Namibia: the new southern star.

In just three and a half years, the Namibian Stock Exchange has exploded to become one of Africa's largest. Brian Scudder caught up with the NSE's General Manager, Mr Tom Minney, as he made one of his flying visits to London.

An investment journalist by trade, Mr. Tom Minney was one of the first to buy shares on the Namibian Stock Exchange (NSE) when it opened in October 1992. Today he is its General Manager.

In this short space of time, the NSE has grown at a breathtaking pace. It originally began as an Association of 36 Namibian businesses, each laying out N$10,000 (R1 to N$1) to give a total capitalisation of N$360,000 for the first three years. By 1994, the NSE was breaking even and able to begin ploughing profits into expansion. The NSE had become a viable option, and people were beginning to sit up and take note.

"The NSE is a special case in some ways," says Mr Minney. "Its development was accelerated because of the number of dual listings with the Johannesburg Stock Exchange. We are in the same common monetary area which makes the shifting of stocks from one Exchange to the other very easy, and with the big South African banks and Insurance companies listed, we have one of the biggest market capitalisations in Africa.

"Standard Bank Investment Corporation and First National Bank, the Southern Life Association, Mutual and Freedom have helped create a market capitalisation of N$70bn."

Trading takes place four hours a day, Monday to Fridays, with a morning and an afternoon session. "The whole system is computerised," says Mr Minney, "so no one needs to actually stand there and shout to anyone!" There are now three brokers, and although there has been no formal announcement, there will definitely be an expansion on the broking side this coming year.

Long-term thinking

This expansion is being made possible because of some long-term thinking from the Namibian Government. "Institutional investment is very important to the NSE," says Mr Minney, "because the Government has managed to persuade them to bring their money back from South Africa.

"The process began in March 1994, when the Government stipulated that those institutions managing Namibian individual's money in South Africa, would have to find out exactly how much they had, and bring 10% of it back to Namibia and form registered companies for it. In consultation with all parties, the Government increased this level of funds required in Namibia to 20% and then on to 35% by June 30 1995."

The result is that there has been a marked increase in awareness of, and dealings with, the NSE. "There has been a large rise in domestic investment, and Namibian companies are responding," says Mr Minney. "They are slowly realising that they can tap into this well of institutional money. It's still early days for it to feed through the system, but good investment plans are coming up, with businesses looking to raise more money on the market."

All of this is good news for the NSE. The registering of new companies in Namibia to manage institutional funds has broadened the Namibian financial sector, as has the creation of domestic Unit Trusts to cater to the Namibian investor.

Total traded volume last year was N$233m, with the main index rising 40% for US traders, and while there has been some interest from British fund managers, "the occasional visit" as Mr Minney puts it, it is US fund managers who are leading the market.

"We began with six listed companies in 1993, which became 14 in 1994, and 23 in 1995," says Mr Minney. "It is difficult to tell just how many more will be joining in 1996, but they will come."