By Rachel Nendongo
The above quote, often attributed to Winston Churchill’s 1945 post-war strategy, reflects his understanding that turmoil, while disruptive, often lays the groundwork for strategic gains—a principle as relevant to wartime strategy as it is to today’s capital markets. Volatility marks 2025, with the Trump administration’s tariffs sparking trade war concerns, inflationary pressures lingering, and global monetary policies diverging. Southern African markets are squarely in the mix.
Against this backdrop of global uncertainty, regional dynamics are also shaping investment prospects. On the positive side, Namibia’s recent offshore oil discoveries have the potential to transform the country’s fiscal and growth trajectory. Conversely, political instability in neighbouring South Africa—exacerbated by the fractious coalition government following the 2024 general elections—has introduced fresh volatility. Despite these crosscurrents, we are seeing attractive dislocations across asset classes. Notably, the Namibian bond market is offering a compelling risk-adjusted opportunity, with 10-year government bond yields rising to 11.52%, up from sub-11% levels earlier in the year.
We view the market’s response to these risks as an overreaction. Historical anomalies support this perspective. During the COVID-19 pandemic in 2020, Namibian yields spiked above 14% as global uncertainty peaked. In 2016, the “Nenegate” incident—when South Africa’s finance minister was abruptly replaced—triggered a surge in South African benchmark yields and pushed Namibian yields to 11.5% due to regional spillover. More recently, the Russia-Ukraine war in 2022 and 2023 created a high-inflation environment, driving Namibian yields to 12.8% amid commodity price shocks. In each of these instances, yields reverted to their long-term average of around 10% within 12 to 18 months as risk sentiment stabilised, creating value for investors who entered at peak discounts.
Namibian bonds have shown resilience across diverse market conditions, delivering strong real returns that consistently outpace inflation. As detailed in Table 1, the Simonis Storm Securities (“SSS”) Namibian Government Bond Index highlights an average annualised real return of approximately 7% over certain independent periods through March 2025. This sustained outperformance underscores Namibian bonds' reliability as fixed-income assets, even during periods of heightened volatility.
Table 1 : Returns
| Annualised returns | |||
| Nam bond returns (SSS index) | Nam Inflation | Real returns | |
| 1 year (ended March 2025) | 18.7% | 4.2% | 14.5% |
| 3 year | 14.1% | 5.3% | 8.8% |
| 5 year | 14.1% | 4.6% | 9.5% |
| 10 year | 10.5% | 4.7% | 5.8% |
Source : SSS Namibian Government Bond index
Figure 2 provides a brief analysis of the sources of these returns. Income returns, derived from coupon payments, have averaged around 9% annually, providing a steady foundation for investors. Capital returns, driven by price movements and coupon reinvestments, have experienced fluctuations but have not been a significant drag on total returns, ensuring that overall performance remains stable and dependable.
Source: SSS Namibian Government Bond index/Arysteq
Namibian bonds offer a compelling opportunity in today’s volatile markets. The market’s recent sell-off, reacting to local and global risks, has created an attractive entry point, with yields above long-term averages historically signalling value as they revert. Without ignoring risk and the persistence of certain factors, the combination of historically strong real yields and stable income returns makes Namibian bonds attractive for investors seeking to capitalise on opportunities in Southern African markets without taking excessive risk.
Source : Bloomberg
