Investment focus

Policy and business environment

The thrust of government policy is economic growth and employment expansion within the framework of a national development programme. Under the Foreign Investment Act, foreign investors are encouraged on a par with domestic investors, except that under certain circumstances the government intervenes to protect local industry from being dominated by foreign concerns. As in South Africa, the need for black empowerment and affirmative action is seen to be a justifiable basis for political intervention. Commercialisation of the largely profitable state-owned enterprises has been preferred to privatisation. The establishment of enterprises in Export Processing Zones (EPZs) is intended to diversify export markets and increase the proportion of finished goods sold. The government has established an export promotion agency to concentrate on developing new markets for Namibian products.

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Currency regulations

Namibia has liberalised its foreign exchange regime. Overseas investors may repatriate profits and dividends. Private individuals who are resident in Namibia have access to foreign currency accounts and can invest up to N$350,000 in offshore accounts. However, companies with foreign equity ownership of over 75 per cent will be affected by exchange control regulations. The steady depreciation of the South African rand since the early 1990s has boosted local currency earnings during periods of flat demand as the most important commodities, diamonds and uranium, are priced in US dollars.

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Markets

Under the Lome Convention most Namibian goods have duty-free access to the EU. There is also access to the US under the generalised system of preferences (GSP). Namibia has become a major exporter of hake to Spain, which along with the UK (diamonds, beef and canned fish), Japan (rock lobster and crab), France (uranium) and Italy (base metals, dimension stone and karakul sheep pelts) are Namibia's major export markets. Scandinavian countries, Germany and China are also important markets. Namibia is a member of SADC and SACU. Local products have duty-free access to the South African market.

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Investment

Namibia has an impressive range of incentives designed to attract foreign and local investment in productive sectors of the economy with a view to promoting diversification of the economy through the expansion of export-oriented manufacturing concerns, downstream processing, tourism and financial services. The Investment Centre (IC) is an autonomous unit within the Ministry of Trade and Industry and is Namibia's official investment and promotion one-stop office, providing a service from the initial enquiry to the operational stage. In addition to general information on fiscal, legal, immigration and regulatory aspects of foreign and domestic investment, it offers tailor-made advice on sector-specific opportunities and assists investors in minimising bureaucratic obstacles through inter-ministerial and public-sector liaison, evaluation of relevant incentives and identification of local funding sources.

The Offshore Development Company (ODC) is a private sector company with a minority government shareholding set up to monitor, regulate and promote Namibia's EPZ status, and to ensure that an application is processed within a minimum of one week and a maximum of one month. The ODC works jointly with the IC to provide foreign investors access to immigration facilitation and other essential start-up services. At the request of approved EPZ promoters it also provides factory sites and erects individual factory shells throughout the country at economical rates.

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Legal protection

The constitution of Namibia guarantees property ownership and prohibits nationalisation. Investments are protected through bilateral investment arrangements with a number of countries. Namibia is a member of the Multilateral Investment Guarantee Agency (MIGA) of the World Bank, which protects against expropriation, breach of contract and war and civil disturbance, as well as the inconvertibility or transfer of currency. The Foreign Investment Act offers full protection for investors.

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Tax

Corporate income tax rates have been reduced since independence. Mining and petroleum have separate tax incentives including capital equipment write-offs. There are a wide range of measures to lower the tax burden for companies involved in manufacturing and exports. Manufacturing incentives allow 50 per cent corporate tax reductions for new and existing companies applicable for five years and at 17.5 per cent over a ten-year period; around 150 per cent tax is deductible for export promotion costs; and training costs and direct production wages are 125 per cent tax-deductible. Corporate tax in EPZs is zero-rated. VAT is expected to be introduced at the end of 1999.

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Free zones

A package of generous incentives apply to approved EPZ enterprises located anywhere in Namibia where at least 80 per cent of the products manufactured are sold outside SACU countries. Strikes are prohibited at EPZ enterprises.

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Labour

There is a skills shortage with a large proportion of the population unemployed, especially in the north, and many more with little education. The 60 per cent illiteracy rate and lack of skills are acute among the under-20s who make up 55 per cent of the population. Only 10 per cent speak English fluently although Afrikaans is spoken by most people. Highly qualified professionals are also in short supply.

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Utilities

Electricity generation is the primary source of energy alongside imports from South Africa, which have increased in recent years. Since Telecom Namibia (TN) upgraded the telecommunications service, Namibia has had one of the most modern systems in Africa. By 2000 the commercial parastatal will no long be the sole provider of telecommunications in the country. In 1995, Namibia established an earth satellite station and international switching centre, in Windhoek, connecting the country to the global telecommunications system.

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Regional affiliations

Namibia is a member of the Common Monetary Area, SACU and SADC.

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