Saturday 17 April 2021
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Namibia’s listing fear

Government believes the fear of the unknown as well as a lack of understanding when it comes to the role stock exchanges can play in wealth creation and the reduction in inequality has resulted in a topic regarded as a “no-go area” for parastatals and politicians.
Listing is the process of taking a privately-owned organisation and making the transition to a publicly-owned entity whose shares can be traded on a stock exchange, in Namibia that is Namibia Stock Exchange. The NSX is the only shares market in the country.
With Namibian SOEs having dismal records when it comes to being transparent and accountable, Jooste believes the moment SOEs start listing, such practices will be eliminated as they will be expected to adhere to the strict requirements on the stock exchange. Over the years, most of the SOEs that ought to pay dividends to government have not been doing so due to poor performance and have instead turned into beggars, constantly crying for bailouts.
“In Namibia there is a problem because there are only few people who understand how the stock exchange work, so whenever talks about listing SOEs is opposed, it is mostly based on the fear of the unknown. People have an impression that if the SOEs are listed on the stock exchange it will be purchased by foreigners, that is obviously not the case,” Jooste said.
He added: “If you speak to the experts they will share the details on how the shareholders will go about listing those companies. In our case it will be a super controlled action. One can still maintain and control without being a majority shareholder.”
Another benefit is  “when it comes to companies’ governance one has to limit the opportunities of the shareholder’s interference so it becomes more independent. The quality of corporate governance completely escalates when companies list. There some rules and regulations which company owners are accountable for,” he said.
The minister said there are several SOEs such as MTC which are potential candidates for listing, adding that others still have a long way to go to meet the set listing criteria. Profitability of an entity is a key criteria.
“In other countries where there is a matured economy, public companies are listing to become more competitive. The process does not only entail unlocking capital, but more about broadening the ownership of the companies. Although unlocking capital is one of the reasons, enhancing performance of SOEs through listing is my primary aim,” Jooste said.
Using China as an example, where the Shanghai Stock Exchange’s market capitalisation hovers around 50%, Jooste underscored the need for strategic operations in the public sector.
“I always emphasize that I do not want an impression created that we are only pushing for SOEs to list because of the current state of our economy because even during the honeymoon phase, I would push for listing,” he said.
The Shanghai Hong Kong Stock Connect, which was launched on Nov 17, 2014, allowed overseas investors to access Shanghai-listed Chinese shares mostly traded on Chinese mainland for the first time. The move was a significant milestone in China’s capital market liberalization process.
At the time, the Shanghai Stock Exchange was home to over 900 listed companies, three years later eight of the top ten companies on that stock exchange were SOEs.
“Benchmarking with China gave us an indication that public companies can compete and Namibia should be no different,” he said.
“The companies need to be sensitive although there’s a fear of the unknown. Politicians are resisting it[listing] because they really don’t understand the how the stock exchange works, most of them think listing a company is like selling it.
This[selling on the NSX] cannot really happen here because we can determine the amount of shares available for foreigners so that we avoid exposing ourselves,” he explained.
According to Jooste: “In some cases we Namibians have to be sensitive, we can start with small offerings and increase it with time. But the process has to be done correctly because if we get it wrong the first time it will create many doubts.”
With Namibia having recently borrowed N$3 billion from African Development Bank, Jooste feels raising capital on the stock exchange through listing companies is a much more effective way to generate revenue compared to taking out a loan.
“The cost of borrowing is much more compared to unlocking capital through listing.
Through listing we can attract foreign direct investment and broaden ownership. After all, on an individual basis, I still believe it is better to buy shares than to save your money with banks because the returns are far greater,” he advised.
Despite overall optimism, Jooste cautioned against overexposure of SOEs on stock exchanges should they list one day. No SOE is currently listed in Namibia, although MTC is widely believed to be the first SOE to be listed.

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