Attitude toward Foreign Direct Investment
The Namibian government welcomes and encourages foreign investment to help develop the national economy and benefit its population. The FIA guarantees equal treatment for foreign investors and Namibian firms, including the possibility of fair compensation in the event of expropriation, international arbitration of disputes between investors and the government, the right to remit profits and access to foreign exchange. Investment incentives and special tax incentives are also available for the manufacturing sector.
Other Investment Policy Reviews
The Namibian government has not conducted any investment policy review in the recent past through the OECD, WTO or UNCTDAD. However, in June 2014, the Institute of Public Policy Research (IPPR) released a study on Easing the Way for Investment in Namibia identifying 17 policy recommendations. The study is available online at the following link: Investment Policy Recommendations
The Namibian Chamber of Commerce and Industry publishes an annual Namibia business and investment climate (NAMBIC) survey. The most recent one available on-line is from 2014 and one can get a copy at the following link: http://www.ippr.org.na/sites/default/files/namBIC_2014_with%20final.pdf
Laws/Regulations on Foreign Direct Investment
The FIA is the primary legislation that governs foreign direct investment in Namibia. It calls for granting a Certificate of Status Investment (CSI) and special incentives to manufacturers and exporters.
The Competition Act of 2003 established the legal framework to “safeguard and promote competition in the Namibian market.” The Act aims to promote:
The efficiency, adaptability and development of the Namibian economy;
Competitive prices and product choices for customers;
Employment and advancement of the social and economic welfare of Namibians;
Expanded opportunities for Namibian participation in world markets;
Participation of small enterprises in the economy by ensuring a level playing field; and
Greater enterprise ownership particularly among the historically disadvantaged.
The Competition Act also established the Namibia Competition Commission (NaCC), which has the mandate to review any potential mergers and acquisitions that might limit the competitive landscape or adversely impact the Namibian economy. The Minister of Industrialization, Trade and SME Development is the final arbiter on merger decisions and may accept or reject a NaCC decision. Any investor can file an appeal with the ministry but no formal process is prescribed for doing so.
Relatively effective and transparent regulatory systems have been established in many sectors. In 2000, the government established the Electricity Control Board (ECB) to regulate electricity generation, transmission, distribution, supply, import and export within the country. The ECB is also mandated to recommend to the Minister of Mines and Energy which companies or entities should receive licenses. The ECB’s vision is for Namibia to have a competitive and transparent electricity market, but the Namibian parastatal responsible for providing electricity, NamPower, currently enjoys a virtual monopoly.
The 2009 Communications Act aims to level the playing field for all telecommunication operators and improve competition, but many implementing regulations are not yet in place. Under this same act, the Communications Regulatory Authority of Namibia (CRAN) replaced the Namibian Communication Commission (NCC), which had limited regulatory authority. The state-owned Namibian Broadcasting Corporation (NBC), which transmits TV and radio services, is exempted from the licensing procedures enumerated in the act.
The Bank of Namibia (BoN), the country's central bank, regulates the banking sector. . Most banks in Namibia are South African-owned, but the BoN has begun to grant licenses to banks from other countries. In 2015, the BoN granted provisional licenses to Banco BIC Namibia Limited, and Banco Atlantico, both of which have majority Angolan shareholding. In December 2012, the BoN granted a license to SME Bank Namibia Limited, a majority government-owned banking institution that is mandated to provide access to financial services for small and medium Namibian enterprises. The SME Bank is owned by both Namibia and Zimbabwe.
The Namibia Financial Institutions Supervisory Authority (NAMFISA) regulates non-banking financial institutions. NAMFISA aims to reduce financial crime through developing and implementing effective regulatory systems.
In 2014, the Namibian government established the Business and Intellectual Property Authority (BIPA) to improve service delivery and ensure effective administration of business and intellectual property rights (IPRs) registration. BIPA serves as a one-stop-center for all business and IPR registrations and related matters. It is also tasked with the provision of general advisory services and information dissemination on business registration and IPRs. Website: http://www.bipa.gov.na/ BIPA is currently established under Section 21 of the Companies Act, pending the enactment of the enabling legislation to transform it into a fully-fledged regulatory body.
The functions of BIPA are:
to be the central focal point for the registration, administration and protection of businesses, commercial and industrial properties rights; and
to be the legal depository of information, documents and data required to be lodged under the applicable legislations.
