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In year of elections, will African countries get the investor vote?

In year of elections, will African countries get the investor vote?

By Laurie Hammond from Hogan Lovells and Thibaut Hollanders from Liedekerke Africa.

The world, including investors, will keep a close eye on the various national elections to be held in Africa this year. The lead up and aftermath of national polls usually comes with uncertainty, something which investors tend to avoid if possible.

National elections have recently been completed in the Democratic Republic of the Congo and there are upcoming elections in South Africa (May) and Nigeria (16 February).

Other African nations heading for national elections include Senegal (24 February), Malawi (May), while citizens of Botswana, Mozambique and Namibia will head to the polls in October.

For investors who have been active in the mining sector in many of these countries, after the elections it will be a matter of assured continuity and stability, both from a political and legal perspective, for them to keep investing.

In a number of African countries, the mining sector has been hampered by significant challenges and change and uncertainty has been prevalent, as seen in new regulatory requirements and policies in countries such as the DRC and South Africa. Commodity price volatility has added to these challenges.

As a result, corporates and investors have increasingly looked to alternative funding solutions to plug the liquidity gap and provide an attractive yield.

In the DRC, alternative funding options, such as credit facilities from debt funds, and private placements (such as issuance of bonds by a limited number of investors or issuance of high yield bonds) are already frequently used across the mining sector.

In Rwanda, because of the economic situation, mining companies will inevitably be looking for alternative financing and the government is encouraging nationals to invest in the mining sector.

In the DRC a new Mining Code was promulgated on 9 March 2018 and provides for material amendments, including reinforcement of local content requirements and an increase in the royalty rate due to the state when selling minerals. There is also a reduction of the tax regime attractiveness with the introduction of two new taxes: the “50% super profit tax” and the “capital gains tax”, which is due when shares are transferred.

Existing mining projects will directly and immediately be subject to the new provisions. In this respect, major mining companies have threatened to bring proceedings over the New Mining Code before the International Centre for Settlement of Investment Disputes.

In DRC, the new president, although from the former “hard opposition”, will have very limited actions, as the parliament remains within the control of the former president amidst widespread allegations of electoral fraud. Should the situation remain as such, the mining environment should not be fundamentally different over the next years.

Rwanda is interesting as the mining sector is one of the top priorities of the Government. The new Rwandan Law of 13 August 2018 on mining and quarry operations has the objective of stabilising the mining sector and attracting more investors.

In addition, the mineral reserves have been underestimated. Mining in Rwanda is the second largest exporter and was last year one of the main contributors of the country’s gross domestic product (GDP). It is expected that it will at least remain the same for this year.

Rwanda has liberalised its economy, allowing the private sector to be the engine of growth and wealth creation.

In South Africa political and regulatory uncertainty will continue in the lead-up to local elections and will impact on long term investment decisions in the mining industry. The land debate will also continue and create a level of policy uncertainty, as it impacts significantly on the mines.

However, the finalisation and gazetting of Mining Charter 3 and the withdrawal of the Minerals and Petroleum Resources Development Act Amendment Bill have had a positive impact on market sentiment and have provided a level of stability for the industry. The publishing of the Charter took longer than was promised, but the outcome was positive, as there were proper consultations and consideration of the comments received.

Investing in mining projects in Africa requires a deep understanding of both the regulatory and political climate in that country and the potential impact of the global economy on that industry and country.

At a country level, investors are looking for stability, certainty and how elections may impact this and their ability to exit. At a global level, investors looks at how financial market volatility, trade tensions and geopolitical factors could affect any investment.

Investment opportunities lie not only in mining itself but in the related infrastructure, energy and technology needs of this sector in each country and investors are increasingly looking at investing for impact.

Governments, corporates and investors working together with a long term, holistic view could open up investment opportunities that have far-reaching positive impacts across the continent.


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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.