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Cablegate: Namibia: 2010 Investment Climate Statement

Published: Fri 15 Jan 2010 07:03 AM
VZCZCXRO8642
RR RUEHBZ RUEHDU RUEHJO RUEHMR RUEHRN
DE RUEHWD #0042/01 0150705
ZNR UUUUU ZZH
R 150703Z JAN 10
FM AMEMBASSY WINDHOEK
TO RUEHC/SECSTATE WASHDC 0077
INFO SOUTHERN AF DEVELOPMENT COMMUNITY COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHINGTON DC
RUEATRS/DEPT OF TREASURY WASHINGTON DC
UNCLAS SECTION 01 OF 14 WINDHOEK 000042
SIPDIS
FOR STATE EB/IFD/OIA D. AHN, AND T. WALSH
FOR STATE AF/S P. GWYN
FOR USTR W. JACKSON
FOR DOC/ITA J. DIEMOND
E.O. 12958: N/A
TAGS: EINV EFIN ETRD ELAB KTDB PGOV USTR OPIC WA
SUBJECT: Namibia: 2010 Investment Climate Statement
REF: 09 STATE 124006; 09 WINDHOEK 20
==============================
Openness to Foreign Investment
==============================
1. (U) The Government of the Republic of Namibia (GRN) is
committed to stimulating economic growth and employment through
attracting foreign investment. The Foreign Investment Act of 1990
is the primary legislation that governs foreign direct investment
in Namibia. The Ministry of Trade and Investment is the
governmental authority which is primarily responsible for carrying
out the provisions of the Foreign Investment Act. Under the act
the Ministry established the Namibia Investment Center (NIC). The
NIC serves as Namibia's official investment promotion and
facilitation office. It is often the first point of contact for
potential investors. The NIC is designed to offer comprehensive
services that range 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 also tasked with assisting investors
minimize bureaucratic "red tape" by coordinating work with
government ministries as well as regulatory bodies.
2. (U) The Foreign Investment Act guarantees equal treatment for
foreign investors and Namibian firms, i.e., 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.
3. (U) The Registrar of Companies in the Ministry of Trade and
Industry is responsible for managing, regulating, and facilitating
the formation of businesses. The Registrar's office encourages
investors to seek professional advice from legal practitioners,
auditors, accounting officers, or secretarial firms when
registering their businesses.
4. (U) The government, through the Competition Act, has designed a
legal and regulatory framework that attempts to safeguard
competition while boosting the prospects for Namibian businesses as
well as recognizing the role of foreign investment. The act is
intended 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.
5. (U) Other laws include the Companies Act and the Close
Corporation Act. These laws provide the legal framework for the
establishment of business entities. Implementation of the
Competition Act and the amended Companies Act, however, is still
pending.
Foreign Ownership Restrictions
------------------------------
6. (U) While the Foreign Investment Act stipulates that foreign
investors should be treated the same as Namibian investors, the Act
acknowledges that the government has the right to impose
restrictions. Most restrictions have to do with land and natural
resource rights and government contracts (tenders). For example,
the government requires local participation before issuing licenses
to exploit natural resources.
Black Economic Empowerment and Affirmative Action
--------------------------------------------- ----
7. (U) The government actively encourages partnerships with
historically disadvantaged Namibians. 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.
8. (U) In certain industries the government has employed different
techniques to increase Namibian participation.. In the fishing
sector, companies pay lower quota fees if they operate
Namibian-flagged vessels that are based in Namibia, with crews that
are predominantly Namibian. The Minister of Mining and Energy has
made clear that prospective mining companies must "indicate and
show commitment to empower previously disadvantaged Namibians" in
their applications for exploration and mining licenses.
Government Tenders
------------------
9. (U) Most government transactions, including the procurement of
goods and services, are coordinated through the Tender Board of
Namibia (http://www.mof.gov.na/tender.htm). The board comprises
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 socio-economic 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. The board generally requires that companies are registered
with the Ministry of Trade and Industry and that it is in good
standing with the Department of Inland Revenue (the tax authority)
and the Social Security Commission.
