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Opinion - Selling of MTC shares will widen the digital gap

2021-03-31  Staff Reporter

Opinion - Selling of MTC shares will widen the digital gap
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The vision of Namibia in 2030 is to become a knowledge-based society. However, achieving that goal will be a challenge if the digital gap continues to widen.

A previous article (New Era, 25 March 2021) gave unsolicited advice to the government to reconsider the decision to offload a 49% stake in MTC before some legal and industry reforms.

Many psychologists say that unsolicited advice feels like criticism. But you are susceptible to unsolicited advice if you are vibrant. Remember in your youth? Everybody had something to tell you, your parents, relatives, friends, the list is too long to exhaust, but only time could tell what was good advice or not.

The government selling a 49% stake in MTC will bear more fruit after overarching reforms. There are several pertinent questions to answer around the reforms required (what, why, how, when, who, etc.). A good starting point to answer these questions is an intensive and retrospective SWOT analysis of our economy. The approach can be similar to the recent land ‘indaba’ (discussion or conference) but with more academic flare than political drum beats.

The main reason for selling the MTC stake is to pay off the country’s debt, says the economic advisor to the president, according to the media. This makes the genuine transfer of MTC to the private sector a mirage.

The government must adopt principles used in the private sector when making commercial decisions. For instance, don’t sell a revenue-generating asset to pay a debt or even to finance your operations budget. Because doing this will be a sign of distress that needs a prompt and precise intervention to avoid foreclosure (sold off to pay debts).

The government failing to meet its obligation cannot lead to foreclosure. Based on that, government securities (sovereign debt) have a low-risk profile. However, nowadays, the government can default. Sovereign risk (that a government can default) manifests in junk government securities. In my opinion, sovereign risk is used as a scarecrow to create panic in governments. While some governments have fallen for these gimmicks, others have resisted and opted for home-based solutions.

The article (New Era, 25 March 2021) suggested legal reforms around real estate and investments. These reforms are coupled with those in the ICT industry to create an enticing environment for private sector investment in ICT infrastructure.

What is the logic behind the advice given here? Firstly, MTC contributes positively to the government coffers. Offloading it now is like selling your golden goose that lays the golden egg. Secondly, the value of listed securities on a stock exchange is heavily influenced by its profitability and earnings potential. Therefore, listing MTC now is going to trigger a causal effect culminating in MTC services and products costing more to quench the thirst of investors for dividends. Also, the MTC stock must ensure marketability through higher profits. Consequently, this will negatively impact the affordability of MTC services.

Reforms are usually not for the faint-hearted. When championing a reform, one has to put their body on the chopping board. Very similar to an army that has been surrounded by a vicious enemy whose intention is to wipe you out. A good strategy will be one that will either give you a chance to escape alive and live to fight another day or the one that gives you victory.

To conclude, no matter from which microscope you view the economic woes facing our beloved country, responses and the solutions to them are hinged on pervasive reforms. But these reforms will take time and will require patience with the right captains on the battlefront.

*Robert Gatonye is a doctoral student (finance) at the Namibia Business School (NBS), an ICT expert, and a Certified Public Accountant (CPA).

2021-03-31  Staff Reporter

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