Namibia kick-starts debt issuance programme - CNBC Africa

Namibia kick-starts debt issuance programme

Southern Africa

by Trust Matsilele 0

Namibia is keen on tapping into an additional one billion dollars in the South African market. PHOTO: Getty Images

A debt issuance programme is a flexible financing tool used to issue senior bonds and private placements used for long-term refinancing on the capital markets.

“Looking back in 2013/2014 period there was target issuance of 2.4 billion Namibian dollars and the bank ran a shortfall of about 300 million [Namibian dollars] last year,” Shaun Namaseb, portfolio manager for Capricorn Asset Management told CNBC Africa.

“The Bank of Namibia is keen on tapping into an additional one billion dollars in the South African market currently trading in the Johannesburg Stock Exchange”.

The country is currently facing a 7.6 billion Namibian dollars deficit.The Namibian government has been issuing bonds so as to raise capital to fund budget deficit for the regime and also to foster growth for domestic capital market.

“An increase in operational and development budget [is credited for the ballooning deficit]. The main beneficiary to that is the transport and defence ministry,” he added.

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However, it is believed the shortfall was also necessitated by opportunistic tendering.

Since the global economic meltdown Namibia has been battling to return to normalcy. In 2013, the Namibian economy is estimated to have slowed marginally to 4.3 per cent compared to 5.3 per cent in 2012.

(READ MORE: Namibia central bank leaves lending rate at 5.5%)

In 2011, Namibia issued its first ever sovereign debt 10-year Eurobond, worth 500 million United States dollars, which was oversubscribed. In 2012, the government issued a 10-year bond worth 850 million Namibian dollars in South Africa and this was also the first time such a bond had been issued by the government in that country.

Namibia is one of the smaller economies in the region with a population size of just above 2.9 million. The country’s gross domestic product is estimated to be at 13 billion Namibian dollars.

The country’s economy is largely driven by mining and agriculture.

The country’s political leadership is currently facing pressure due to the increasing Chinese nationals’ presence in the country. Currently on a state visit to China, the country’s Prime Minister, Hage Geingob saying the influx has no economic disadvantages to Namibia.

BY TRUST MATSILELE

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