Namibia

2005 INVESTMENT CLIMATE STATEMENT – NAMIBIA
OPENNESS TO FOREIGN INVESTMENT


The Government of the Republic of Namibia (GRN) is committed to stimulating economic growth and employment through attracting foreign investment. Independent ratings confirm that Namibia enjoys a positive investment climate. While Namibia is generally an open investment climate, there are some concerns regarding the bidding and contracting procedures with parastatals. (Please see parastatal section below for more information.)

Independent Ratings:

The World Bank ranked Namibia 33 among 155 countries for overall ease of doing business in its Doing Business in 2006 report. Namibia received lower rankings for registering property, trading across borders, and enforcing contracts. Although the judicial system respects the sanctity of contracts, Namibia ranked 67 among 155 countries for contract enforcement. The World Bank reported 31 procedures, 270 days and a cost of 28.3% of debt to enforce contracts.
http://www.doingbusiness.org/ExploreEconomies/Default.aspx?economyid=135

In 2005, Fitch Ratings assigned Namibia a long-term BBB- foreign currency credit rating and a long term BBB local currency credit rating as a result of a stable policy environment and sound macroeconomic fundamentals.

Click here for the rating: http://www.fitchratings.com/corporate/ratings/issuer_content.cfm?issr_id=82572368

Click here for Namibia’s parastatal electricity provider NamPower‘s rating: http://www.fitchratings.com/corporate/ratings/issuer_content.cfm?issr_id=82576967

In 2005, the World Economic Forum ranked Namibia 63 out of 117 countries, down 11 places from the previous year’s ranking. The report blamed bureaucratic red tape and favoritism by government officials for the lower rating. Link: http://www.weforum.org/site/homepublic.nsf/Content/Growth+Competitiveness+Index+rankings+2005+and+2004+comparisons

Investment Center:

The Namibia Investment Center (NIC) is Namibia’s official investment promotion and facilitation office and is often potential investors’ first point of contact. NIC’s comprehensive services range from the initial inquiry stage through to operational stages. NIC provides general information packages and tailored advice on investment opportunities, incentives, and procedures. NIC can also help investors minimize bureaucratic obstacles by working closely with key sector ministries and service and regulatory bodies.

For a full list of NIC services, please contact the center directly:

Namibia Investment Centre
Ministry of Trade and Industry
Brendan Simbwaye Square, Goethe Street
Private Bag 13340
Windhoek, Namibia
Tel: +264-61-283-7335
Fax: +264-61-220278
E-mail: nic@mti.gov.na

or visit the Ministry of Trade and Industry website: http://www.mti.gov.na/

Laws:

• liberal foreign investment conditions,
• non-discriminatory access to all sectors of the economy,
• no local participation requirement,
• full protection of investments,
• repatriation of capital,
• right to remit profits,
• access to foreign exchange,
• international arbitration in the case of disputes between investors and the government, and
• fair compensation in the event of expropriation.

Namibia’s Competition Act promotes and safeguards competition in Namibia to:

• promote the efficiency, adaptability and development of the Namibian economy;
• provide consumers with competitive prices and product choices;
• promote employment and advance the social and economic welfare of Namibians;
• expand opportunities for Namibian participation in world markets while recognizing the role of foreign competition in Namibia;
• ensure that small enterprises have an equitable opportunity to participate in the Namibian economy; and
• promote greater enterprise ownership particularly among the historically disadvantaged.

For more information on incorporation procedures and registration requirements, visit: http://www.mti.gov.na/allaboutus_text/company_law.htm
http://www.mti.gov.na/allaboutus_text/close_corporations.htm

Company Registrations:

The Registrar of Companies in the Ministry of Trade and Industry manages, regulates, and facilitates the formation of business entities and encourages investment through an appropriate legal framework. The Registrar’s office encourages investors to seek professional advice from legal practitioners, auditors, accounting officers, or secretarial firms when registering their businesses. It takes about 30 days to register a business in Namibia.

The Ministry of Trade and Industry’s online registering companies’ pamphlet is available at the following link: Registration of Companies Note: The booklet is designed for printing double-sided pages. Please contact the Ministry directly for the most up-to-date registration information.

