Finance Focus |Thursday 21 June 2018 1

Thursday 29 June 2017

Finance

FocusA Publication of

Thursday, 21 June 2018

2 | Finance Focus Thursday 21 June 2018

Born between 1982 and 2002, so-called millennials are quickly becoming

the largest segment of Africa’s working population. Africa-born millennials or Afrilennials, have unique characteristics that set them apart from their international counterparts.

Afrilennials have far greater family responsibilities and there are more people who depend on them at home. For this reason, they seek rapid career growth and development, rarely staying in one job for long periods of time. This increases their chances of becoming unemployed should they be unable to find the right job.

Regularly changing careers could also have a severe impact on the growth of an Afrilennial’s retirement funds. This makes a personal retirement fund crucial as it will allow that fund to steadily grow over many years.

Here are some saving tips for Afrilennials: Start as early as possible: The trick is to start as early as possible, in order to let the power of compound interest do its work.

Set yourself investment goals:

Understanding what your savings goals are and setting milestones for yourself will help to keep you focused.

Make sure your investment plan works for you: It’s important to thoroughly research the investment options available to you. Fees, flexibility, risk and diversification are all important factors to consider when choosing investment products.

Automate your monthly savings: The old saying “you can’t spend what you don’t have” rings true. Automating your savings through monthly debit orders or through scheduled payments with FNB online banking will not only ensure you save each month, but will also provide much needed stability in your finances.

Use your FNB Rewards for luxuries: Afrilennials are known to be tech savvy, and now thanks to FNB Rewards, you can save your cash-back rewards for that special holiday, or a fancy night-out by simply swiping your debit or credit card, filling up for fuel with your credit card or purchase airtime using any of FNB’s banking channels.

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Terms and conditions apply. www.fnbnamibia.com.na

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• Transfer money to and from your Savings Pocket – free of charge and without any notice period via branch, ATM and FNB Online.

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EARN REWARDS

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GOOD RATES

• Competitive interest rate on your savings.

WE expect a modest rebound in GDP growth of 1,9% in 2018 from an

estimated contraction of 0,8% last year on the back of strong mining output and modest recoveries in the construction and wholesale and retail sales industries.

The collapse in the construction industry that started in 2016, following the conclusion of several large-scale mining and infrastructure projects, continued to be a major constraint to growth in 2017. Meanwhile, lower output in several other major subsectors of the economy, such as wholesale and retail trade, public administration and fishing, added more misery.

Weak growth and public overspending during the past few years have contributed to deteriorating government finances and soaring public debt, which in turn caused the loss of its investment-grade credit rating for the first time towards the end of 2017.

Although we have lowered our 2018 GDP growth forecast from 3,1% to 1,9%, due to reduced expectations for growth in the agricultural and mining sectors in the short term, the medium-term outlook remains favourable for robust growth. Mining and manufacturing exports should be supported by synchronised

Meek GDP growth expected for 2018

global economic growth, the construction sector should benefit from multilateral development loans as well as an uptick in foreign direct investment and consumer spending should recover in line with a broader recovery in the economy.

Namibia’s current account deficit narrowed in 2017, at a much faster pace than we had projected earlier, thanks mainly to a much lower import bill due to weak domestic demand. However, the external balance is forecast to deteriorate somewhat in 2018 as imports recover on the back of higher international oil prices as well as improved

domestic demand and Southern African Customs Union revenues are expected to fall.

The fiscal deficit is expected to narrow in 2018 thanks to efforts to curb government expenditure and improved mining tax revenues. However, we are sceptical about the finance ministry’s ability to reach its fiscal targets. We forecast Namibia’s budget deficit to narrow to 4,8% of GDP in the 2018/19 fiscal year (FY) from an estimated 5,2% of GDP in the 2017/18 FY. However, gross government debt is projected to rise to roughly 46% of GDP in 2018/19 FY from nearly 41% of GDP in

2017/18 FY. Headline inflation has fallen sharply from 8,2% yearly in January 2017 to 3,8 % yearly in May 2018, thanks to moderating food inflation (following good summer rains in 2017), lower rental costs and the impact of the stronger currency compared to last year.

An average annual CPI inflation rate of 6,2% was recorded in 2017, which we forecast will moderate to 4,4% in 2018. Although the Namibian currency’s strong rally on the back of positive political developments in South Africa (the Namibian dollar is pegged on par with the rand) in December 2017

has improved the inflation outlook, inflation risks, stemming from the possibility of currency depreciation and higher oil prices, are tilted to the upside. We expect the Bank of Namibia will leave its repo rate unchanged at 6,75% for the remainder of the year.

The ruling Swapo party has won elections in Namibia without interruption since 1989 and has governed with significant majorities ever since, but in the process accountability, transparency and governance standards have suffered. Namibia, pre-and post-independence, has been fortunate to enjoy a robust, fearlessly independent media and, with the added benefit of strong democratic institutions, several key protections against the abuse of power exist. But ultimately, the best protection against the abuse of power is the threat of removal by democratic process. Namibia does not have that protection and Swapo’s political dominance is set to remain for at least the next two elections.

Unchecked power will likely lead to increasing levels of corruption and mismanagement. We maintain our current political risk rating unchanged at low with the overall trend neutral.

* This analysis was written by PSG Namibia.

Finance Focus |Thursday 21 June 2018 3

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With the tax season approaching and the submission of tax

returns due by 30 June 2018, it is important to know which form is applicable to you. It is important to consider the timing, content and filing of income tax returns. An individual’s tax year runs from 1 March up to the last day of February each year, representing a full 12-month period (irrespective of the type of individual income tax return – Yellow, Blue or Brown). For example, tax year 2018 refers to the income tax period from 1st March 2017 to 28 February 2018. Usually Pay as You Earn (PAYE) is withheld over this 12-month period if an individual is employed or earns director’s fees. The income earned for each tax year must be included in and declared on the income tax return for that period. If you receive allowances as part of your remuneration, the income tax return makes provision for you

as employee to claim back certain expenses that were incurred in the production of business income.

