‘Fix legislative landsacpe’

The local Business and Intellectual Property Authority (Bipa) claims to have made significant improvements to reduce obstacles. Lawmakers, however, partly due to the pandemic, have been slow and ineffective in addressing pending legislation related to tax policy and private company ownership.

Several declared policies have been reversed or halted, leaving an unreliable framework in place. This uncertainty is causing both local and foreign potential investors to remain hesitant and adopt a wait-and-see approach.

The Foreign Investment Act of 1990 (FIA) was expected to be replaced by the Namibia Investment Promotion Act (Nipa), which was announced in August 2016.

Nipa aimed to establish rules for promoting sustainable economic development and growth by attracting foreign and domestic investment, reducing unemployment, accelerating economic growth, and diversifying the economy.

It also addressed the reservation of certain economic sectors and business activities for specific categories of investors, dispute resolution mechanisms, and related matters.

However, due to substantial legal concerns raised by the private sector, Namibia has not yet enforced the act, and the FIA remains the guiding legislation on investment.



Empowerment

Meanwhile, ad hoc regulations for various sectors, especially mining and natural resource exploration, have contributed to the overall investment uncertainty.

The New Equitable Economic Empowerment Bill (Neeeb), which has been in development for over a decade to create economic and business opportunities for disadvantaged groups, has faced reservations from the business community.

They are concerned about potentially being compelled to partially relinquish ownership of companies, and as a result, the bill has not been adopted.

Market

Namibia’s economy is still heavily dominated by state-owned enterprises (SOEs), and the grounding and liquidation of Air Namibia exemplify mismanagement issues.

The country’s small population and import-dependent economy contribute to a lack of market competition.

The government has recently recognised the importance of small and medium-sized enterprises (SMEs) and micro-enterprises (MMEs) for sustainable economic growth.

To restore and promote business confidence in the formal sector, a more binding formal framework is needed.

Meanwhile, the informal sector has been growing considerably and is home to the majority of the population.

Foreign direct investment (FDI) in Namibia faces challenges due to the relatively small domestic market, high transportation costs, relatively high energy prices, and a limited pool of skilled labour.



Environment

There is uncertainty regarding the legislative environment and applicable laws in Namibia.

The absence of a reliable and transparent legal framework, and particularly its consistent and impartial application, is eroding confidence and trust in competition policy.

Although there are laws and institutions in place to regulate and prevent excessive concentration and monopolisation, as well as to safeguard consumers, their enforcement is inconsistent. This points to broader institutional weaknesses and a lack of implementation capacity.

The substantial subsidisation of various state-owned enterprises by the government distorts economic sectors. Many state-owned enterprises operate at a significant deficit and regularly require state subsidies to remain afloat.

These subsidies typically do not directly benefit individual consumers, but instead cover instances of mismanagement and address disparities between salaries and service delivery.

This situation tends to reinforce monopolistic tendencies and can facilitate the misuse of resources, such as through tenderpreneurship.



Trade

Namibia maintains an open trade system with no tariff quotas.

The country joined the World Trade Organization (WTO) in 1995. In 2019, its most-favoured nation (MFN) binding average tariff rate stood at 7.7%, with a binding coverage of 94.3% and special safeguards applicable to 37.5% of trade for the year 2018.

Namibia is a signatory to the African Continental Free Trade Area (AfCFTA) agreement, which became operational in January 2021.

The nation’s trade relations are governed by its membership in the Southern African Customs Union (Sacu), the Southern African Development Community (SADC), and the Southern African Economic Partnership Agreement (EPA) with the European Union.

While Namibia generally follows a policy of free trade, there are a few exceptions, particularly in the form of differentiated tariffs and preferential treatment for certain critical domestic sectors.



Restrictions

The government has also implemented import and export restrictions, primarily affecting agricultural products such as white maize, wheat, and mahangu (pearl millet), along with products derived from these grains.

Additionally, there is an import substitution programme for horticultural products.

Namibia imposes licensing requirements on all imports, although most licenses are granted automatically. A limited number of products necessitate non-automatic licenses.

Customs regulations in Namibia are outlined in the Customs and Excise Act (Act no. 20 of 1998) and are generally in line with international conventions regarding recommended practices for importing and exporting goods.

Namibia’s key trading partners include the European Union, China and South Africa. - Bertelsmann Stiftung