Black Economic Empowerment (BEE)/Affirmative Action:
Although the Government does not have a codified Black Economic Empowerment (BEE) program, the Ministry of Labor and Social Welfare’s Equity Commission requires all firms to develop an affirmative action plan for management positions and to report annually on its implementation. Namibia’s Affirmative Action Act strives to create equal employment opportunities, improve conditions for the historically disadvantaged, and eliminate discrimination. The commission facilitates training programs, provides technical and other assistance, and offers expert advice, information, and guidance on implementing affirmative action in the work place.

There is no local ownership requirement for foreign investments, but the government actively encourages partnerships with historically disadvantaged Namibians. In certain industries, such as the fishing sector, there has been a concerted campaign to increase Namibian participation in existing investments. In particular, some foreign companies with fishing licenses have alleged being forced into partnerships with local individuals or firms chosen by the government in order to renew their licenses.

Real Estate:

Foreign investors can purchase and own land in Namibia with the exception of agricultural land. Due to Namibia’s ongoing land reform and resettlement process, commercial agricultural land reform legislation restricts foreign ownership of agricultural farmland.

Tenders:

Most government transactions, including the procurement of goods and services are made through the Tender Board of Namibia. The board is comprised of representatives from various government ministries appointed by the Minister of Finance. The Government is required by law to publicize calls for tenders in the local media and the Namibia Government Gazette. Although the primary aim of the tender board is to ensure that tenders are awarded to the best bid in an open bidding process, the procurement policy of Namibia does permit preferences according to certain socioeconomic goals and strategies. Beneficiaries of these preferences are generally not restricted to the historically disadvantaged or Namibian citizens but are reserved for individuals and companies domiciled in Namibia.

For additional information on tender policies in Namibia:
http://www.tenderscan.co.za/procurementPolicy.htm#Namibia

Parastatals:

Although the Namibian economy is dominated by the private sector and there are sufficient opportunities for private sector investment, parastatals provide most of the essential services such as telecommunications, transport, water, and electricity. Although the Government underscores its commitment to privatization, the process remains slow and many parastatals remain in the hands of the Government. That said, the Government is currently selling a 34% share in its state-owned mobile monopoly to a regional or international telecommunications operator. However, a U.S. business has criticized the process for a lack of transparency and unfair bidding schemes designed to favor one party. The Government plans to sell another 15% to Black Economic Empowerment groups.

CONVERSION AND TRANSFER POLICIES

The Foreign Investment Act of 1990 offers investors meeting certain eligibility criteria the opportunity to obtain a Status Investment Certificate (SIC), which entitles the holder to:

• preferential access to foreign exchange to repay foreign debt, pay royalties and similar charges, remit branch profits and dividends;
• preferential access to foreign currency in order to repatriate proceeds from the sale of an enterprise to a Namibian resident;
• exemption from regulations which might restrict certain business or categories of business to Namibian participation;
• right to international arbitration in the event of a dispute with the government; and
• payment of just compensation without undue delay and in freely convertible currency.
  

Namibia is a member of the South African Rand Common Monetary Area (CMA). As such, non-status investors are subject to South African exchange controls applicable to the CMA. The Bank of Namibia administers exchange control. All 4 commercial banks are authorized dealers in foreign exchange.

The Bank of Namibia relaxed exchange control regulations for investment transfers by corporations. Corporations may now transfer 93.8 million USD to any country in Africa and 62.5 million USD to any country outside Africa. Non-residents may access local credit up to 200 percent of their total shareholders’ investment to finance foreign direct investments in Namibia. The Namibian banking system is modern and closely tied to the South African system. However, banking fees and charges are among the highest in the world, often excluding low-income savings. 3 of the 4 local commercial banks are branches of South African banks. All local commercial banks handle international transactions and trade financing.

Following discussions with the IMF and World Bank in 2005, the Ministry of Finance is considering restricting capital flight from Namibia by requiring unit trusts to invest 35% of all investments in Namibia and 10% of investments for pension funds listed on the Namibia Stock Exchange.

