The Namibian government prioritizes attracting more domestic and foreign investment to stimulate economic growth, combat unemployment, and diversify the economy. The Ministry of Industrialization and Trade (MIT) is the governmental authority primarily responsible for carrying out the provisions of the Foreign Investment Act of 1993 (FIA). The MIT is working on new business legislation, the Namibia Investment Promotion and Facilitation Act, but the legislation is still in draft form. As a result, the FIA remains the guiding legislation on investment.
The FIA calls for equal treatment of foreign investors and Namibian firms, including the possibility of fair compensation in the event of expropriation, international arbitration of disputes, the right to remit profits, and access to foreign exchange. The government emphasizes the need for investors to partner with Namibian-owned companies and/or have a majority of local employees to operate in country.
The mining, fishing, and tourism sectors have historically attracted significant investment in Namibia. There are large Chinese foreign investments, particularly in the uranium mining sector. South Africa has considerable investments in the diamond mining and banking sectors, while Canada has investment in gold, zinc, and lithium mining. Spain and Russia have investments in the fishing industry. Foreign investors from the United Kingdom, the Netherlands, the United States, and other countries have investment in oil exploration off the Namibian coast. Logistics, manufacturing, and mining for diamonds and critical minerals such as gold lithium, and uranium also attract investment.
The investment climate in Namibia is generally positive. Despite global economic disruptions caused by the COVID-19 pandemic, Namibia has maintained political stability and continues to offer key advantages for inward Foreign Direct Investment (FDI), such as an independent judicial system, protection of property and contractual rights, good quality physical and telecommunications infrastructure, and easy access to South Africa and the region. Namibia is upgrading its transportation infrastructure to facilitate investment and position itself as a regional logistics hub. An expansion at Walvis Bay Port concluded in 2019, renovations at Hosea Kutako International Airport are ongoing, and there are plans to extend and rehabilitate the national rail line, notably to improve connection from Walvis Bay port to neighboring countries. Namibia has the best roads on the African continent, according to the World Economic Forum. Namibia also has access to the Southern African Customs Union (SACU, which is also headquartered in Namibia), the Southern African Development Community’s (SADC) Free Trade Area, and markets in Europe and Asia. With the second highest solar radiation in the world and vast land and wind resources, Namibia is also positioning itself to be a global leader in renewable energies and green hydrogen, with potential to improve local and regional access to energy and efforts to combat climate change.
Factors that may inhibit FDI into Namibia are the country’s relatively small domestic market, high transport costs, high energy prices, and limited skilled labor pool. Corruption is a problem but not endemic. A recent scandal in the fishing sector resulted in the arrests of ministers and business leaders, cost Namibia around a billion USD, and strained public trust.
As a post-apartheid country with one of the highest rates of inequality in the world, Namibia continues to look for ways to address historic economic imbalances. Proposed legislation, the New Equitable Economic Empowerment Bill (NEEEB), which has been in draft form for more than a decade, will look to create economic and business opportunities for disadvantaged groups, including in the areas of ownership, management, human resource development, and value addition. Parliament aims to pass the bill in 2022, but further delays are possible.
1. Openness To, and Restrictions Upon, Foreign Investment
3. Legal Regime
4. Industrial Policies
5. Protection of Property Rights
6. Financial Sector
7. State-Owned Enterprises
While Namibian companies are generally open to foreign investment, government-owned enterprises have generally been closed to all investors (Namibian and foreign), with the exception of joint ventures discussed below. More than 90 state-owned enterprises (SOEs, also known as parastatals) include a wide variety of commercial companies, financial institutions, regulatory bodies, educational institutions, boards, and agencies. Generally, employment at SOEs is highly sought-after because their remuneration packages are not bound by public service constraints. Parastatals provide most essential services, such as telecommunications, transport, water, and electricity. A list of SOEs can be found on the Ministry of Public Enterprises’ website: . The following are the most prominent SOEs:
- Namibia Airports Company (airport management company)
- Namibia Institute of Pathology (medical laboratories)
- Namibia Wildlife Resorts (tourism)
- Namport (maritime port authority)
- Nampost (postal and courier services)
- Namwater (water sanitation and provisioning)
- Roads Contractor Company
- Telecom Namibia (primarily fixed-line)
- TransNamib (rail company)
- NamPower (electricity generation and transmission)
- Namcor (national petroleum company)
- Epangelo (mining)
In 2021, the government liquidated the state-owned airline, Air Namibia, which had become a financial burden. When the Minister of Finance tabled the budget in March 2021, he announced that the Namibian government will reduce its stake in state-owned enterprises as a way of raising capital, unburdening the government from the budgetary drain of perpetual SOE-bailouts, and giving room for the private sector to play a more prominent role in the economy. The government is looking to reduce its stake or completely divest in certain SOEs.