Private expenditure will not be deductible and will be disallowed by Inland Revenue. Any other income/earnings received during the tax year is also required to be included in and declared on the income tax return for that period. This includes rental income, investment income, farming income, etc.

wIt is important to ensure that such expenses must be incurred in the production of that other income and should not be of a capital nature. Capital allowances may be available on certain capital assets acquired (including motor vehicles, furniture and fittings, computer equipment, etc).

The following indicates the different types of income tax returns for individuals, their due dates for filing with Inland Revenue and a brief explanation of each:

• Yellow income tax return – due before or on 30 September, this return applies where you have a complex income structure, income from various sources other than normal employment or if you run a business in your own name / earn farming income. This is also the return used for family trusts and business trusts.

• Blue income tax return – due before or on 30 June each year, this return is for employees with salary structures and allowances. This return allows you to claim expenses incurred for business against allowances received. The return also accounts for other income (such as rental or investment income) outside your employment.

• Brown income tax return

– due before or on 30 June each year, this is the most basic tax return. It is for individuals with a basic salary structure and no other additional income, except from employment. It is also for pensioners earning no extra income, except pension income.

• As a taxpayer, it is important to ensure that you are filing the correct income tax return, on time with Inland Revenue and that all relevant income and expenses are included therein.

To make this process hassle-free, PwC has a product called TaxTim. Taxtim is an online digital assistant that will help you complete your tax return step by step. This will enable you to do your tax return even though you have no tax knowledge.

* Visit https://pwc.taxtim.com/na/ for more information

Which colour tax return form should I submit?

Johan Nel, PwC | Partner/Director – Corporate and

International Tax

4 | Finance Focus Thursday 21 June 2018

Retirement Fund Solutions corporate governance a key pre-requisite for peace of mind!

To the internal controls, Retirement Fund Solutions (RFS) recently introduced a full-time audit,

compliance and risk management function. Carmen Diehl, our manager: internal audit, compliance and risk management is a chartered accountant. Her work is peer-reviewed by a chartered accountant and independent corporate governance expert.

INTERNAL AUDITThe board of RFS is ultimately responsible

for overseeing the establishment of effective systems of internal control in order to provide reasonable assurance that the company’s financial and non-financial objectives are achieved. Executing this responsibility includes the establishment of an internal audit function. Internal control is understood to mean the processes aimed at achieving reasonable assurance about the realisation of the following objectives:

• the accomplishment of established objectives and goals for operations and programmes;

• the economical and efficient use of resources;

• the reliability and integrity of financial and non-financial information;

• compliance with relevant policies, procedures, laws and regulations;

• safeguarding of assets. the scope of work of the internal audit activity is to determine whether the organisation’s network of risk management, control, and governance processes, as designed and implemented by management, is adequate and functioning in a manner to ensure:• Risks are appropriately identified and

managed;• Interaction with the various governance

groups occurs as needed;• Significant financial, managerial, and

operational information is accurate, reliable, and timely;

• Employees’ actions are in compliance with policies, standards, procedures, and applicable laws and regulations;

• Programmes, plans and objectives are achieved;

• Quality and continuous improvement are fostered in Retirement Fund Solution’s control process;

• Significant legislative or regulatory issues impacting the organisation are identified and properly addressed.

RISK MANAGEMENTRisk management is aligned to corporate

and business plan objectives and priorities. It encompasses strategic and operational risks

that may prevent RFS from achieving its objectives. Management therefore anticipates and takes preventative action to manage risks proactively rather than dealing with the consequences.

RFS established risk-rating criteria in terms of impact (the financial, reputational and/ or legislative impact) and likelihood (the possibility of a risk materialising). Criteria are formally reviewed annually and revised as appropriate. The impact rating criteria are also a reflection of the risk appetite of RFS.

Risks are managed at operational level whilst the Executive Committee monitors threats, pursues opportunities and ensures that risks are identified, assessed, mitigated and managed.

In accordance with NamCode recommendations, the risk owners, who are the executive directors of RFS, have 2 monthly risk review meetings where functional areas are covered on a rotational basis to identify and assess material business risks, the rating of these risks and mitigating measures to address the risks and to review the overall risk management effectiveness.

COMPLIANCEThe compliance process is based on the

recommendations of the NamCode, the corporate governance code for Namibia.

A compliance requirement is defined as a law, regulation, government directive, industry code or standard, permit or licence or a business-related requirement i.e. internal policy/procedure or contractual agreement that the company is legally obliged to comply with.

The board holds ultimate compliance responsibility, sets compliance policies and

ensures that these policies function effectively.

The compliance process can be summarised as follows:

1. Identification of all relevant laws and regulations or amendments to existing laws and regulations.

2. Identification of compliance requirements.

3. Interpretation and understanding of legislation impact on the company. RFS can assemble an appropriate team to do a detailed interpretation of legislation. This impact can include aspects relating to employees, systems, procedures and/or clients. Where necessary, expert advice (e.g. legal, actuarial, etc.) can be obtained depending on the circumstances.

4. Changing / implementation of systems and processes to ensure compliance to ensure that the new compliance requirements are embedded in the day-to-day activities.

5. Staff take responsibility for the continuous compliance requirements.

6. The manager: internal audit, compliance and risk management, in cooperation with the executive directors, is responsible to maintain a centralised compliance register which is updated as and when new compliance requirements are identified. This register is accessible to all relevant staff.

7. Reporting on compliance matters is done as a minimum on a two monthly basis to the internal audit committee and to the executive committee.

Carmen Diehl, Retirement Fund Solutions manager: internal audit, compliance and risk management

Retirement Fund Solutions Managed by Namibians. Trusted by Namibians.

https://rfsol.com.na061 - 446 000

5 reasons why retirement fund trustees know that RFS is GREAT

G R E A T

Governance

Full-time internal audit ensures your peace of mind.

~Our disaster recovery site

ensures continuity.~

Our Professional Indemnity cover stands at over

N$ 58 million.