Parastatals
-----------
10. (U) While Namibian companies are generally open to foreign
investment, government owned enterprises (parastatals) have to date
generally been closed to all investors (Namibian and foreign). The
following are the most prominent commercial parastatals:
* Air Namibia (Air carrier)
* Namibia Airports Company (Airport management company)
* Namibia Wildlife Resorts (Tourism)
* Namport (Maritime Port Authority)
* Nampost (Postal and courier services)
* Namwater (Water sanitation and provisioning)
* Roads Contractor Company
* Telecom Namibia (Fixed-line telecommunications)
* TransNamib (Rail company)
* NamPower (Energy generation and transmission)
11. (U) The government owns a host of other enterprises, from media
ventures to a fishing company. In December 2009, the Minister of
Mines and Energy inaugurated Epangelo Mining, a wholly
government-owned mining company. Parastatals own assets worth
approximately 40% of GDP and most receive subsidies from
government.
12. (U) Foreign investors have participated in joint ventures with
government in certain sectors (i.e., mobile telecommunications and
mining). The Government sold a 34% share in 2006 in its
state-owned mobile phone company, MTC, to Portugal Telecom.
However, a U.S. business criticized the process for a lack of
transparency and unfair bidding practices designed to favor one
party. NamDeb, a 50-50 partnership between the government and
DeBeers has mined Namibia's land-based diamonds since 1994.
13. (U) There has been some debate on whether to list parastatal
companies on the Namibian Stock Exchange (NSX), but there are no
plans to do so in the near future. Parastatals provide most of the
essential services such as telecommunications, transport, water,
and electricity.
Independent Ratings on Namibia's Investment Climate
--------------------------------------------- ------
14. (U) Independent ratings confirm that Namibia enjoys a
relatively positive investment climate. The World Bank ranked
Namibia 66 among 183 countries in its 2010 Doing Business report.
Namibia received its lowest rankings for registering property,
trading across borders, and starting a business. The World Bank
reported that Namibia requires on average 10 procedures and 66 days
to start a business. Registering property takes on average 9
procedures and 23 days, and the process costs nearly 10% of the
property's value. It takes 11 documents and approximately 29 days
to export a product and 24 days to import an item (trade across
borders), according to the World Bank.
http://www.doingbusiness.org/ExploreEconomies /?economyid=135
15. (U) In December 2009, the Fitch Ratings service issued its most
recent credit analysis and assigned Namibia a long term foreign
currency rating of BBB-. This was consistent with Fitch's 2005
rating of Namibia. For more information go to:
http://www.fitchratings.com (Logon required)
Foreign Investment in the Namibian Stock Exchange
--------------------------------------------- ----
16. (U) Foreigners must pay a 10% non-resident shareholders tax on
dividends; however there are no capital gains or marketable
securities tax. As a member of the Common Monetary Area, the
Namibia Dollar (denoted as N$) is pegged one-to-one with the South
African Rand.
Work Permits
------------
17. (U) The lengthy and administratively burdensome process of
obtaining work permits is among investors' greatest complaints in
Namibia. Although the government cites the 36 percent unemployment
rate as its motivation for a strict policy on work permits,
generally Namibia does not yet have the available skills capacity
to fill the jobs which foreigners seek.
Index/Ranking
-------------
2009 TI Corruption Index 56 of 180
2009 Heritage Economic Freedom 71 of 183
2010 World Bank Doing Business 66 of 183
2009 MCC Govnt Effectiveness 0.55 (90%)
2009 MCC Rule of Law 0.59 (73%)
2009 MCC Control of Corruption 0.64 (87%)
2009 MCC Fiscal Policy 1.3 (75%)
2009 MCC Trade Policy 88.4 (100%)
2009 MCC Regulatory Quality 0.18 (67%)
2009 MCC Business Start Up 0.928 (34%)
2009 MCC Land Rights Access 0.571 (13%)
2009 MCC Natural Resource Mgmt 78.16 (29%)
================================
Conversion and Transfer Policies
================================
18. (U) The Foreign Investment Act of 1990 offers investors meeting
certain eligibility criteria the opportunity to obtain a
Certificate of Status Investment (CSI). A "status investor" is
entitled 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 in the event of expropriation.
19. (U) To obtain a CSI, an investor must apply to the Ministry of
Trade and Industry. The investor's application must demonstrate
the extent to which the proposed investment will:
* contribute toward Namibia's development objectives;
* utilize Namibian labor and natural resources to contribute to
the economy;
* assist in the advancement of socially, economically or
educationally disadvantaged of Namibians;
* make provisions for equal opportunities for women; and,
* likely impact the environment, and the proposed measures to
mitigate adverse environmental consequences.
20. (U) There is no limit on investment transfers by corporations
to other countries. The Bank of Namibia processes applications.