Under the FIA, the Ministry of Industrialization, Trade, and SME Development established the Namibia Investment Center (NIC), which serves as Namibia’s official investment promotion and facilitation office. The NIC is often the first point of contact for potential investors. It is designed to offer comprehensive services from the initial inquiry stage through to operational stages. The NIC also provides general information packages and advice on investment opportunities, incentives and procedures. The NIC is tasked with assisting investors in minimizing bureaucratic red tape, including obtaining work visas for foreign investors, by coordinating work with government ministries as well as regulatory bodies.
Business in Namibia may be conducted in the form of a public or private company, branch of a foreign company, closed corporation, partnership, joint venture or sole trader. Companies are regulated under the 2004 Companies Act, which covers both domestic companies and those incorporated outside Namibia but trading through local branches. To operate in Namibia, businesses must also register with the relevant local authorities; workmen’s Compensation Commission; and the Social Security Commission.
Most investors find it helpful to have a local presence or a local partner in order to do business in Namibia, although this is not a legal requirement. Companies usually establish business relationships before tender opportunities are announced. The World Bank’s Doing Business 2016 report notes that it takes 10 steps and an average of 66 days to start a business. Some accounting and law firms provide business registration services.
The FIA provides for liberal foreign investment conditions and equal treatment of foreign and local investors. With limited exceptions, all sectors of the economy are open to foreign investment. There is no local participation requirement in the FIA, but the Namibian government is increasingly emphasizing the need for investors to partner with Namibian-owned companies and/or to have a majority of local employees in order to operate in the country.
The FIA reiterates the protection of investment and property provided for in the Namibian constitution. It also provides for equal treatment of foreign investors and Namibian firms, including the possibility of fair compensation in the event of expropriation, international arbitration of disputes between investors and the government, the right to remit profits and access to foreign exchange.
In Namibia, there are several names and definitions given to the micro, small and medium-sized enterprises (MSMEs) sector, which overlaps to a significant extent with the informal sector. A definition of SME widely used in Namibia is the one set by the Ministry of Industrialization, Trade, and SME Development (below).
Namibia’s MSME sector is engaged in a whole range of activities including: subsistence farming; crafts (including woodwork, pottery, handicraft, basketry, jewelry-making, leatherworking, weaving, sewing, and furniture-making); small-scale manufacturing (including bread-making, tailoring, food catering, candle-making, and confectionery); small-scale mining; small-scale construction (including building, brick-making, plumbing, welding, carpentry, and electricity); informal services (including transport, auto repair, shoes, electric household appliances, gardening, domestic work, and hoe polishing); and informal trade (including rural information markets (“cuca shops”), urban information, informal cross-border trade (particularly along the Namibian/Angolan border), informal meat markets (“bush markets” in rural and urban areas), and informal sorghum marketing).
In 2013, the Ministry of Trade and Industry launched a "growth at home" strategy to promote job creation through the manufacture of products with added value. The “growth at home” strategy emphasizes the importance of commodity-based industrialization by strengthening local and national value chains and creating more efficient linkages within the economy supported by improved logistics and infrastructure, and improvements in the ease of doing business. Namibia is endowed with significant human and natural resources that can be used to advance industrialization and structural economic transformation through value addition strategies in all sectors, but particularly in agriculture and agro-processing, fish processing and in mining and mineral beneficiation.
Limits on Foreign Control and Right to Private Ownership and Establishment
Foreigners must pay a 10% non-resident shareholder tax on dividends. There are no capital gains or marketable securities taxes, although certain capital gains are taxed as normal income. As a member of the Common Monetary Area, the Namibian Dollar (NAD) is pegged at parity with the South African Rand.
Foreign and domestic entities may establish and own business enterprises and engage in all forms of remunerative activities. The Ministry of Home Affairs grants renewable and non-renewable temporary employment permits for a period of up to 12 months for skills not locally or readily available. However, work permits and long-term residence permits are subject to bureaucratic hurdles. Complaints about delays in renewing visas and work permits are common.
Namibia does not currently have a privatization program.
Screening of FDI
The Namibia Investment Center (NIC) is responsible for screening all potential foreign investments. It does not follow a formal review process, but does evaluate the credibility of potential investors and their business presentations and gauges the potential economic benefit to the country. The NIC’s decisions are forwarded to the Minister of Industrialization, Trade and SME Development for final approval/rejection.
The Namibian Competition Commission (NaCC), established in 2009 under the Competition Act of 2003, is responsible for reviewing mergers (foreign and domestic) to safeguard and promote competition in the Namibian market. See the section on Transparency of the Regulatory system for more information on the NaCC.