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Author: Daniel Steinmann

Rate cycle turned, short term interest rates down by 25 basis points

In line with expectations, the Monetary Policy Committee of the Bank of Namibia, on Wednesday followed the cue of the South African Reserve Bank and lowered short term interest rates by one quarter of a percentage point. “The Monetary Policy Committee of the Bank of Namibia cut the Repo rate by 25 basis points to 6.75%. The Committee took the decision to support domestic economic growth, while maintaining the one-to-one link between the Namibia Dollar and the South African Rand” said central bank Deputy Governor, Ebson Uanguta in a statement announcing the rate decision. During their meeting on Monday,...

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Moody’s downgrades Namibia’s rating to Ba1, maintains negative outlook

Statement issued by the Minister of Finance, Mr Carl-Heinz Schlettwein The Government of the Republic of Namibia took note with concern – of the decision by Moody’s Investor Services to downgrade Namibia’s international credit rating to Ba1, from Baa3- in December 2016, while maintaining its negative outlook. This essentially put Namibia’s international debt issuances in the category of “junk status”, an assessment that we do not concur with for reasons elaborated in subsequent paragraphs. We further note, that Namibia’s local currency bond and bank deposit ceilings were also lowered to A2 from A1; the foreign currency bank deposit ceiling...

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Moody’s official statement on the downgrade of Namibian government debt

Rating Action: Moody’s Downgrades Namibia’s rating to Ba1, maintains negative outlook Global Credit Research – 11 Aug 2017 London, 11 August 2017 — Moody’s Investors Service (“Moody’s”) has today downgraded Namibia’s long-term senior unsecured bond and issuer ratings to Ba1 from Baa3 and maintained the negative outlook. The key factors for downgrading the rating are: 1. Erosion of Namibia’s fiscal strength due to sizeable fiscal imbalances and an increasing debt burden 2. Limited institutional capacity to manage shocks and address long-term structural fiscal rigidities 3. Risk of renewed government liquidity pressures in the coming years Despite the weakening of its creditworthiness, the country’s key credit metrics in the economic, fiscal and external spheres are currently well aligned with those of Ba1-rated peers. The rating is also supported by the country’s strong growth prospects in the coming years. However, the maintenance of the negative outlook following the downgrade of the rating to Ba1 reflects the risk that the erosion in key fiscal and debt metrics could be more pronounced than currently anticipated, giving rise to significant funding challenges. Namibia’s long-term local currency bond and bank deposit ceilings were lowered to A2 from A1. The long-term foreign currency bank deposit ceiling to Ba2 from Baa3, and the long-term foreign-currency bond ceiling to Baa2 from A3. RATINGS RATIONALE FIRST FACTOR: EROSION OF NAMIBIA’S FISCAL STRENGTH DUE TO SIZEABLE FISCAL IMBALANCES AND AN...

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When corruption is more than just an academic topic for conversation

It is always a pleasure to tell foreigners corruption is not ingrained in Namibian culture. It is easy to make this statement when comparing us to Angola, or Zambia or the Democratic Republic of the Congo, where corruption is so common, nothing moves without a bribe. Unfortunately, the corruptless culture no longer seems true. An incident that happened last week alerted me to the fact that corruption is everywhere and that my bragging, although impressing the visitors, is not a reflection of reality. Perhaps it is the pervasive culture of entitlement or perhaps it is just a lousy, lazy...

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Number Portability stalls amendment of Numbering Plan regulations

Number portability, the luxury that enables telephone customers to retain their number even if they switch operator, has become a hot debate since the Communications Regulator of Namibia, CRAN, hosted a public hearing on 25 July to introduce the process to amend the so-called National Numbering Plan. At this hearing, CRAN’s Chief Operations Officer, Jochen Traut, gave an overview of the National Numbering Plan to make provision for number portability The Legal Advisor of one of the fastest-growing privately-owned telecommunications companies, Nadine Boonzaaier of Paratus Telecom, told the Economist that despite the announced intention to amend the Regulations of...

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Debt to equity, equity to debt, its all a natural part of the business cycle

A spattering of exchanges at the highest government level this week confirmed the notion that the economy currently runs on sentiment and not on investment and consumption as it should. Early in the week the President told us things are under control and that the government is taking care of the backlog in payments to construction companies. Then a day later the official opposition retorted with a rather scathing reply, telling us everything is not OK and that the President’s view is flawed. Still, another day later, a bank tried to tell us we entered a full-blown recession in...

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Oil moves give many operators hope, but profitability is still a long shot

In the last week of July, Nymex crude prices rose every trading day closing the week at US$49.87 per barrel. Brent was a tad higher at US$52.60. This immediately prompted a flurry of responses from analysts with the leading narrative, more or less attributing the rise to OPEC members’ decision to cut production by one million barrels per day. Ostensibly this move is to improve crude prices so that member countries can get closer to budget balance, especially those whose only real economic contribution comes from oil. The obvious question then becomes: What do these OPEC countries deem a...

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