Rigid quality standards

We have 5 Chartered Accountants on our staff.

~7 of our staff are members

of relevant professional associations.

~We have more than 1,000

years of relevant experience amongst 70 employees.

~We have a reputation for rapid and exact service.

Excellence through ownership

What you see is what you get. We have no foreign

shareholders.~

All staff share in the profits of the company.

~We have a long-term

visi0n.

Added value

Our top management is involved in client service.

~Administrator and technical

resources are allocated to each client.

~We are not bottom-line

driven.~

Our measured growth is matched to our customer

requirements.~

We don’t have sales targets, and there are no hidden

costs.

Track record

We have 18 years behind us as a company.

~We have 20 years+ among

our core team.~

We have an exceptional reputation.

~We have significant market

share.~

We are known for our transparency and full

disclosure.

Following the path of greatness requires a keen eye on the road ahead, and the discipline to stay on course, no matter what the temptation to stray. We understand that our future lies in providing exceptional service to more than 200 large, medium and small employer groups. We support trustees and the

funds they manage with excellence and insistence on quality that leads to rock-solid pension fund administration. Find out more about us. Call us, or visit our website.

Finance Focus |Thursday 21 June 2018 5

Tel: +264 (0)61 304 400 | Mandela House, cnr Nelson Mandela Ave and Arians Street, Windhoek | PO Box 11526, Klein Windhoekwww.eoscapital.com.na

INTRODUCTIONFounded by Johannes! Gawaxab and Nicole Maske, Eos Capital is the leading Namibian private equity firm that partners with companies seeking equity financing to fund their growth, transformation, turnaround or the exit of shareholders. Companies looking for an equity partner to get them through these tough economic times, can now look to Eos.

Eos Capital has raised N$461million for its Allegrow Fund in 2015. Allegrow provides equity, debt and mezzanine finance to fast growing unlisted Namibian businesses and works with the businesses it has invested into to build the quality of management and grow the businesses to their full potential.

The focus is on established profitable businesses with a track record of three years or more across Consumer, Services, ICT and General Industrials sectors. The Fund can invest a minimum of N$10million and a maximum of N$90million in a single deal. The Fund does not do property development, fishing, agriculture or mining.

FUNDAllegrow

WHAT WE OFFER COMPANIESAgainst a back drop of rapidly changing economic conditions, Eos Capital attracts Namibian companies that seek an equity partner to work with them in achieving their full growth potential. These companies might be looking for:1. Capital to fund their growth – such as a new factory, geographic expansion, acquisition of competitors2. Capital to support a turnaround or transformation of the businesses – this especially in a time when it might be difficult for the company to obtain debt financing3. A new shareholder to purchase some or all of the shares of a shareholder or founder who is looking to exit4. An increase in their shareholding by previously disadvantaged Namibians

Combining Executive Chairman !Gawaxab’s experience in building businesses across the African continent and starting Namibia’s first unlisted asset management fund, with CEO Maske’s strategy and finance experience, and CIO, Friedrich’s strategy and transaction advisory experience, Eos Capital is what many top unlisted companies yearn for in partnership.

Eos offers an attractive alternative to banks, that brings a true partner that can help businesses unlock their full potential. We invest in businesses and work rigorously to deliver value.

INVESTMENTS TO DATEThe following investments have been made through the Allegrow Fund in less than 3 years:

COMING SOON: INFRASTRUCTURE FINANCING

Eos Capital has identified a new gap in the market – financing for infrastructure projects. It’s new Fund, the Infrastructure Development and Investment Company Namibia (IDICON), will soon be launched to fund attractive Namibian projects. It will provide long term financing for projects through equity or quasi-equity investments.

There are many attractive investments in the infrastructure sector that require financing and can contribute to the economic development of the country.

Johannes !Gawaxab | Executive Chairman Nicole Maske | Chief Executive Officer

Ekkehard Friedrich | Chief Investment Officer

6 | Finance Focus Thursday 21 June 2018

Public Enterprise Sustainability• NGONI BOPOTO

A confluence of factors brewed a perfect storm leading to a Namibian government liquidity squeeze in 2016.

To steer the vessel into calm water, the best response strategy was to put in place a fiscal consolidation stance, however this strategy played out into the unintended consequence of an economic slowdown, which in turn culminated in a recession. The Namibian government’s ability to navigate the uncharted territory, the deepest recession on record, hinges on creating fiscal space over the near term, investment promotion and addressing structural economic issues (which make the economy susceptible to external events) over the medium to long term. In addressing the former, we have identified the potential for public enterprises in unlocking value from latent state assets and improving efficiencies amongst those deemed to be central to government’s activities or strategic in nature.

Namibia has 77 public enterprises, of which the most profitable has an imminent initial public offering (IPO) on the local board of the Namibian Stock Exchange. This is a landmark IPO not only by virtue of its ownership but also from market capitalisation and diversification points of view. It also highlights a shifting mindset amongst policy makers and has set in motion a trend which will catalyse the development of domestic capital markets. In the absence of fiscal support, most public enterprises have to engage investors for funding and by extension must satisfy certain requirements which invariably drive reform. Due to the return driven nature of capital markets, we expect this to infuse efficiencies that will lead to self-sustainability, resulting in public enterprises contributing to rather than draining the fiscus.

A public or state-owned enterprise, can be defined as a business organisation wholly

or partly owned by the state and controlled through a public authority while assuming a corporate structure. Public enterprises (PEs) are often placed under public ownership for social reasons. In most cases, the activities of such enterprises could be carried out by departments existing within government structure, however, incorporation of the respective PE may have been selected because of the desire to achieve greater efficiency. Unfortunately, in most instances, this noble objective remains a fleeting illusion.

Apart from governance, the social obligation of facilitating the delivery of satisfactory public goods presents considerable challenges in public enterprises across the world. While it is imperative that the state be responsible for the welfare of vulnerable members of society, it is also crucial that these organisations’ strategic thrust incorporates sustainability as an indispensable component. Whether they are completely dependent on the fiscus or self-sustaining, we need to ensure that they can stand the test of time both from a funding perspective and the capacity to adapt as the nation’s requirements evolve.

