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Namibian Debt Markets

Unpacking Public and SOE Debt Financials


Until 2011, Namibia had very little public debt. In fact, at just 16% of GDP, the country had one of the lowest debt-to-GDP ratios in the world. Fast forward six years to 2017, and the country is downgraded by both of the international rating agencies that cover her, to a sub-investment or “junk” rating, citing amongst others, the rapid rise in public debt.

Summary of the article

Over the first five years of this period, the country went through one of her longest and largest boom periods, with the strongest and most sustained growth levels seen since independence. However, thereafter the bottom fell out, and as is now clear, much of this growth was driven by debt, both public and private. As a result, between early 2011 and the end of 2017, Government debt levels went from N$13.8 billion (16.4% of GDP) to N$72.8 billion (40.6% of GDP), a N$58.9 billion increase. Now, despite an economy that has contracted for more than two years, little surplus public debt capacity means that government is not in a position to stimulate growth through fiscal expansion (lower taxes or higher spending). In addition, shareholder support for State Owned Enterprises has become increasingly challenging due to government financial constraints, at just the time when corporate profitability is under vast pressure due to a weak macro environment.

Furthermore, the aritcle elaborates on the following topics to give a clear overview on public and soe debt financials:

  1. Background on non-government bonds
  2. The current makeup of non-government bonds
  3. SOE Bonds
  4. SOE funding needs

The Namibian capital markets are currently undergoing rapid development, driven by a number of factors, from regulation changes to changes in public finances. As a result, a number of changes can be expected with regards to public corporates funding options and opportunities. While not a new opportunity, one so-far underused source of capital for local SOEs is the listed debt capital markets, and with a dynamic approach to capital raising and funding, more efficient use of finite capital in country could be key to driving growth and development in the future. The opportunities abound.

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