EXPROPRIATION AND COMPENSATION


The primary mechanism for land reform that the government continues to pursue is a "willing buyer-willing seller" program, which is rooted in the Namibian Constitution. The Namibian Constitution also provides for the expropriation of property in the public interest subject to the payment of "just" compensation and in accordance with legal procedures. Landowners have the option to challenge the Government, including the price offered for expropriation, through the court system. As in other Southern African countries emerging from apartheid, land reform is at the forefront of public debate. The land reform process draws criticism for the slow pace of acquiring commercial farmland and resettling Namibia’s landless. Namibian stakeholders agreed that foreign-owned and non-productive farmland should be primary targets for expropriation. In 2005, the Government introduced a land tax to raise money for land acquisition subjecting absentee landowners to higher tax rates than resident farmers.

DISPUTE SETTLEMENT

The Foreign Investment Act guarantees settlement of any disputes by international arbitration. Namibia’s legal system, based on the Roman Dutch Law is similar to South Africa’s legal system. The system provides effective means to enforce property and contractual rights. The Company’s Act of 2004 governs company and close corporation liquidations and Insolvency Act 61 of 1936 governs insolvent individuals and their estates. The Insolvency Act details sequestration procedures and the rights of creditors.

A new Insolvency Amendment Bill was passed in 2005 but has not yet been signed into law. The Bill can be viewed at (http://www.parliament.gov.na/parliament/billsandacts/billdetail.asp?BillID=127)

There is little government interference in the court system. Per the Criminal Procedure Act of 2004, foreign court judgments may be accepted under an extradition treaty.

Namibia signed but has not ratified the Convention on the Settlement of Investment Disputes Between States and Nationals of Other States.

PERFORMANCE REQUIREMENTS AND INCENTIVES

Namibia does not impose performance requirements on foreign investors. However for certain industries, there are local content requirements to exempt final products from duties under the Southern African Customs Union (SACU).

Incentives:

Incentives are mainly aimed at stimulating manufacturing in Namibia and promoting exports. Incentives are designed to give Namibia-based entrepreneurs investing in manufacturing and exporting a competitive edge. These tax and no-tax incentives are accessible to both existing and new manufacturers. For more information on these incentives, visit: http://www.mti.gov.na/incentives_text/special_incentives_manu.htm

Import Permits:

The Ministry of Trade and Industry issues required import permits to importers. Products subject to non-automatic import licensing are: medicines, chemicals, frozen and chilled fish and meat, live animals, genetic materials, controlled petroleum products, firearms and explosives, diamonds, gold, and other minerals, and almost all second-hand goods including clothing and motor vehicles. In practice, the Ministry of Trade and Industry does not issue licenses for imported used clothing imports.

Most non-agricultural imports only require a permit issued by MTI. However, depending on the agricultural product, additional documentation may be necessary. The Namibian Agronomic Board issues permits for the import, export, and transit of controlled agronomic crops such as wheat and wheat products and corn and corn products. Agronomic crops and derivatives and plants and plant products also require a phytosanitary certificate issued by the Ministry of Agriculture, Water and Forestry. The Namibian Meat Board regulates the import and export of live animals (cattle, sheep, goats and pigs) and derivative meat products. Importers of these products must demonstrate compliance with the country’s animal health standards by obtaining a veterinary import permit from the Directorate of Veterinary Services.

Namibia is a party to the WTO Agreement on Import Licensing.
Export Processing Zones:

Companies with Export Processing Zone (EPZ) status can set up operations anywhere in Namibia. There are no restrictions on the industrial sector provided that the exports are destined for markets outside the SACU region, earn foreign exchange, and employ Namibians. EPZ benefits include no corporate tax, no import duties on the importation of capital equipment or raw materials, and no VAT, sales tax, stamp or transfer duties on goods and services required for EPZ activities. Non-residents operating in an EPZ may hold foreign currency accounts in local banks. The Government also provides grants to EPZ companies for training programs to improve Namibian workers’ skills and productivity.