Non-residents may access local credit up to 200 percent of their
total shareholders' investment to finance foreign direct
investments in Namibia. The banking system is modern and closely
tied to the South African system. Three of the four local
commercial banks are subsidiaries of South African banks. All local
commercial banks handle international transactions and trade
financing. Banking fees and charges are among the highest in the
world.
==============================
Expropriation and Compensation
==============================
21. (U) Government expropriations are rare. According to the
Foreign Investment Act, foreign investors who have received a
Certificate of Status Investment (CSI) are entitled to "just
compensation without undue delay and in freely convertible
currency" if the government expropriates the investor's property.
Furthermore, the courts are generally independent and uphold
contracts.
22. (U) 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.
23. (U) Under its land reform program the government has carried
out the expropriation of "unproductive" agricultural land from both
domestic and overseas (primarily German) landowners. The High
Court of Namibia on March 6, 2008 made its first ruling on the
legality of expropriation under the land reform program. The Court
ruled the program was constitutional but found that the Ministry of
Lands and Resettlement's administration of the expropriation
process had violated Namibian law on several grounds.
Dispute Settlement
24. (U) The Foreign Investment Act allows for the settlement of
disputes by international arbitration for investors that have
obtained a Certificate of Status Investment (CSI). The CSI must
also include a provision for international arbitration. The Act
stipulates that arbitration "shall be in accordance with the
Arbitration Rules of the United Nations Commission on International
Trade Law in force at the time when the Certificate was issued"
unless the CSI stipulated another form of dispute resolution.
25. (U) 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 1973 governs company and corporate liquidations
while the Insolvency Act 61 of 1936 governs insolvent individuals
and their estates. The Insolvency Act details sequestration
procedures and the rights of creditors.
26. (U) A new Insolvency Amendment Bill was passed in 2005 but has
not yet been signed into law. Implementation of the new Company's
Act of 2007 is pending finalization of regulations.
27. (U) The Namibian court system is independent, and does not
suffer from government interference. Per the Criminal Procedure
Act of 2004, foreign court judgments may be accepted under an
extradition treaty.
28. (U) 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
=======================================
29. (U) Namibia does not impose performance requirements on foreign
investors. For certain industries, however, there are local
content requirements to exempt final products from duties under the
Southern African Customs Union (SACU).
Incentives
----------
30. (U) Incentives are mainly aimed at stimulating manufacturing in
Namibia and promoting exports. To take advantage of the incentives,
companies must be registered with the Ministry of Trade and
Industry (MTI) and the Ministry of Finance. Tax and non-tax
incentives are accessible to both existing and new manufacturers.
The MTI has developed a brochure titled Special Incentives for
Manufacturers and Exporters which is available from the Namibia
Investment Centre (NIC). Namibia has also established an Export
Processing Zone (EPZ) regime that offers favorable conditions for
companies wishing to manufacture and export products for regional and
international markets (see section Foreign-Trade Zones/Free Ports).
Import Permits
--------------
31. (U) The Ministry of Trade and Industry requires import permits
for products entering the country. 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 used clothing imports.
32. (U) 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, wheat products, 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 (MAWF). Retailers of
fruits, vegetables, and other crop products must purchase 27.5
percent of their stock from local farmers. 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. The import of wood and lumber
products requires permits from the MAWF.
33. (U) Namibia is a party to the WTO Agreement on Import
Licensing.
============================================
Right to Private Ownership and Establishment
============================================
34. (U) 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.
Real Estate
-----------
35. (U) Foreign investors can purchase and own land in Namibia.
There is an exception related to agricultural land. Due to
Namibia's ongoing land reform and resettlement process, legislation
restricts non-resident foreigners from purchasing agricultural
farmland. Existing agricultural land owned by non-resident
foreigners (so-called absentee owners) has been considered a
primary target for government expropriation under the land reform
process.
=============================
Protection of Property Rights
=============================
36. (U) 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.
37. (U) Namibia is a party to the WIPO Convention, the Berne
Convention for the Protection of Literary and Artistic Works, and
the Paris Convention for the Protection of Industrial Property.
Namibia is also a party to the Protocol Relating to the Madrid
Agreement Concerning the International Registration of Marks and
the Patent Cooperation Treaty. Namibia is a signatory to the WIPO
Copyright Treaty and the WIPO Performances and Phonograms Treaty.
38. (U) The responsibility for IPR protection is divided among
three government ministries. The Ministry of Trade and Industry
oversees industrial property and is responsible for the
registration of companies, private corporations, patents,
trademarks, and designs. The Ministry of Information and
Communication Technology manages copyright protection, while the
Ministry of Environment and Tourism protects indigenous plant
varieties and any associated traditional knowledge of these plants.
