Namibian researcher explores modern finance

Mesias Alfeus, from Onamutai village in Oshana Region, has secured a career as a senior lecturer in financial risk management in the Statistics and Actuarial Science department at Stellenbosch University in South Africa.

Alfeus is exploring and developing new mathematics to implement state-of-the-art financial models that can capture the dynamics of observed financial market risks or phenomena.

"As a young researcher, I will embrace the research network with my international collaborators, and I want to be flexible to dive deeper into challenging research projects that can lead to a breakthrough in modern finance and financial risk management discipline," he said.

Comparing higher education systems

He says the Namibian higher education system is of an acceptable standard, saying it all depends on an individual's quest to learn for career advancement.

"For example, most graduates from the Namibian higher learning institutions who further their studies in South Africa excel pretty well amid others from well-recognised South African universities."

Motivated by the NRF rating

One of his great accomplishments is being rated by the National Research Foundation (NRF) in South Africa.

The rating is a measure of the quality of a researcher based on peer reviews, including international recognition.

It is a rare accolade that is bestowed on academics with exceptional research output.

He explained that in order to be rated by the NRF, one must have published a number of high-quality research papers in international peer-reviewed journals and demonstrate a high potential for leadership in the field of research.

Pioneering work

Alfeus is one of the pioneers for the framework of stochastic modelling of "rollover risk", which consists of two components, namely credit downgrade risk and funding liquidity risk, which is now very topical for the discussions on the London interbank offered rate (LIBOR) replacements.

The rollover is justified by the fact that basis spreads persist in the market, which means that there must be other risks blocking the textbook arbitrage channel.

"In our view, the main risk preventing the arbitrage strategy to be exploited is that the arbitrager might not be able to roll over (shorter tenor) debt at the benchmark rate in the future, but will have to pay a higher rate or credit spread. This work is now regarded as a seminal work in the academic literature. For long-dated instruments, a "rollover risk" is likely going to be more pronounced when the LIBOR rate is replaced, especially in developing countries," he said.