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Many business owners say they see an improvement in economic activity but they are at the end of their available credit

Many business owners say they see an improvement in economic activity but they are at the end of their available credit

Credit extension to the private sector is staging a slow recovery having notched up another few percentage points during May when it grew by just over eight percent compared to May 2017. This is a welcome sign given the severely depressed credit demand for the past 30 month, but there are also some hidden danger signals in the underlying data.

For instance, credit extended to individuals grew by 24% in the category ‘other loans and advances.’ This is a sure sign of households under duress and having to resort to alternative financing channels, usually when all legally available overdraft limits have been exhausted.

Another danger signal comes from credit to commercial entities. Here one notices the sharp rise in overdrafts, growing 11% year on year, and credit cards and short-term loans jumping an unbelievable 28% in a year.

These statistics show that certain categories of credit are completely out of kilter compared to the more general trend. These dramatic increases do not reflect business growth, investment, economic growth or, for that matter, even inflation.

Speaking to scores of business people, there is one overarching theme that emerges from all the discussions. Many owners and managers are openly expressing their concern that their companies have exhausted all their reserves and that they are now urgently scouting for more financing. In all the usual categories they are borrowed to the hilt, and it is only less common categories of financing that some of these business are now tapping as a last resort.

I think it is a given that the very large businesses will always find access to credit, regardless of the origin. These businesses typically have parents or shareholders that can arrange additional credit. This luxury, however, is not available to the typical small to medium family-owned business.

Over the previous weekend, an in-depth talk with the owner of a business that has been around for almost forty years, told me that he is literally at the end of his tether. He has exploited all conventional avenues for financing and has started to liquidate his own assets to generate liquidity to keep his business afloat.

The saddest part is that he has seen a measurable improvement over the past six months compared to 2018 and the horrendous 2017. He is actually almost back to a positive cashflow but now faces huge problems in terms of inventory. There is simply no cash resources left and to service the contracts that are now starting to come in again, he has to have financing to increase inventory.

I suspect there are many hundreds of medium-sized family-owned businesses who face exactly the same conundrum. I even spoke to owners who said the first semester of this year saw an improvement in turnover, but they have never been more indebted in their lives. They also shared the concern that while their cashflows have improved, the burden of servicing the additional debt they acquired over the previous two years, puts them in an effective negative cashflow position from an operational perspective.

About two months ago, there was a meeting between the Namibia Chamber of Commerce and Industry, and the Bank of Namibia, to discuss options for the central bank to relax temporarily, certain compliance ceiling for commercial banks, to allow clients to utilise more credit. Under normal banking reporting standards, this will not be allowed, but the Bank of Namibia has the authority to relax these ratios, at least for a specified period of time.

I have not heard about any movement in this regard and sincerely hope the request was not wiped under the table, the moment the meeting was over. From my own observations and discussions, now is the time for the central bank to urgently consider this move to allow banks more leeway in supporting enterprising people who otherwise will simply be classified as delinquent clients.

The open question is: How long can these businesses still survive despite a noticeable uptick in commercial activity, if rules and regulations intended to regulate banking under normal conditions, force their bank to shut them down.

The current state of the economy can not be described as normal by a long shot. Now is the time for the central bank to act and now is the time for commercial banks to do their part to bring substance to the overall private sector credit stats.

Special acknowledgement to IJG Research who did a splendid job of unpacking all the subcategories of the private sector credit statistics.


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.