While remaining cognisant of the divergence and complexity inherent in state machinery, it is our considered opinion that the classification of these organisations is key to the nature of the expectation we should place on them and their sustainability. Departing from the assumption that these organisations have primarily been called into being to serve as implementing arms of the state machinery in its entirety, prompts us to put them into the following three categories: (i) core, (ii) strategic and (iii) non-core.

We classify, as core public enterprises those whose roles are central to government’s existence or character. Strategic public enterprises relate to the identification of long-term or overall aims of the nation and the means of achieving these aims, while non-core public enterprises are those

that perform peripheral or incidental activities and their assets are either not essential or just no longer used in the government’s operations. In a nutshell, the latter encompasses the enterprises that are nice to have but will not imperil the efficient functioning of the government system should they cease to exist.

Our rationale for using these three basic classifications is that they determine the function of each public enterprise in terms of the government’s primary role of public service delivery. The principal take-home point being that government by its very nature is not in the business of managing businesses. When government does assume this role, concerns and conceptual difficulties in distinguishing between “public” and “private” often arise.

The OECD Corporate Governance Working Paper No. 6 titled, Balancing Commercial and Non-Commercial Priorities of State-Owned Enterprises highlights the following rationale for public ownership of enterprises: • Improving efficiencies in service delivery• The establishment of monopolies in

sectors where competition and market regulation are not deemed feasible or efficient

• Sectors where competition has been introduced but a state-owned operator remains responsible for public service obligations

• Where those public service obligations that public enterprises are charged with are too complex to be articulated in service contracts

• Industrial policy or development strategies, where SOEs are being used to overcome obstacles to growth or correct market imperfections

The above bullet points (and any other reasons for the creation of public enterprises) can be used as departure points in evaluating whether the existing PE structure remains relevant or

warrants any tweaking. A synthesis of reasons for commercialisation of PEs in 17 European countries since 2008 reflected the following in order of significance:• Rationale for ownership no longer

fulfilled (12)• Raise fiscal resources (8)• Improve market structures or economic

efficiency (6)• Improve corporate financial or non-

financial performance (5)• Overall policy to reduce the state’s role in

the economy (5)• Ownership of SOE was intended to be

temporary (2)Most, if not all, of the above are relevant

for Namibia today, however, to dispel the stigma associated with changing the structure of SoEs, it is essential to clarify the roles and responsibilities of the government as a public enterprise owner and not a manager.

The prerequisites for public enterprise reform include a clear legal and regulatory framework and a strong coordinating entity for oversight (well underway in Namibia), and the will to maintain separation with government activities that could interfere with competition. This, coupled with the establishment of merit-based governance, conscious independent and qualified boards will instil a culture of transparency and accountability, resulting in improved investor sentiment.

Political commitment to public enterprises reform is essential, however, it is currently being impeded by misconceptions related to commercialisation of these entities. Over and above the points highlighted earlier in the text, our case for successful public enterprise transition to sustainability should be a voluntary exercise grounded in: (i) rigorous impact analysis; (ii) needs assessment, accompanied by a well thought-out strategy and impeccable execution.

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GIPF Unlisted Investments Fund ManagersThe Government Institutions Pension Fund (GIPF) is a major investor in our economy and this is clear from the exposure towardsinvestments in Namibia.

To date, GIPF has committed over N$5.48 billion into the local economy through its unlisted investment programme, and this has greatly impacted the development of the local unlisted market especially in the areas of property, private equity, debt and infrastructure. Through the Unlisted Investment Programme, GIPF invested into at least 56 portfolio companies in their respective Special Purpose Vehicle’s (SPV’s).

Below is a list of the Unlisted Fund Managers/Special Purpose Vehicles indicating their respective mandates and contact details:

No. Unlisted Fund Managers

Special Purpose Vehicle Mandate Physical

Addresses LandLine

1 Business Financial Solutions Pty Ltd

Nampro Fund I and Nampro Fund II

Procurement Debt FundC/o of Jan Jonker 7 Lazarette Street, Ausspannplatz

061 388 600

2 First Capital Treasury Solution Pty Ltd

First Capital Real Estate Finance Fund

Property Financing for Government Employees

No. 124 John Meinert Street Windhoek Namibia

061 401 326

3 Kongalend Financial ServicesKongalend Renewable Energy Trust

SME Group Lending and Solar Energy loans

C/o of Haddy & Viljoen Street, Windhoek West

061 241 440

4 Konigstein Capital Pty LtdKonigstein Capital Property Investment Fund

Property Development, Affordable Housing and Private Equity

Unit 7, The Village, 18 Liliencron Street, Windhoek, Namibia

061 303 227

5 Preferred Management Services

Preferred Investment Property Fund (PIPF)

Property DevelopmentShop no 9, 78 Bougain Villas Estate, Sam Nujoma Drive, Windhoek

061 248 318

6 Safland Property Group Namibia

Frontier Property TrustProperty, focus on Retail Properties, Offices and Industrial

4th Floor, 1@Steps Office, c/o Grove and Chasie street, Kleine Kuppe, Windhoek, Namibia

061 254972/3

7 TEMO Capital VPB Growth FundPrivate Equity and Venture Capital

Unit 6,Trift Place, Corner of Schinz & Trift Streets, Windhoek, Namibia

061 220 069

8 IJG Private Equity Pty Ltd Desert Stone FundPrivate - Equity and Venture Capital

100 Robert Mugabe Avenue, First Floor Heritage Square, Windhoek

061 383 517

9 Old Mutual Investment Group Namibia

Tunga Real Estate Fund & Expanded Infrastructre Fund

Property (Retail, Residetial and Affordable Housing) and Infrastructure Services

10th floor. Old Mutual Towers, Alternative Investments Old Mutual Investment Group (Namibia) (Pty) Ltd

