2005 INVESTMENT CLIMATE STATEMENT – NAMIBIA
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.
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
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
or visit the Ministry of Trade and Industry website: http://www.mti.gov.na/
Namibia’s Foreign Investment Act of 1990 guarantees equal treatment of foreign and local investors. The Act further provides for:
Namibia’s Competition Act promotes and safeguards competition in Namibia to:
Other laws include the Companies Act and the Close Corporation Act. These laws provide the legal framework for the establishment of business entities. Download the Companies Act: 2004 Companies Act
For more information on incorporation procedures and registration requirements, visit: http://www.mti.gov.na/allaboutus_text/company_law.htm
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:
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.
Foreign Investment in Stock Exchange:
There is no capital gains or marketable securities tax or stamp duty on deals. The only special tax for foreigners is the Non-Resident Shareholders Tax consisting of 10% of dividends. There are no general restrictions on foreign investment and none that currently affect Namibian Stock Exchange investors. Foreign exchange regulations are related to those in South Africa through the Common Monetary Area treaties, and the Namibia Dollar is linked 1-to-1 with the Rand. Investors must apply through an "authorized dealer" (most commercial banks) for free remittance of dividends and sales. Namibian Stock Exchange: http://www.nsx.com.na/
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.
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:
CONVERSION AND TRANSFER POLICIES
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 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
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
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.
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
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:
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
Ministry of Home Affairs & Immigration
Namibia Investment Centre
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.
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.
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.
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.
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.
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
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.
Although corruption continues to surface, particularly in the parastatals, the judiciary is investigating several widely publicized cases. There has been a welcomed amount of transparency and media attention surrounding these cases. The Namibian Government also passed the State Owned Enterprises Bill requiring parastatals to devise a business strategy.
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 TradePrivate Bag 13340 Windhoek, Namibia Tel: +264-61-283-7331 Fax: +264-61-253865 E-mail: email@example.com
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