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Growing headline inflation poses danger to low income earners

Growing headline inflation poses danger to low income earners

The steadily growing headline inflation is putting a tight squeeze on the living standards of low income earners. While high income households may be able to absorb the price shocks with less discomfort, it is hardly the case at the other end.

This is evident in this week’s Namibia Consumer Price Index compiled by the Namibia Statistics Agency, which shows that annual inflation has been picking up from 3.5% in March 2018 to 4.8% in September 2018. This massive 37% increase severely diminishes the ability of poor households to survive on their meagre incomes. Annual inflation measured monthly has consistently gone higher and higher since March mostly due to a high base effect from the previous year.

According to the NSA’s inflation report, prices for goods rose by 4.9% in September compared to 4.6% in August, while prices for services increased by 4.7% compared to 4.1% in August. Prices for both categories accelerated at their fastest pace this year.

The strong increase in public transportation fares that resulted in an inflation rate of 18.0% compared to September 2017 was the main driver behind the rise in service inflation.

On a monthly basis, inflation increased by 0.8% in September 2018 from 0.03% registered in August 2018.

Research Associate at the Economic Association of Namibia, Klaus Schade said the higher inflation was expected, as the combined effect of higher fuel prices and fares for public transport services is exerting upward pressure on the inflation rate.

“Namibia currently experiences only the direct impact, but higher transportation costs will have an impact on the prices of other goods soon through so-called second round effects. Furthermore, the weaker currency compared to a year ago, even though it has gained some ground again since the middle of September, will result in higher prices for goods imported from outside the Rand area,” Schade said.

He stressed that sourcing goods to the extent possible locally will protect producers and consumers from increasing transportation costs and a weaker currency.

“In the meantime, however, consumers have to tighten the belt, not only because of rising price levels, but also because of a tight labour market,” Schade said.


CAPTION: Bread and cereal prices rose at the fastest pace in September (3.8%) after relatively stable prices during the first four months this year.


About The Author

Donald Matthys

Donald Matthys has been part of the media fraternity since 2015. He has been working at the Namibia Economist for the past three years mainly covering business, tourism and agriculture. Donald occasionally refers to himself as a theatre maker and has staged two theatre plays so far. Follow him on twitter at @zuleitmatthys

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.