The Offshore Development Company (ODC) administers the country’s Export Processing Zone (EPZ) regime. However, ODC has been at the center of a corruption scandal involving the loss of 100 million Namibian dollars (approximately 15.7 million USD) in investments and faces possible liquidation. ODC maintains that it is financially stable and is negotiating repayment.

Further information on EPZs is available at: http://www.mti.gov.na/incentives_text/epz_odc.htm
EPZ incentives table: http://www.mti.gov.na/incentives_text/epz_incentives_table.htm

The Export Processing Zone Act is available at: http://www.mti.gov.na/incentives_text/epz_act.htm#export_processing_zone_act

For information on Namibia’s Walvis Bay port EPZ managed by the Walvis Bay EPZ Management Company, please click: http://www.mti.gov.na/allaboutus_text/walvis_bay_epz_management_compan.htm#walvis_bay_epz_management_company

For information on the Oshikango EPZ Industrial Park located on the Angolan border, please click:
http://www.mti.gov.na/allaboutus_text/oshikango_epz_industrial_park.htm#oshikango_epz_industrial_park

Namibia does not require visas for U.S. citizens traveling to Namibia for tourist purposes for stays up to 90 days. For business travel, many U.S. citizens are often similarly admitted for 90 days without a visa. However, several travelers have experienced difficulties at the border when stating their purpose of entry as work.

The Ministry of Home Affairs grants renewable and non-renewable temporary employment permits for a period of 12 months for skills not locally or readily available. However, anyone applying for a work permit or long-term residence permit will likely face difficulties and delays. Several companies and expatriates have complained about problems renewing work permits and visas. Several noted that even though they submitted their documents for renewal prior to expiration, they only received their renewed documents two months after the documents expired. They were thus prevented from traveling outside Namibia during the time that their documents were being processed by the Ministry of Home Affairs.

For the most up-to-date information regarding visa requirements, please contact the Namibian Embassy in the United States, Ministry of Home Affairs, or the Namibian Investment Center at the following addresses:

Embassy of the Republic of Namibia
1605 New Hampshire Ave., NW
Washington DC 20009
Telephone: (202) 986-0540
Fax: (202) 986-0443)

Ministry of Home Affairs & Immigration
Cohen Building
Kasino Street
Private Bag 13200
Windhoek, Namibia
Tel. +264-61-292 2111
Fax +262-61-292 2185

Namibia Investment Centre
Ministry of Trade and Industry
Brendan Simbwaye Square, Goethe Street
Private Bag 13340
Windhoek, Namibia
Tel: +264-61-283-7335
Fax: +264-61-220278
E-mail: nic@mti.gov.na

RIGHT TO PRIVATE OWNERSHIP AND ESTABLISHMENT

The Namibian Constitution guarantees all persons the right to acquire, own and dispose of all forms of property throughout Namibia, but also allows Parliament to make laws concerning expropriation of property (see above) and to regulate the right of foreign nationals to own or buy property in Namibia. There are no restrictions on the establishment of private businesses, size of investment, sources of funds, marketing products, source of technology, or training in Namibia. However, under commercial agricultural land reform legislation, foreign purchase of agricultural farmland is prohibited.

PROTECTION OF PROPERTY RIGHTS

The Namibian legal system protects and facilitates acquisition and disposition of property such as land, buildings, and mortgages. All deeds of sales are registered with the Deeds Office. Property is usually purchased through real estate agents and most banks provide credit through mortgages. The Namibian Constitution prohibits expropriation without just compensation.

Two ministries share responsibility for IPR protection. The Ministry of Information and Broadcasting manages copyrights and the Ministry of Trade and Industry’s Directorate for International Trade oversees industrial property and is responsible for registrations of companies, private corporations, patents, trademarks and designs. Namibia ratified the Paris Convention, Patent Cooperation Treaty, Madrid Protocol and Agreement and The Hague Protocol and Agreement. Namibia is a member of regional bodies, such as the African Industrial Property Organization (ARIPO) and its Banjul Protocol governing trademarks and the Harare Protocol on patents.

Online information pamphlets are available by clicking on these links: Industrial Designs, Patents and Trademarks. Note: The booklet is designed for printing double-sided pages.

