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It’s nice to get dividends, it’s not nice to pay for the losses your companies rake up

It’s nice to get dividends, it’s not nice to pay for the losses your companies rake up

The fanfare around the Windhoek Country Club’s dividend to its shareholder, the government, brought the issue of ownership and its responsibilities back into the spotlight of what exactly should be the government’s role in the economy.

It was an amusing moment when the Minister of State-owned Enterprises, Hon Leon Jooste, received a cheque for N$6 million from the hotel’s manager, complete with board members in attendance. What the line ministry, or the Ministry of Finance for that matter, wants to do with six million is beyond my comprehension, but at least this is one government-owned entity that does not need a N$600 million bailout every year.

About two months ago, I was sent a copy of a supposedly new NEEEF document. It took only a few seconds to determine that this was indeed not a new NEEEF bill but the summary of the Cabinet discussions when this bill was first mooted. Although this smacks of a case of either fake news or intentional malinformation, it nevertheless gave me five minutes of entertainment to see what the line of thinking was then, and what it is today.

Anybody who wants to understand where the government comes from in terms of poverty alleviation, must go back to that first NEEEF document before it became a bill. Furthermore, it is also not a waste of energy to follow the timeline from the first discussions to the bill to the point where the President stated publicly that the 25% shareholding pillar will no longer be pursued.

Perhaps the most striking part of the first NEEEF document is the part that clearly conveys the notion that there is no need to create prosperity, it can simply be taken and redistributed with complete disregard for the consequences, both to the business owners and to the new shareholders.

At that time I wrote a commentary pointing out that the Swapo government is deluding its followers, promising them everlasting Nirvana, a steady stream of income, and wealth beyond their wildest dreams. I explicitly wrote that ownership does in fact not mean any of these three but instead, it comes with a whole set of responsibilities, chief of which are governance and capitalisation.

What would have happened to all the previously disadvantaged shareholders if they became company shareholders then, only to find out less than a year later that if a company makes a loss, it has to be made good by the shareholders. Imagine the stink it would have created with all the thousands of quick-rich new owners who suddenly would have been confronted with the reality that they now have to pay in, and not take home anymore.

I, as much as any other person who is concerned about the economy, congratulates the Windhoek Country Club as well as MTC, Telecom, Namdeb and I think Nasria, who regularly send the finance minister a dividend cheque, and make a big PR spiel out of it. Is this not what all state-owned enterprises are supposed to do?

At last count, I found 81 entities listed by the SOE ministry. This is indicative of the government’s extremely skewed view of what an economy is, what prosperity is, what entrepreneurship is, and what its own role in the economy should be.

There are no gains in being the owner of 81 entities that take up more than a huge chunk of your income, and then ask to be carried financially, year after year after year.

I am glad that the Country Club is in a position to pay its shareholder a dividend. This has not always been the case and for many years, this hotel also required regular recapitalisation. It is only in the last couple of years that the Country Club has become an asset. Before that, it performed like the vast majority of state-owned enterprises.

Shareholding does not guarantee a never-ending steady stream of dividends. This much is clear with the almost 30-year history of dozens of parastatals. The question is whether the powers that be believe this. I am wondering if, when they talk in private, they still harbour their misguided, uninformed notions of what business is, both its good and its bad aspects.

In this sense, the recession is a blessing in disguise. Not only did it force the government to reconsider its own role as shareholder of so many entities, it also opened the eyes of thousands upon thousands of ordinary Namibians, experiencing for the first time since Independence that the government is not all-powerful, it does not have access to unlimited amounts of money, and there is no benefit in ownership when there is no profit.


 

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 www.economist.com.na. 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 daniel@economist.com.na

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.