In January 2009 the Ministry of Trade and Industry circulated a
draft industrial property bill, which proposes to establish an
Industrial Property Office to handle the administration of patents,
marks and designs. The law has not yet been passed.
39. (U) The Ministry of Information and Communication Technology
has drafted amendments to the Copyright and Neighboring Rights
Protection Act of 1994 with the aim of bringing it in line with the
TRIPS Agreement and the WIPO treaties. The amendments also aim to
improve standards of IPR protection and include new aspects such as
satellite, traditional knowledge and folklore issues. They have
not yet been passed and enacted, however. Two copyright
organizations, the Namibian Society of Composers and Authors of
Music (NASCAM) and the Namibian Reproduction Rights Organization
(NAMRRO), are the key driving forces behind the government's
anti-piracy campaigns. NASCAM administers intellectual property
rights for authors, composers and publishers of music. NAMRRO
protects all other intellectual property rights including literary,
artistic, broadcasting, satellite, traditional knowledge and
folklore.
=================================
Transparency of Regulatory System
=================================
40. (U) Namibia has a bicameral legislature comprising the National
Assembly and National Council. 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. Sector-based 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.
41. (U) 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 core function is
to regulate electricity generation, transmission, distribution,
supply, import and export within the country. The ECB's vision is
for Namibia to have a competitive and transparent electricity
market. As regulator, the ECB is responsible for recommending to
the Minister of Mines and Energy which companies or entities should
receive licenses.
Click here for Fitch's credit rating for NamPower:
http://www.fitchratings.com/corporate/ratings /issuer_content.cfm?is
sr_id=82576967
42. (U) Parliament passed a new Communications Act which the
President signed into law in October 2009. The new act replaces
the Namibian Communications Commission Act (Act 4 of 1992) and
amends certain relevant sections under the Posts and
Telecommunications Act, 1992 (Act 19 of 1992). Advocates of the new
act argued it was needed to level the playing field for all
telecommunication operators and improve competition. Under the act,
the Communications Regulatory Authority of Namibia (CRAN) replaces
the Namibian Communication Commission (NCC), which only had limited
regulatory authority. Although the CRAN has greater powers than
its predecessor, civil society groups argue that the new act does
not provide the CRAN enough regulatory independence. Such groups
note that the Minister of Information and Communication Technology
alone may appoint the CRAN Chairperson and Vice-Chairperson, and
that the Minister must concur on the prescribing of any new
broadcast licenses. The state-owned Namibian Broadcasting
Corporation (NBC) - which transmits TV and radio services - is
exempted from licensing procedures enumerated in the act. The act
also contains intelligence gathering (intercept) provisions which
civil society groups have argued violate civil liberties and the
Namibian constitution. To comply with the intercept provisions,
telecommunications companies could be saddled with many technical
burdens and significantly higher costs, critics argue.
43. (U) The Bank of Namibia (BoN) regulates the banking sector.
The Namibia Financial Institutions Supervisory Authority (NAMFISA)
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
============================================= =====
44. (U) There is a free flow of financial resources within Namibia
and throughout Common Monetary Area (CMA) countries of the South
African Customs Union (SACU) which include Namibia, Swaziland,
South Africa and Lesotho. 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.
45. (U) Although the NSX is the second largest stock exchange in
Africa, this distinction is largely because many South African
firms listed on the Johannesburg exchange are also listed (dual
listed) on the NSX. 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. By law,
Namibia's government pension fund and other Namibian funds are
required to allocate a certain percentage of their holdings to
Namibian investments. Namibia has a world-class banking system
that offers all the services needed by a large company.
46. (U) 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 participation in
industry standards setting consortia.
==================
Political Violence
==================
47. (U) 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, but there were some political
confrontations and violent incidents in 2008 and 2009 between
supporters of the Rally for Democracy and Progress (RDP) and SWAPO
party members. Nevertheless, damage to commercial projects and/or
installations as a result of political violence is considered
unlikely.
48. (U) State Department's 2008 Human Rights Report for Namibia:
http://www.state.gov/g/drl/rls/hrrpt/2008/af/ 119016.htm
==========
Corruption
==========
49. (U) Transparency International ranked Namibia 56 out of 180
countries in its 2009 corruption perceptions index, which measures
the perceptions of businesses and country analysts about the degree
of corruption in a country. A score of 10 reflects a "highly
clean" and 0 reflects a "highly corrupt" nation. Namibia scored
4.5 just behind South Africa's score of of 4.7. Only four
sub-Saharan African countries (Botswana, South Africa, Mauritius
and Seychelles) ranked higher. See:
http://www.transparency.org/policy_research/s urveys_indices/cpi/200
9/cpi_2009_table
50. (U) The Namibian Government has 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 launched the opening of the office in 2006. The
Commission attempts to 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. Some critics charge that the
ACC narrowly interprets its mandate and focuses on minor cases. In
2009, the ACC filed charges against a number of high-profile
government officials.