061 299 3264

10 Ariya Bridge Capital (Pty) LtdAriya Bridge Infrastracture Fund

Infrastructure & Private Equity

Unit 13 2nd Floor, Bridgeview Building, Dr. Kwame Nkrumah Street, Namibia

061 222 962

11 Baobab Capital Pty Ltd Baobab Growth Fund Venture Capital FundUnit 1, 13 Liliencron Street Eros, Windhoek

081 773 3237

12 EOS Capital Pty Ltd Allegrow Fund Pty Ltd Private Equity

Mandela Offices, corner Arians Street and Nelson Mandela Street, Klein Windhoek PO Box 11526, Klein Windhoek

061 304 400

13 Ino Harrith Capital Pty Ltd Namibia Infrastracture FundInfrastructure & Private Equity

69 Jener Street, Windhoek West

061 3088 443

14 Mergence Investment Managers (Pty) Ltd

Mergence Namibia Infrastracture Fund

Infrastructure & Private Equity

1205 Luther Street, Nuyoma Office Park

061 244 653

15 Musa Capital Namibia Pty Ltd Namibia Mid Cap Fund Private EquityA 30 Blohm Street, Windhoek, Namibia

061 246 900

Finance Focus |Thursday 21 June 2018 7

GIPF Unlisted Investments Fund ManagersThe Government Institutions Pension Fund (GIPF) is a major investor in our economy and this is clear from the exposure towardsinvestments in Namibia.

To date, GIPF has committed over N$5.48 billion into the local economy through its unlisted investment programme, and this has greatly impacted the development of the local unlisted market especially in the areas of property, private equity, debt and infrastructure. Through the Unlisted Investment Programme, GIPF invested into at least 56 portfolio companies in their respective Special Purpose Vehicle’s (SPV’s).

Below is a list of the Unlisted Fund Managers/Special Purpose Vehicles indicating their respective mandates and contact details:

No. Unlisted Fund Managers

Special Purpose Vehicle Mandate Physical

Addresses LandLine

1 Business Financial Solutions Pty Ltd

Nampro Fund I and Nampro Fund II

Procurement Debt FundC/o of Jan Jonker 7 Lazarette Street, Ausspannplatz

061 388 600

2 First Capital Treasury Solution Pty Ltd

First Capital Real Estate Finance Fund

Property Financing for Government Employees

No. 124 John Meinert Street Windhoek Namibia

061 401 326

3 Kongalend Financial ServicesKongalend Renewable Energy Trust

SME Group Lending and Solar Energy loans

C/o of Haddy & Viljoen Street, Windhoek West

061 241 440

4 Konigstein Capital Pty LtdKonigstein Capital Property Investment Fund

Property Development, Affordable Housing and Private Equity

Unit 7, The Village, 18 Liliencron Street, Windhoek, Namibia

061 303 227

5 Preferred Management Services

Preferred Investment Property Fund (PIPF)

Property DevelopmentShop no 9, 78 Bougain Villas Estate, Sam Nujoma Drive, Windhoek

061 248 318

6 Safland Property Group Namibia

Frontier Property TrustProperty, focus on Retail Properties, Offices and Industrial

4th Floor, 1@Steps Office, c/o Grove and Chasie street, Kleine Kuppe, Windhoek, Namibia

061 254972/3

7 TEMO Capital VPB Growth FundPrivate Equity and Venture Capital

Unit 6,Trift Place, Corner of Schinz & Trift Streets, Windhoek, Namibia

061 220 069

8 IJG Private Equity Pty Ltd Desert Stone FundPrivate - Equity and Venture Capital

100 Robert Mugabe Avenue, First Floor Heritage Square, Windhoek

061 383 517

9 Old Mutual Investment Group Namibia

Tunga Real Estate Fund & Expanded Infrastructre Fund

Property (Retail, Residetial and Affordable Housing) and Infrastructure Services

10th floor. Old Mutual Towers, Alternative Investments Old Mutual Investment Group (Namibia) (Pty) Ltd

061 299 3264

10 Ariya Bridge Capital (Pty) LtdAriya Bridge Infrastracture Fund

Infrastructure & Private Equity

Unit 13 2nd Floor, Bridgeview Building, Dr. Kwame Nkrumah Street, Namibia

061 222 962

11 Baobab Capital Pty Ltd Baobab Growth Fund Venture Capital FundUnit 1, 13 Liliencron Street Eros, Windhoek

081 773 3237

12 EOS Capital Pty Ltd Allegrow Fund Pty Ltd Private Equity

Mandela Offices, corner Arians Street and Nelson Mandela Street, Klein Windhoek PO Box 11526, Klein Windhoek

061 304 400

13 Ino Harrith Capital Pty Ltd Namibia Infrastracture FundInfrastructure & Private Equity

69 Jener Street, Windhoek West

061 3088 443

14 Mergence Investment Managers (Pty) Ltd

Mergence Namibia Infrastracture Fund

Infrastructure & Private Equity

1205 Luther Street, Nuyoma Office Park

061 244 653

15 Musa Capital Namibia Pty Ltd Namibia Mid Cap Fund Private EquityA 30 Blohm Street, Windhoek, Namibia

061 246 900

8 | Finance Focus Thursday 21 June 2018

Accessing a transactional account or what Letshego terms, a “flexible financial solution”, is

a first step towards broader financial inclusion, as customers can save funds as well as pay and get paid. Letshego Bank has launched LetsGo, an ‘All-in-1 solution’ that not only lets customers earn interest on low balances, but also pay and get paid. LetsGo is also set to open doors to greater value-adding options in the medium term, such as insurance, credit, and other positive rewards for customers who manage their money wisely.

LetsGo is a pay-as-you-use solution, where customers will not be charged unnecessary high monthly fees and can earn competitive interest rates on lower balances – 7% interest on balances below N$5000 and three and a half percent interest on balances above N$5000.

With the new LetsGo solution customers can access and move their money through their mobile phone using Letshego’s USSD code*140*555#. To increase access LetsGo Customers can withdraw and make deposits at any Woermann Brock Supermarket using WiCode cellphone banking, as well as walk into the Windhoek and Kautura branches, for all cash withdrawals,

deposits or requests for statements. LetsGo Cards are also accepted by all ATM’s.