Namibia is a member of the World Intellectual Property Organization. Namibia is currently drafting copyright legislation containing measures to implement the WIPO Internet Treaties. Absent new legislation, Namibia lacks adequate enforcement mechanisms to address problems associated with piracy and copyright violations. However, the Namibian Society of Composers and Authors of Music (Nascam) organization is actively working with law enforcement officials and has confiscated over 50,000 pirated CDs and DVDs.

TRANSPARENCY OF REGULATORY SYSTEM

Although Namibia has a bicameral legislature, most power rests in the National Assembly. While committees in both houses can consider and make recommendations on legislative proposals, in practice, the National Assembly standing committees make recommendations on proposed bills to the National Assembly. The committees are required to solicit citizen and civil society participation when reviewing bills and government agency performance. Sectoral and non-government organizations often work with the Ministry of Justice and other government agencies to sponsor legislation or provide technical expertise for draft legislation. Namibia also has a fledgling lobby movement.

In many sectors, a relatively effective and transparent regulatory system exists. In 2000, the government established the Electricity Control Board (ECB) www.ecb.org.na, which is responsible for regulating the Energy sector. The Namibian parastatal responsible for providing electricity, NamPower, currently enjoys a monopoly. However, the ECB’s vision is for a competitive electricity market through professional and transparent regulation. As regulator, the ECB is responsible for recommending to the Minister of Mines and Energy which companies or entities should be granted licenses. Click here for Fitch’s credit rating for NamPower: http://www.fitchratings.com/corporate/ratings/issuer_content.cfm?issr_id=82576967

The Namibian Communication Commission (NCC) www.ncc.org.na is responsible for a limited amount of regulatory functions, which include regulating frequency allocation and establishing license fees. NCC does not regulate the national fixed line operator, Telecom Namibia, creating a de facto regulatory vacuum for the industry. Namibia has a small degree of parastatal market liberalization. Data and paging services are open to competition and fixed and mobile satellites and mobile services enjoy partial competition. The Government is expected to award a second mobile operator’s license in hopes of improved service and fostering better communication in rural and remote areas.

The Namibia Financial Institutions Supervisory Authority (NAMFISA) www.namfisa.com.na regulates non-banking financial institutions.The authority aims to reduce financial crime through developing and implementing effective regulatory systems.

EFFICIENT CAPITAL MARKETS AND PORTFOLIO INVESTMENT

There is a free flow of financial resources within Namibia and throughout the CMA. Capital flows with the rest of the world are relatively free, subject to South African exchange controls (discussed above in Conversion and Transfer Policies). The Namibia Financial Institutions Supervisory Authority (NAMFISA) registers portfolio managers and supervises the actions of the Namibian Stock Exchange (NSX) and other non-banking financial institutions.

Although the NSX is the second largest stock exchange in Africa, this distinction is largely because of South African firms’ double listings. For additional information on the Namibian Stock Exchange, please visit: http://www.nsx.com.na/ The government has also introduced investment incentives to attract mutual funds and foreign portfolio investors that have energized emerging stock markets elsewhere in the developing world. Namibia has a world-class banking system that offers all the services needed by a large company.

There are no laws or practices by private firms in Namibia enabling incorporations to prohibit foreign investment, participation or control; nor are there any laws or practices by private firms or government precluding foreign investment in industry standards-setting consortia.

POLITICAL VIOLENCE

Namibia is a stable multi-party and multi-racial democracy. The protection of human rights is enshrined in the Namibian constitution, and the government generally respected those rights. Political violence is rare and politically motivated damage to projects and/or installations is highly unlikely.

State Department’s 2004 Human Rights Report for Namibia: http://www.state.gov/g/drl/rls/hrrpt/2004/41618.htm

CORRUPTION

Transparency International ranked Namibia 49 out of 159 countries in their 2005 corruption perceptions index, which measures business and country analysts’ perceptions of the degree of corruption in a country. A score of 10 reflects a "highly clean" and 0 reflects a "highly corrupt" nation. Namibia scored 4.3 just behind South Africa’s score of 4.5. Only two sub-Saharan African countries (Botswana and South Africa) ranked higher.

