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Capricorn sees bottom of inflation cycle, expects upturn to start incrementally in December

Capricorn sees bottom of inflation cycle, expects upturn to start incrementally in December

Capricorn Asset Management’s Chief Economist, Floris Bergh said their short and medium term inflation forecasts are largely unchanged, following the release this week of the monthly and annual inflation figures by the Namibia Statistics Agency.

Annual inflation for November stood at 2.5%, down by 50 percentage points from October’s 3% reading. Capricorn’s forecast of 2.6% is only 10 percentage points away from the actual reading. Given the slightly weaker inflation outcome, Capricorn has now shaved their year-end number from 2.9% to 2.8% but still believes that it will be the first step in a gradual increase.

“The 2.5% for November should constitute the bottom. So inflation is likely to tick up from here,” Bergh said in a short assessment on Thursday.

Factors he sees as potentially leading to a faster than expected increase in inflation are the prices of maize, meat and residential property. Other upside risk factors are the rate at which local authorities increase their rates and taxes, the increase in so-called sin tax, a currency blow-out and another oil price shock.

Still, Bergh cautioned that any unexpected increases would have to be quite “nasty” to exceed what they see as the ‘High Seasonal Pattern.’ In this scenario, headline inflation will still only reach 5.4% by June next year.

The historically low inflation should allow the Bank of Namibia to reduce interest rates, an outcome which Bergh deems possible by February next year.

“Our view is still that the Bank of Namibia should be able to lower interest rates in the current economic malaise, i.e. that inflation considerations ought not to be of major concern. In fact, we expect the next cut in interest rates in February 2020,” he said.


 

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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.

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