LetsGo is ideal for anyone who is looking for an accessible, simple and flexible financial solution that saves you cash in fees, and doesn’t demand a minimum balance to start earning interest on savings.

Letshego remains committed to understanding and meeting the needs of customers, creating solutions, which improve customers’ lives. With the increasing demand for financial services in Namibia, Letshego strives to deliver innovative and inclusive financial solutions that are appropriate for our customers and inclusive to the needs of the communities they serve.

Letshego Namibia opened its doors in 2000 as Edu Loan providing consumer and micro lending services. In August 2008, the Letshego Group (Letshego Holdings Limited), listed on the Botswana Stock Exchange acquired 100% of Edu Loan. The Group subsequently rebranded, and renamed Edu Loan to Letshego Financial Services Namibia. Letshego Namibia is one of 11 markets within Letshego’s regional footprint, actively supporting the Group’s ambition to be Africa’s leading inclusive finance provider.

Letshego Bank leads with its LetsGo Customer-Centric Financial Solution

Ester Kali: chief executive officer – Letshego Bank Namibia

At Letshego Holdings Namibia, we believe that

driving an inclusive finance agenda is the catalyst to achieving broad-based economic development and poverty eradication and therefore financial

inclusion forms an integral part of the Letshego

Group strategy and ours as its subsidiary.

Ester Kali

• Enjoy low banking fees• Choose a debit card of your liking

• Earn up to 7% interest on your transactional solution.

Visit our Windhoek branches to open your LetsGo solution today.

For more informationcall 061 202 3500, visit our Windhoek branches or email namcustomer@letshego.com

*Terms and conditions apply.

Finance Focus |Thursday 21 June 2018 9

Invest in yourself and your company

© 2018 KPMG Advisory Services (Namibia) (Pty) Ltd, a Namibian company and member fi rm of the KPMG network of independent member fi rms affi liated with KPMG International Cooperative (“KPMG International”),a Swiss entity. All rights reserved. 17390MC.

Keeping up-to-date with changes to International Financial ReportingStandards (IFRS) can be challenging.Join our the 2nd IFRS session

Topics to be coveredIFRS 9 practical examplesIFRS 15 practical examplesRecent developments

Date: Friday, 13 July 2018Time: 08:30 until 12:30Location: KPMG Training Centre 6 Sinclair Rd, Sinclair Park Klein Windhoek, WindhoekCosts: N$ 2200 (excl. VAT) per person per sessionBooking: Seats limited, book via email by Friday 06 July 2018 For more information & bookings, contact:Adéle van der Bankavanderbank@kpmg.comTel. (061) 387 520

Terms and conditions apply

kpmg.com/na

OUR VALUES

• Wevalueintegrity• Wearecommittedtoteamwork• Wedriveperformanceexcellence• Wepassionatelyserve• Weareagile• Weareaccountable

OUR LEADERSHIP CREED

We Are Committed• Wetakeownershipofourmandate

• Wehaveasenseofurgencytoexecuteourstrategy

• Wetakemutualaccountabilitytoembedourvisionandvalues

We are united• Wehaveasharedvisionofbeingarespectedregulatoroffinancialinstitutions

• Westandtogether• Wesupportteamdecisions

OUR MISSION

Toeffectively regulate and supervisefinancialinstitutionsandtogivesoundadvicetotheMinisterofFinance.

OUR VISION

NAMFISA’svisionistohaveasafe,stableand fair financial system contributing totheeconomicdevelopmentofNamibiainwhichconsumersareprotected.

www.namfisa.com.na

We are exemplary• Wesettheleadershipbenchmark

We are approachable and fair• Weencourageinnovationandcreativity

We are decisive and firm• Weareconsistentinourdecisions• Wemaketimeousdecisions• Weexecutedecisionsfirmly

We are passionate and inspired• Wearedriventoachieveourvision• Wedefendwhatwestandfor• Wecelebrateourachievements

We care• Wecareaboutthewell-beingofouremployees

• Wecareabouttheprotectionoffinancialservicesconsumers

• Wecareaboutthesafetyandsoundnessofthefinancialservicessector

The Namibia Financial Institutions Supervisory Authority has launched

its whistleblowing hotline. The purpose of this hotline is to reinforce the Namfisa code of ethics and provide assurance to all employees, contractors and other stakeholders related to Namfisa that they will be protected from any penal action or victimisation arising from any legitimate matters reported through any of the reporting channels provided for by Namfisa.

Namfisa is committed to the highest standards of ethical, moral and legal business conduct. Ethical business behaviour is the responsibility of every person in the authority and is reflected not only in our relationships with each

Namfisa board chairman – Gersom Katjimune

other but also with our customers, suppliers, and stakeholders.

Being a regulator requires the Namfisa team to focus on its mandate as set out in the Namibia Financial Institutions Supervisory Authority Act, 2001 (Act. No. 3 of 2001) with diligence and integrity but further to that, it is expected of the staff and board to act responsibly, ethically and abide by the laws of Namibia, both within the workplace and their private lives.

Namfisa is committed to the highest levels of integrity. Employees are expected to conduct their relationships with Namfisa and other stakeholders with objectivity, integrity and honesty. The general rule is that Namfisa employees and the board are obligated to avoid conflicts of interest involving Namfisa, and to disclose and remove themselves from a position of decision making authority with respect to any conflicting situation involving Namfisa.

The whistleblowing hotline encourages stakeholders to report any activity or conduct in which instances of fraud, corruption, malpractices and abuse of Namfisa resources are suspected.

The Namfisa code of ethics represents a personal pledge on every Namfisa staff member and board member that each activity within the authority shall

be underpinned by the values and principles as set out in the strategic foundation of Namfisa.

In pursuit of maintaining the highest standard of corporate governance, the board is committed to ensuring that the authority maintains high standards.

As board chairperson, I urge all users of the whistleblowing hotline to act in good faith and not make false allegations when reporting any concerns.