51. (U) 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
==============================
52. (U) Namibia has ratified reciprocal investment promotion and
protection treaties with Switzerland, Malaysia, France, Germany,
the Netherlands, Cuba, Finland, Spain, Austria, Angola, Vietnam,
Italy and China. There is no bilateral investment agreement and no
bilateral tax treaty between the United States and Namibia. In
2008, SACU (of which Namibia is a member) signed a Trade,
Investment and Development Cooperation Agreement (TIDCA) with the
United States.
53. (U) As a member of the Southern African Customs Union (SACU),
Namibia will be a beneficiary of SACU's 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
Private Bag 13340
Windhoek, Namibia
Tel: +264-61-283-7331
Fax: +264-61-253865
E-mail: dit@mti.gov.na
============================================
OPIC and Other Investment Insurance Programs
============================================
54. (U) The Overseas Private Investment Corporation (OPIC) provides
political risk insurance to qualified U.S. investors in Namibia.
In June 2005, OPIC approved a $25.2 million credit facility to
enhance the operations of NamGem Diamond Manufacturing Company Ltd.
(NamGem). The U.S. sponsor of the project was Lazare Kaplan
International Inc. (LKI). OPIC also has invested in Helios
Sub-Saharan Africa Fund which in turn invested in Africatel
Holdings("Africatel"). Africatel, a subsidiary of PortugalTelecom
Group, owns 34% of Namibia's largest cell provider MTC, while the
government owns the remaining 66%.
55. (U) 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.
=====
Labor
=====
56. (U) 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.
57. (U) While there is a pool of qualified workers in varying
professions in Namibia, there is a shortage of highly skilled
labor. Employers often cite labor productivity 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.
58. (U) In 2007, Namibia passed a new Labor Act. The new law, which
entered into force in November 2008, prohibits discrimination in
the workplace and establishes new protections for pregnant workers
as well as employees infected with HIV/AIDS. The act provides for
arbitration and conciliation as a means to resolve labor disputes
more quickly. The act contained a provision that prohibited the
hiring of temporary or contract workers, but the provision was
ruled unconstitutional by the Supreme Court. Amendments to the
Labor Act to regulate the hiring of contract workers are being
drafted.
==============================
Foreign-Trade Zones/Free Ports
==============================
59. (U) 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.
Export processing Zones (EPZ)
-----------------------------
60. (U) 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.
61. (U) 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 10 million USD) in
investments. ODC maintains that it is financially stable and is
negotiating repayment.
Further information on ODC and EPZs is available at:
http://www.mti.gov.na/subpage.php?linkNo=16
http://www.embnamibia.at/NAMIBIA/tradeInvestm ent/export_processing_
zone_investorguide.pdf
For more information on investment incentives:
http://www.mti.gov.na/subpage.php?linkNo=22
For information on Namibia's Walvis Bay port EPZ managed by the
Walvis Bay EPZ Management Company, please click:
http://www.wbepzmc.iway.na
====================================
Foreign Direct Investment Statistics
====================================
62. (U) United Nations Conference on Trade and Development (UNCTAD)
estimates that in 2008, FDI stocks were equivalent to 39 percent of
GDP, and FDI inflows represented 36 percent of gross fixed capital
formation. For country specific figures up to 2008, please see the
UNCTAD website and select Namibia:
http://www.unctad.org/Templates/Page.asp?intI temID=3198〈=1
=============
Web Resources
=============
Government of the Republic of Namibia: www.grnnet.gov.na
Namibian Parliament: www.parliament.gov.na
Ministry of Trade and Industry: www.mti.gov.na
Bank of Namibia: www.bon.com.na
Namibia Financial Institutions Supervisory Authority (Namfisa):
www.namfisa.com.na
Namibia Stock Exchange: www.nsx.com.na
Namibia Labor Resource and Research Institute (LARRI):
www.larri.com.na
Namibia Communication Commission (NCC): www.ncc.org.na
Fitch's Ratings: www.fitchratings.com
World Economic Forum: www.weforum.org
MATHIEU
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