The Namibia Investment Promotion Act, Act 9 of 2016, was published on 31 August 2016. The Act will become effective on a date to be determined by the Minister of Trade and Industry. The Act has been praised by many and the name of the Act can be deemed to instil a lot of positive feelings given that we need investment in Namibia and the promotion thereof is wonderful. It is therefore concerning that this piece of legislation falls short of its name and the intended results of promoting investment in Namibia. The wording of the Act result in more detrimental consequences that what we believe was intended by this Act. Let’s consider some of the concerns raised by citizens and legal professionals: The definition of Namibian used in the Act does not provide for persons with domicile living in Namibia. This would mean that a person living in Namibia, being married to a Namibian and having business interests in Namibia will have to comply with the stipulations of this Act. The question beckon if this was an oversight?
There also seems to be an oversight insofar the definition relates to companies, as the definition requires that the majority of the shares or the control of the company must be vested in “a” person. Strictly interpreted this means that if no one Namibian citizen / natural person holds more than 50% of the shares or voting rights, the company is not Namibia, regardless of the fact that there might be 10 Namibian shareholders each holding 10%. Section 12 of the Act limits a foreign investor from investing in Namibia, acquiring a licence, permit, authorisation or concession in Namibia without the prior approval of the Minister of Trade and Industry (“Minister”). A foreigner will therefore need to incur additional expenses and time before an investment or acquisition can be made in Namibia. Are we not duplicating certain regulatory oversight with this requirement, given that licences also has a regulatory body, the likes of Bank of Namibia or Namfisa, and why have the Competition Commission oversight requirement then? The time delay caused by all these oversight layers may not warrant the effort for a foreign investor. Section 9 of the Act limits the ability of a foreign investor to expand his business without prior approval of the Minister. Why would a foreign investor then be enticed to keep his returns in Namibia and expand his/her business, creating much needed employment opportunities?
The Act does not define “natural resource sector”, but it does limit the sale of an investment by a foreigner in said sector. The Act does not provide for a threshold in order to exclude smaller transactions and ensuring efficiency in the application of this Act. A foreign investor may grant security to a funder over his/her investment in order to raise funding. With the requirement now that no such investment may be sold or disposed of without the Minister’s approval, this effectively frustrates the orders of Namibian courts against foreign investors. Section 33 of the Act grants the Minister the authority to cancel a foreigner’s ability to conduct business in Namibia at any time. What surety does a foreign investor thus have in his/her investment? Such far reaching authority should surely not lie with one person, but rather with a board or commission?
These are some of the matters that raised concern in the current Act published. The sectors reserved for the State, Namibians or Joint Ventures with Namibians have not been published as yet and the regulations for this may create additional concerns, which we will comment on in future. Should you wish to comment on this legislation, please forward your comments to the Namibian Investment Centre since they will be responsible for the administration of this piece of legislation. We need to start asking critical questions on new legislation and determine if such legislation will really promote Namibia. Our economic growth is slowing and the dreaded word “recession” has been mentioned. If that is the case, then should we not be thinking outside the box? The whole world is trying to attract foreign investment. We need to make it easier for foreign investors in order to compete in the international market, not more stringent and limiting.