Users of the whistleblowing hotline can report their disclosures using any one of the following modes of communication:

1. Toll free cellphone: 081 91 847 (match to match)

2. Dedicated Namfisa whistleblowing hotline: 0800 222 333

3. Unique email address which is namfisa@tip-offs.com

4. Generic free facsimile: 0800 00 77 88

5. Generic tip-offs anonymous website which is www.tip-offs.com

The whistleblowing hotline is available 24 hours a day, 7 days a week. Calls are handled by an independent third party specialising in obtaining the information required to document any allegations.

NAMFISA LAUNCHES WHISTLEBLOWING HOTLINE

• Enjoy low banking fees• Choose a debit card of your liking

• Earn up to 7% interest on your transactional solution.

Visit our Windhoek branches to open your LetsGo solution today.

For more informationcall 061 202 3500, visit our Windhoek branches or email namcustomer@letshego.com

*Terms and conditions apply.

10 | Finance Focus Thursday 21 June 2018

• CHARMAINE NGATJIHEUE

THE increase in food prices has increased the inflation rate in May, with the rate recorded at 3,8%

compared to the 3,6% seen in April.This is according to the Namibia Statistics

Agency’s latest consumer price index (CPI). In an analysis, Klaus Schade, research

associate for the Economic Association of Namibia, said inflation is quickening as they predicted, citing that the month-to-month inflation rate increased from 0,3% in April, compared to the prices in March to 0,4% in May, compared to April.

Schade stressed that the increase in food prices is bad news for low-income earners and the poor since they spend the largest share of their total consumption on these items.

“We expect food prices to continue to increase. Future prices at the South African Future Exchange suggest price increases for white and yellow maize of some 7% by December 2018 and some 1% for wheat. Oil prices have also been on the increase, triggering fuel price increases that will have impacts on the transportation costs of goods and eventually on the production as well as the costs of consumer products,” he said.

According to the analysis, food prices increased stronger in May (3,9%) than in

any month since September 2017, when food prices rose by 4,2% on a year-to-year basis, he said. He noted that the main drivers are prices for bread and cereals that actually increased again after they dropped every month since April 2017.

Prices for bread and cereals are 2,3% higher than in May 2017, while they decreased in April 2018 by 1,5%, “since this category accounts for the largest share of food items (29,4%) price changes have a strong impact on the overall food price inflation. Price increases for meat (8,5%), fruits (12,6%) and vegetables (5,8%) also accelerated compared to April 2018.”

Schade said these four categories account for more than 60% of total food prices and therefore strongly determine the food price inflation, adding that prices for sugar, jam and so forth dropped by 1%, while price increases for milk, cheese and eggs slowed down from 2% in April to 0,2% in May.

“Prices for goods rose faster than for services. Goods price inflation increased from 3,1% in April 2018 to 3,6% in May on an annual basis (compared to May 2017). It is the strongest increase since September 2017,” he said.

Eloise du Plessis, PSG Namibia head of research, stressed that as food prices push inflation higher, fuel prices add pressure.

Looking at the four largest sub-indices comprising the overall CPI, Du Plessis reiterated that considering the major items within the food basket, the prices for bread and cereals increased on an annual basis for the first time since April 2017, but the biggest percentage increases were recorded for fruit and meat.

She said the housing, utilities and fuels sub-index rose by 3,3% yearly in May, down slightly from 3,4%.

“The alcoholic beverages and tobacco sub-index increased by 5,4% yearly in May, higher than the 4,7% yearly recorded in the preceding month. Inflation in the transport sub-index moderated to 5,6% annually in April from 5,8% annually in the preceding month, driven by a month on month decrease in vehicle prices. The monthly CPI inflation rate was recorded at 0,4% in May, up from 0,3% in April,” Du Plessis said.

She noted that PSG believes that inflation reached the bottom of the cycle in April and will increase steadily during the remainder of 2018, adding that the weakening of the Namibia dollar and higher international oil prices will put pressure on fuel prices and import costs in coming months.

Moreover, Du Plessis said the Ministry of Mines and Energy raised fuel pump prices by 60c a litre in June, which is an increase

of 11,8% annually. In addition, Namport tariffs for controlled petroleum products have increased by N$2 from N$34 to N$36 per kilo litre.

Meanwhile, Simonis Storm’s junior analyst, Indileni Nanghonga, said that inflation was mainly driven by education, health, transport and alcoholic beverages and tobacco which increased by 9,9%, 5,7%, 5,6% and 5,4%, respectively.

“The twelve-month average inflation rate for the period June 2017 to May 2018 stood at 4,7 %, while the calendar year average from January 2018 to May 2018 was estimated to be 3,6 %. Monthly, Inflation increased to 0,4 % in May 2018 compared to 0,3 % recorded during the previous month,” she said.

Nanghonga stressed that inflation is a real confidence killer in the already depressed Namibian economic environment and will start to drift upwards in the coming months as the recent spike in oil prices filters through the supply chains, especially in the transport category and as the Rand continues to weaken. “This will simultaneously feed through to other inflation categories such as food and beverages. Our view is that inflation will increase at a moderate pace for the remainder of the year and our average annual inflation forecast for 2018 remains at 4,1%,” she noted.

Food prices lead to rising inflation – analysts

WHEN Namibia gained independence from South Africa in 1990, it inherited a well-

functioning physical infrastructure for the most part, but also a large unskilled labour force. The economy remains intertwined with South Africa, as it is structurally dependent on South Africa’s trade and financial system. Although Namibia has a small agricultural sector in terms of value added, the farming sector offers employment to a significant proportion of the population. As a result, many Namibians are directly or indirectly dependent on farming activity for their livelihoods.

In contrast, the rich mining industry employs few people. Diamond and uranium mining dominate the industrial sector, while the manufacturing sector is underdeveloped. The services sector includes a large tourism industry, a developed banking sector and strong retail sector.

