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Friday 19 April 2019
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NEEEB impact on Industrialization and Investor relations

Safeguarding measures needed for potential investors and industrialists

On the basis of mankind, we only fall in three categories of rewards: Hard work, Greed or laziness. In this article we will try to expand if Namibia Equitable Economic Empowerment Bill (NEEEB) will reward any of the above and iron out a pragmatic approach on its impact on Investment and Industrialization.  The NEEEB policy is currently reviewed until September and its key challenge is the mandatory 25% black ownership pillar which will cause dire socio-economic problems.

The upside is that the policy is designed to promote public welfare but adversely on the basis of discrimination. Subsequently welfare can be achieved through investment and industrialization and there can be serious risk and trade-offs to each other.
After independence most Namibians migrated to urban areas and shifted away from farming to pursue work in the city. The government is facing mass urban migration as never before and seeks quick solutions to deal with this issues. People crave for equity, empowerment and control depending on which class of society they are from. At the consultative meeting held in Windhoek, Standard Bank CEO Junius Mungunda explained that there is a difference between “empowerment, control and ownership” and notably each of these have clear distinctions.

He also mentioned that Namibians blacks will require approximately N$ 28 billion dollars to buy shares into banking sector entities, which is quite cumbersome.
Namibia needs investment to help our economy to become self-dependant and create employment for masses. We import 90% of our goods from South Africa and the country is host to most South African enterprises that has a grip on the economy. Most Namibians whether black or white became empowered by South African entities based fair or dubious identities, that is also why Affirmative Action “compliance” Bill was implemented to promote equality and fairness in the workforce.

Namibia’s services sector is mostly dependent on FDI and research shows that it contributes to 3.8% of the GDP amounting to about N$ 3.6 billion in 2015, the foreign entities like Rossing has been known to pay taxes, develop towns, provide scholarships and pay Royalties. There are also many Namibians that invest in foreign countries abroad their survival depends on foreign policy.
Namibia is also least industrialized because there is slow progress in boosting revenue growth and the economic growth has slowed down in past few years and in some cases the government had to cut it expenditures.

Primary Industrial projects are shelved and there is a serious structural mistrust between government and the people to drive development changes. We need money and skills to grow, which is facilitated by bilateral and plurilateral partnerships agreements. There is strong market inter-dependence between local companies and foreign enterprises to such an extent that most major projects are handled along foreign partners because projects require both human and financial resources which is beyond the basis of colour and political enforcements.

Most private companies that are black owned put up an appearance as black companies, but after they are appointed for projects they sell it off to experienced white entrepreneurs, in order to safeguard their reputation and because it is not about race but efficiency, resources and skills transfer. Namibia has this unique ability of unity that that makes it more attractive than South Africa to attract investors, however NEEEF will strongly hinder Industrial relations and this will halt development objects because if it remains in this hostile framework, it will imbalance domestic trade.

Trade agreements such as SACU, SADC, EPA, CFTA, TFTA and Mercussor are signed to apply comity and harmonize trade laws and to create trust between member states and their legislations. We already have a lot of virtual borders that hinder and slows trade in our region between our neighbours and this is not good for a port linked country, if we compare with other incentives offered by the likes of Mauritius such as tax exemptions, tax breaks and EPZ’s.

With indigenization laws there is a thin line between pre-establishment commitments made by investors and post-establishment threats. They also avoid risks of indirect or direct expropriation. There post-establishment threats have caused serious pull-outs, withdrawals and market diversions and substitutions, in most cases it does not happen overnight but delicately over time. Sovereign laws and trust plays a major role for countries but developing economies are most vulnerable to policy adjustments if the timing and frameworks are untrustworthy.  Firstly, I suggestions we remove the racial barriers and identify all Namibians as equal. Secondly, voluntary restraint agreements are needed to negotiate for deeper stake for all Namibians alike in fairness, but only in strategic sectors where we can boost local empowerment and resource sharing.

Voluntary restraints are needed against South Africa to agree their withdrawal from certain sectors to allow infant businesses to thrive, for example in agricultural goods. Land remains the elephant in the room, thus I will suggest that local elites, both black and white must negotiate to withdraw from land capitalism and give other local enterprises space to acquire land.

We must also handle in isolation cases where nationals where ill-treated by foreign investors and direct such cases to better dispute resolution frameworks. Government must create institutions or councils to help nationals maintain equities in foreign owned entities without being muscled out, and enable constituencies to empower themselves.  Thirdly we need strong funding for acquire fair equity, but it may deepen corruption and nepotism if the process of funding is unclear.




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