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Pre-emptive move to identify fiscal risks outside the budget casts a different light on government liabilities

Pre-emptive move to identify fiscal risks outside the budget casts a different light on government liabilities

On 16 August the International Monetary Fund released a new country report for Namibia specifically looking at the additional risks posed by the liabilities of state-owned enterprises, and by perceived risks from public private partnerships once this mechanism gathers steam.

This report does not form part of the usual so-called Article IV Consultations which the IMF conducts with the Ministry of Finance around October and November every year. It is a stand-alone report and it is very specific in the entities that it analysis to get to an assessment of their level of systemic risk, first for the government’s budgetary process but also for the broader economy.

Although the report’s title page is dated March 2018, the official release was only last week. It is not clear what the reason for this is but there are other, smaller indications in some areas of the 78-page document that hint at a “work in progress.” Another key observation, in my mind, is that the report was commissioned by the Ministry of Finance, indicating that there must be some concerns in government circles about the risk of government guarantees suddenly and unexpectedly becoming fiscal liabilities.

The IMF describes their mandate like this: “At the request of the Ministry of Finance (MoF) of Namibia, a mission of the IMF’s Fiscal Affairs Department (FAD) visited Windhoek during January 17–31, 2018 to analyze main source of fiscal risks, notably Public-Private Partnerships (PPPs) and Public Entities (PEs), and advise on options for better monitoring, managing and reporting these risks.”

As one works through the content, a picture gradually emerges that there is no coordinated framework for the government to make its own assessment of fiscal risk from the many entities which it controls as shareholder. But ultimately, in the later pages, it transpires that almost all risk stems from a very small portfolio of seven “problem children”, all with which we are very familiar.

When I looked at the tables discussing analysis and recommendations in more detail, it stood out that TransNamib and Air Namibia are the two biggest culprits, and that other seemingly more innocent entities like the University of Namibia, are not far behind.

Specifically the two transporters made me rethink the concept of company value, at least in terms of revenue and profit. For example, take TransNamib. How does one determine the value of a 100-metre reserve stretching over almost 3000 kilometres. It translates to 10 hectares every kilometre meaning the rail company controls around 30,000 hectares in land excluding the enormous land holdings they have for stations, yards, sidings, and what not.

The IMF says bluntly TransNamib is technically bankrupt. Of this I am not so sure. It remains to be seen exactly what the value of all the assets is, including rolling stock, and all the other paraphernalia required to run a national railway network. Despite substantial accumulated debts, also mentioned in the report, I believe a fair valuation of TransNamib will rather consider its ‘operational value’ instead of its book value.

Air Namibia is perhaps an easier case. It does not own any land or structures. These have all fallen to the Airports Company, and as far as I know it does not own any of the aircraft it operates. These are all leased. So the only possible valuation model is its ability to generate revenues by flying people around. Its value is contained purely in its operations and the fact that it is a going concern. The IMF thinks Air Namibia is also bankrupt and with this I have to agree, unfortunately.

But when I noticed that the IMF team lamented the lack of data on parastatals, I realised that the problem with these loss-makers is 90% governance and only 10% operational. For instance, TransNamib has last published annual financial statements for 2015/16, UNAM for 2016, and Air Namibia not since 2012.

This means either the directors do not know what is going on with their companies’ finances, or they have been instructed not to divulge the true extent of the damage. How does one justify serving as a director of a state-owned enterprise, earning a director’s fee, and allow that the most basic, fundamental pivot of all governance, the financial statements, are not up to date. It goes beyond belief.


The assessment of potential risk from public private partnerships starts on page 36 and runs to page 50. Because the existing number of projects that fall under this definition is small and the projects themselves are fairly small, the IMF team had to lean on a number of case studies. I am not saying this part of the report is less important but it certainly is less relevant given the enormous difference in risk weight between the state-owned enterprises and public private partnerships.

From page 63 to 78, the report covers mostly case studies based on other countries, so for the time being, we can ignore this part, but the glaring governance issues that surface throughout the entire document, can only be ignored at our peril.

Download the full report from:


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 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

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.