gap between public and private investment. This is where the New Development Bank and other Development Finance Institutions (DFIs) play a pivotal role.

Apart from perceived or actual investment barriers, infrastructure projects have to identify and mitigate multiple risks notably completion risks,regulatory or policy uncertainty, performance risks and revenue risks to ensure that the project not only repays its debts, but also provides an adequate return for investors. The overall “bankability” and multi-faceted and inter-dependency of the components of the primary and enabling infrastructure of a project must not be underestimated.

The key role that DFIs have to play in making a project bankable include being able to provide a broad range of financing products, the ability to act as a loss absorber on both greenfield as well as brownfield projects, having developmental mandate which goes beyond pure funding, active engagement in creating enabling environments to address regulatory and institutional challenges, and risk mitigation.”

Whyte added that Industrialization in the SADC has to happen but it’s going to be challenging, especially when developing nations like China have the ability to mass produce products at lower production cost.

“SADC members will most likely also use the Summit’s platform to discuss the need for cross border and regional co-operation and collaboration, as well as the need for regulatory certainty and certain, independent, transparent and impartial regulation. Also under discussion will be the need to pursue a liberalised market to foster intra-Africa trade based on the recently signed African Continental Free Trade Area Agreement, the implementation of liberalised foreign exchange markets and convertibility of currencies, the status of bi-lateral investment treaties and security around property rights in the region,” he said.


About The Author

Guest Contributor

A Guest Contributor is any of a number of experts who contribute articles and columns under their own respective names. They are regarded as authorities in their disciplines, and their work is usually published with limited editing only. They may also contribute to other publications. - Ed.

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.