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There is room for more than a 25 basis point reduction in the repo rate but not in one go

There is room for more than a 25 basis point reduction in the repo rate but not in one go

“The MPC took this decision in order to continue supporting domestic economic activity and to maintain the one-to-one link between the Namibia Dollar and the South African Rand.”

This quote comes from the minutes of the MPC meeting held in August last year. The minutes of the last MPC meeting on 04 December 2019 has not been published yet but if the historical pattern is anything to go by, the December minutes will probably be published on Monday, 17 February, a day before the scheduled Monetary Policy Committee meeting.

The next Monetary Policy Committee meeting will be the first for 2020. While the consensus view was that the repo rate will remain unchanged at least for the first semester, local analysts have quickly found a new tune after the South African Reserve Bank’s Monetary Policy Committee surprised markets with an unexpected reduction of the SA repo rate last month.

Against all expectations, the Reserve Bank announced a 25 basis point reduction in the SA repo rate on 16 January. This was a unanimous decision by the committee, indicating that the South African economy really is in dire straits and that every committee members realises the severity of the situation. It was however, not the consensus opinion among economists and analysts and the move caught everybody off guard. Still, going by the text of the committee’s announcement, the decision was weighed carefully and discussed in depth.

In Namibia, the last adjustment to the local repo rate was in August 2019 when it was reduced by 25 basis points from 6.75% to 6.5%. I do not know how many analysts bother to read the minutes of the Bank of Namibia’s Monetary Policy Committee meetings since they are all based on the same template. It is actually quite boring stuff but every now and then a gem surfaces, especially when their analysis is convincingly off track.

Be that as it may, the minutes of the August 2019 meeting, only published on 22 October, offered the snippet quoted at the beginning. This confirms that Namibian monetary policy is basically set in Pretoria.

For the first ten years after Independence, the local basic interest rate also followed the SA repo rate but was typically in the order of 1.5% to 2% higher than in South Africa. This was always defended as a necessary precaution to ensure sufficient local liquidity since the SA giant would simply drain Namibian liquidity were interest rates the same. During those years, what we know today as the so-called repurchase rate, or repo rate, was called the bank rate in Namibia.

Given the interest rates of the past six years or so, a 2% premium above the SA rate may seem punitive but it must be remembered that the bank rate was in the order of 16% and above, basically more than double what the repo rate is today.

As the local capital market developed, this scenario changed gradually and for several years, our repo rate has tracked the SA repo rate in lockstep.

Therefore it is not farfetched to expect the Bank of Namibia’s Monetary Policy Committee also to bring the Namibian repo rate down by 25 basis points at the 18 January meeting. In such a move, the committee is further supported by headline inflation of only 2.6% and local bank liquidity that has been negative for the better part of two weeks. (I can remember only one instance where Namibian inflation was lower than the current value and that was in 2005.)

Conventional economics teaches that if a central bank wants to increase liquidity, it lowers the basic short-term lending rate and conversely, when it wants to bleed liquidity out of the system, it increases this rate.

With inflation where it is, comparable to inflation of the 1960s, there is room for a cut bigger than the expected .25 percentage point adjustment. But this does not need to be done all at once. In practice, the central bank has the opportunity to adjust rates every second month so ‘treading lightly’ is probably the sensible thing to do.

I think, Wait and See is all the local MPC can do at this stage, but given SA’s surprise move two weeks ago, I will not be surprised if the local rate goes to historically low values later this year. After all, did not the central bank also put it on paper that they take their monetary decisions to “continue supporting domestic economic activity.”


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.