Lithon’s development model: a catalyst for change

Lithon’s new Venture Engineering division was born from a commitment to make a significant impact on people’s lives, and a firm belief that success starts with collaboration. Between those with the means to finance innovation, those with available resources for development, and those with the necessary expertise to bring the two together and facilitate a successful end result. Here’s how Lithon is working towards a better future for Namibia – and, ultimately, the African continent.

The unemployment crisis

Unemployment has long been a concern in Namibia, but the situation escalated significantly from 2017, with a 2021 Bloomberg report confirming that the country had the second highest unemployment rate in Africa. Namibia’s current unemployment rate is 33.4 percent with youth unemployment estimated at an even more staggering 46%.

“The 2015–2017 drought resulted in massive urbanisation across Namibia as people moved to the cities in search of work,” says Lithon CFO Gert Grobler. “And unfortunately, it doesn’t end there. There are currently over 67 000 unemployed graduates, with more waiting to enter the job market each year.” he adds.

Despite the escalating unemployment rate, which Grobler suggests is closer to 50% on the ground, no new jobs are being created. The financial sector, which has traditionally seen huge expansion to create new jobs, is oversubscribed, and the government’s debt crisis has put a freeze on new hires.

“It’s evident that something needs to change,” says Grobler. “Trying to solve the unemployment problem using existing methods is no longer working. So, the question is, what do we need to do differently?” 

The trust gap

Grobler doesn’t believe that access to funds is the biggest challenge to closing the infrastructure gap – based on Lithon’s research, approximately $170 billion per annum is required for infrastructure investment in Africa. Instead, he believes the greatest obstacle is the trust gap that exists, firstly, in response to the lack of concrete results achieved via grant funding allocated to government, and secondly by the extreme aversion to risk of those managing equity in Namibia’s fledgling private equity sector.

“Around N$200–N$300 million is currently available in this sector,” says Grobler, “but given the urgency to provide almost immediate returns to stakeholders, these funds are being allocated to established businesses, unable to create anywhere near enough new jobs to make a significant impact on Namibia’s unemployment rate.

Bridging the trust gap

Grobler believes the answer is to bridge the trust gap by accessing capital for the right businesses – greenfield investments that have the power to change lives through significant job creation.

“SMEs and the private sector need to band together to unlock the opportunities on our doorstep,” he explains, “but gaining access to available capital requires a 360-degree solution that includes a sound understanding of all areas of expertise and can be tailored to meet the risk appetite of the capital provider. When the capital, expertise and operators are available, that’s when you can make opportunities happen and create the jobs this country so desperately needs.”

Lithon Venture Engineering

With its extensive knowledge of the Namibian landscape, and over two decades on the ground collaborating with communities, landowners, financiers, and government, Grobler believes that Lithon is ideally positioned to generate end-to-end deals for investors and entrepreneurs in the development and agricultural sectors and see these projects through from the first feasibility study to the day they begin operations. 

“Private sector sponsors currently face an expensive, time-consuming process to bring an investment opportunity to life. By packaging deals for investors seeking a partner they can trust, we believe we can have a bankable project, with capital behind it, on the ground within six months.”

The exciting news is that Lithon is already rolling out several projects under its new Venture Engineering banner. 

“There is so much opportunity,” says Grobler. “The key lies in finding a new way of doing things. With 20 years of experience and skills development behind us, and a commitment to remaining front-footed and agile as we move forward, we’re optimistic about what the future holds for Lithon, our investment partners and those living in Namibia and beyond.

Are you an investor or innovator looking for a partner you can trust?

For more information on investment opportunities and Lithon’s Venture Engineering division, please get in touch with Gert Grobler on gert.grobler@lithon.com.