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Scalability key to manufacturing for exports – Development Bank

Scalability key to manufacturing for exports  – Development Bank

Export-oriented manufacturers can benefit from scalability and a strong consumer base in the local market, said Development Bank of Namibia CEO, Martin Inkumbi.

Inkumbi said that although Namibia is a small market, excellent access to a diversified spread of SADC neighbours, and the benefits of the African Continental Free Trade Area (ACFTA) and SACU make the country a viable proposition for manufacturing with a view to exports.

Inkumbi noted however, that the primary barrier to setting up a manufacturing business are costs of establishment and market penetration. He encouraged smaller, yet scalable operations at startup to reduce the cost of establishment aimed at multiple countries, adding that these reduce the initial cost outlays, but also enable the manufacturer to grow on the basis of demand. Inkumbi further noted that the scalable approach reduces risk in various aspects of market penetration, such as cross-border market development, inventory efficiency, distribution channels, adjustment of supply, price adjustment, penetration pricing and promotion.

“The success of a manufacturing operation is typically based on size at the time of evaluation, rather than size at the time of inception, so the view of a successful operation is biased and not reflective of its beginnings. By penetrating with a small to mid-sized operation, the manufacturer requires lower capital at start-up, but can still grow as demand increases,” Inkumbi explained.

According to Inkumbi, the Development Bank recognises the value of the owner’s contribution to establishment and operating costs, stating that a 30% owners’ equity contribution is ideal, while the Bank can provide the 70% debt funding. Collateral, Inkumbi added, can be provided in the form of assets financed and guarantees.

“The Development Bank is interested in long-term relationships that span the growth trajectory of the enterprise. As the enterprise grows and matures, it will require additional finance. The Development Bank has engaged in multiple financing deals across the span of years with larger Namibian companies, and these have been provided on the basis of sustainable growth. However, the Bank’s single obligor limit is N$400 million,” Inkumbi said.


 

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.