INDUSTRYIndustry contributed nearly 27% to

GDP in 2017. Historically, mining and manufacturing have dominated the sector. More recently, large-scale infrastructure projects, such as the Southern African Development Community Gateway Port at Walvis Bay, the Neckartal Dam Project and the construction of large new mines, such as the Husab Uranium Project, have spurred the construction sector. The construction industry recorded a superb average annual growth rate of nearly 24% per year in the 2011-15 period. However, this phenomenal growth was unsustainable due to rising government debt as well as falling government and mining company revenues due to a downturn in commodity prices.

The construction sector has subsequently gone from being the major growth driver over the 2011-15 period to the major drag on the economy since 2016. The sector contracted by an average annual rate of 26% per year during the 2016-17 period. We anticipate that over the short term the Namibian construction sector will continue to struggle as fiscal funding for infrastructure will remain under pressure

and trying economic conditions also place a drag on private sector construction projects.

MININGThe mining sector is a cornerstone of

the Namibian economy. Roughly half of export earnings is earned through mining activities. Namibia’s main mineral products are diamonds, copper, uranium, gold and zinc. Other minerals mined in much smaller quantities include magnesium, silver, lead, semi-precious stones and iron ore. There has been an increase in the exploration of battery minerals such as cobalt, graphite and lithium. Celsius Resources aims to start production in 2020 at Namibia’s first cobalt mine.

The Chamber of Mines of Namibia (CoM) noted that fixed investment into the mining sector saw an increase in 2017, following several years of decline, on the back of a recovery in commodity prices. Fixed investment made by the sector increased by a significant 66% to N$5,73 billion in 2017 and exploration spending increased by 6% to N$562 million in the same year.

CONSTRUCTIONThe construction sector contracted by

an estimated 25,6% in real value added in 2017, following a contraction of 26,3% recorded in 2016. As mentioned earlier, the sector’s poor performance was driven by a marked decline in government-funded infrastructure projects and slowdown in construction spending by cash strapped mining houses.

MANUFACTURINGThe manufacturing sector contributed

roughly 11% to GDP in 2017 and is focused on the food, beverages and fishing industries – close to half of manufacturing output are food-related goods. Consequently, droughts can significantly reduce manufacturing output, as was the case in 2016 when local bottlers, breweries and meat producers had to scale back production. The manufacturing sector expanded by a sluggish 1,4% in real value added in 2017, compared to an expansion of 5,2% in 2016.

*A PSG Analysis for June

A brief Namibian economic structure

Finance Focus |Thursday 21 June 2018 11

• CHARMAINE NGATJIHEUE

STOCK of international reserves stood at N$28,1 billion in May 2018, translating to a N$2,6 billion decline on

a monthly basis.This was said by Bank of Namibia

governor Iipumbu Shiimi, who said at this level, the stock of international reserves is projected to cover 4,7 months of imports of goods and services.

Shiimi said; “Although reserves remain sufficient to sustain the currency peg between the Namibia dollar and the rand, it is relatively low compared to Namibia’s peers in the region.”

Speaking at the Monetary Policy Committee (MPC) announcement for June, with the repo rate remaining unchanged at 6,75%, Shiimi said activity in the domestic economy remained slow during the first four months of 2018.

He said inflation and the rate of growth in private sector credit extension (PSCE) declined compared to a year ago.

“Domestic economic activity remained slow during the first four months of 2018, despite improvements in some key sectors. This slow activity was largely reflected in the wholesale and retail trade and fishing sectors. The domestic economy is expected to perform slightly better in 2018 compared to

2017,” Shiimi said. Moreover, Shiimi reiterated that PSCE

slowed during the first four months of 2018, compared to the corresponding period in 2017, saying the average annual growth rate stood at 5,7%, lower than the 7,8% seen over the same period in 2017.

“The slower growth in PSCE is due to reduced demand for credit by both the household and corporate sectors, especially in the form of mortgage, overdraft and installment credit. Since the last MPC meeting, the growth in PSCE rose moderately to 5,8% at the end of April 2018 from 5,7% reported in the previous MPC statement,” he said.

Following a review of global, regional and domestic economic and financial developments, Shiimi stated that these factors caused the repo rate to remain unchanged. In the first quarter of 2018, the global economy slowed, although it is estimated to record a tad higher growth rate in 2018 compared to 2017. The global economy is estimated to grow by 3,9% in 2018, on account of marginally higher projected growth in advanced economies, the emerging market and developing economies compared to the preceding year.

“Most advanced economies recorded slower growth rates during the first quarter of 2018, mainly due to lower consumer spending

and industrial production. Going forward, economic activity growth in advanced economies as a whole is projected to improve to 2,5% in 2018 compared to 2,3% in 2017,” Shiimi said.

Touching on the local currency, PSG head of research Eloise du Plessis said recently the Namibia dollar weakened to a six-month low of N$13,35 against the US dollar due to concerns about tighter monetary policy in developed countries and the possible impact of a global trade war on global growth. Meanwhile, she added that the South African economy’s continued weak growth performance also contributed to the Namibian currency’s weakness (since the Namibia dollar is pegged on par with the rand). “We still expect the currency to recoup some of its recent losses towards the end of this year. Pressure from rising US interest rates should be subdued as the markets have now mostly priced in another two US interest rate increases for 2018 (previously, it was only one) and we still expect the eventual impact of the rise in protectionism on global growth to be modest,” she said. Du Plessis said, however, the risks for global growth and the Namibia dollar are skewed to the downside, given the pressures on inflation and international reserves, “we expect the BoN to keep its repo rate unchanged for the remainder of 2018.”

International reserves stocks declined by N$2,6 billion

Bank of Namibia governor – Iipumbu Shiimi

Domestic economic activity remained slow during the first four months of

2018, despite improvements in some key sectors. This slow activity was largely reflected in the wholesale

and retail trade and fishing sectors. The domestic economy is expected

to perform slightly better in 2018 compared to 2017

Iipumbu Shiimi

12 | Finance Focus Thursday 21 June 2018

3. Focus Finance Frans Indongo 061-220884

065-263085

066-255153