The Namibian Government adopted a policy of "zero tolerance" for corruption. The Namibian Government passed the Anti-Corruption Act in May 2003, appointed the director and deputy director of the resulting Anti-Corruption Commission in October 2005, and is in the process of establishing this unit, which will complement civil society’s anti-corruption programs and support existing institutions such as the Ombudsman's Office and Attorney General. Anti-corruption legislation is in place to combat public corruption.

In 2004, the government took action against corrupt officials. In September former deputy minister Paulus Kapia resigned due to allegations of corruption; and the ruling party, SWAPO, subsequently forced him to relinquish his parliamentary seat. In December the government dismissed and brought charges of misappropriation against the director of the state-run National Broadcasting Corporation. Also in December, several members of the Walvis Bay Town Council were suspended for alleged corruption.

Namibia has signed and ratified the UN Convention Against Corruption and the African Union’s African Convention on Preventing and Combating Corruption. Namibia signed the Southern African Development Community’s Protocol Against Corruption.

BILATERAL INVESTMENT AGREEMENTS

Namibia has ratified reciprocal investment promotion and protection treaties with Switzerland, Malaysia, France, Germany, and The Netherlands. Negotiations of similar treaties are in the advanced stages with Belgium/Luxemburg, Italy, Romania, and Austria. There is no bilateral investment agreement between the United States and Namibia.

As a member of the Southern African Customs Union, Namibia will be a beneficiary of SACU free trade agreement with the European Free Trade Association (Iceland, Lichtenstein, Norway, and Switzerland) currently awaiting signatures and is part of negotiations for trade agreements with the U.S. and Mercosur (Argentina, Brazil, Paraguay, and Uruguay). SACU plans to extend its free trade network to the EU, China, Egypt, India, Kenya, and Nigeria. Namibia also has an FTA with Zimbabwe that was finalized in 1993.

For additional information, please contact:

Directorate of International Trade

The Namibian Constitution allows for the formation of independent trade unions to protect workers’ rights and to promote sound labor relations and fair employment practices. Namibia has ratified six of the International Labor Organization’s fundamental conventions. Businesses operating within the EPZ are required to adhere to the Labor Act. In terms of EPZ legislation, however, strikes and lockouts are prohibited within the zone.

While there is a large pool of qualified workers in varying professions in Namibia, there is a shortage of highly skilled labor. Employers often cite labor productivity issues as their biggest challenge. The Government offers manufacturing companies special tax deductions of up to 25 percent if they provide technical training to employees. The Government will also reimburse companies for costs directly related to employee training under approved conditions.

In late 2004, Namibia passed a new Labor Act to replace legislation dating back to 1992. The new law, once implemented, will be stricter with respect to discrimination in the workplace and will establish new protections for pregnant workers as well as employees infected with HIV/AIDS. Link: http: www.parliament.gov.na/parlidocs/ACT570.pdf

FOREIGN TRADE ZONES/FREE PORTS

Foreign firms enjoy the same investment opportunities as local companies. There are no free ports in Namibia, although NamPort, the national port authority, is considering establishing a free port distribution center at Walvis Bay.

OPIC AND OTHER INVESTMENT INSURANCE PROGRAMS

The Overseas Private Investment Corporation (opic) provides political risk insurance to qualified u.s. investors in Namibia. Namibia is also a member of the World Bank’s Multilateral Investment Guarantee Agency (miga), which performs a similar function. MIGA has so far not issued any guarantees for investment, but Namibia has been an active beneficiary of MIGA's technical assistance services. The Embassy buys its local currency from the local commercial banks at their daily rate. The Namibian dollar is pegged 1-to-1 to the South African Rand.

FDI STATISTICS

Foreign Direct Investment Statistics are available from the Bank of Namibia. However, the published statistics do not reveal country specific figures.

http://www.bon.com.na/stats/bop.aspx?type=2

WEB RESOURCES

www.grnnet.gov.na
www.namibian.com.na
www.newera.com.na
www.bon.com.na
www.nsx.com.na