The government owns numerous other enterprises, from media ventures to a fishing company. Parastatals own assets worth approximately 40 percent of GDP and most receive subsidies from the government. Most SOEs are perennially unprofitable and have only managed to stay solvent with government subsidies. In industries where private companies compete with SOEs (e.g., tourism and fishing), SOEs are sometimes perceived to receive favorable concessions from the government. Foreign investors have participated in joint ventures with the government in a number of sectors, including mobile telecommunications and mining.
In 2015, the Namibian President created a new Ministry of Public Enterprises intended to improve the management and performance of SOEs. Legislation to shift oversight of commercial SOEs from line ministries to the Ministry of Public Enterprises was passed by Parliament in 2019. However, the Ministry of Public Enterprises reached the end of its mandate in 2022 and will be absorbed into the Ministry of Finance.
8. Responsible Business Conduct
Most large firms, including SOEs, have well defined (and publicized) social responsibility programs that provide assistance in areas such as education, health, environmental management, sports, and small and mid-sized enterprise (SME) development. Many firms include Black Economic Empowerment (BEE) programs within their larger Corporate Social Responsibility (CSR) programs. Firms operating in the mining sector – Namibia’s most lucrative industry – generally have visible CSR programs that focus on education, community resource management, environmental sustainability, health, and BEE. Many Namibian firms have HIV/AIDS workplace programs to educate their employees about how to prevent contracting and spreading the virus/disease. Some firms also provide anti-retroviral treatment programs beyond what may be covered through government and private insurance systems.
Namibia’s mining sector is considered a leader in the region for its sound mining policy and responsible business conduct. Namibia ranked as the best jurisdiction in Africa on its mining policy in a 2019 Fraser Institute survey. The Namibian Chamber of Mines ( ) is an independent association of mining businesses that monitors and encourages responsible business practices and corporate social responsibility from its members and the mining industry at large. Namibia is also a member of the U.S. Department of State’s Energy Resource Governance Initiative (ERGI), which seeks to promote sound mining governance and resilient energy mineral supply chains. Namibia is not a member of the Extractive Industries Transparency Initiative (EITI).
The Anti-Corruption Act of 2003 created an Anti-Corruption Commission (ACC), which began operations in 2006. The ACC attempts to complement civil society’s anti-corruption programs and support existing institutions such as the Ombudsman’s Office and the Office of the Attorney
General. Anti-corruption legislation is in place to combat public corruption, but often is not well-implemented due to budgetary constraints. In a nationwide survey commissioned by the ACC and released in 2016, corruption was listed at the third-most important development challenge facing Namibia (6 percent, after unemployment at 37 percent and poverty at 30 percent). 78 percent of survey respondents rated corruption as “very high” in Namibia. The highest result comes from those in rural areas. Namibia’s 2021 rating by Transparency International’s Corruption Perceptions Index worsened to 58 out of 180 from a score of 57 in 2020. Afrobarometer has also reported a downward trend regarding perception of corruption in Namibia over the past decade.
In 2019, Namibia was embroiled in a fishing industry corruption scandal in which government ministers and business leaders were charged and imprisoned for allegedly co-opting the national fishing quota system for personal gain. The scandal allegedly cost Namibia billions of U.S. dollars and has tarnished the reputation of the ruling political party. The accused are in prison awaiting trial. The scandal has resulted in Namibia and its ACC taking a closer look at other industries susceptible to corruption, but many Namibians criticize the government for not doing enough to combat corruption
Namibia has signed and ratified the UN Convention against Corruption and the African Union’s African Convention on Preventing and Combating Corruption. Namibia has also signed the Southern African Development Community’s Protocol against Corruption.
10. Political and Security Environment
Namibia has been a stable multiparty and multiracial democracy since becoming independent in 1990. The protection of human rights is enshrined in the Namibian Constitution, and the government generally respects those rights. Political violence is rare and damage to commercial projects and/or installations as a result of political violence is unlikely. The State Department’s Country Report on Human Rights for Namibia provides additional information.
11. Labor Policies and Practices
Namibian law allows for the formation of independent trade unions to protect workers’ rights and to promote sound labor relations and fair employment practices. The law provides for the right to form and join independent unions, conduct legal strikes, and bargain collectively on specific issues; however, the law prohibits workers in certain sectors, such as the police, military, and correctional facilities, from joining unions. Except for workers in services designated as essential, such as public health and safety, workers may strike once mandatory conciliation procedures are exhausted and 48 hours’ notice is given to the employer and labor commissioner. Workers may take strike actions only in disputes involving specific worker interests, such as pay raises.
Namibia has ratified all of the International Labor Organization’s fundamental conventions. Businesses operating within export processing zones are required to adhere to the Labor Act. The 2007 Labor Act contained a provision that prohibited the hiring of temporary or contract workers (“labor hire”), but the provision was ruled unconstitutional by the Supreme Court. The Labor Amendment Act of 2012 introduced strict regulations with respect to the use of temporary workers, according to which temporary workers must generally receive equal compensation and benefits as non-temporary workers.
Child labor in Namibia occurs in certain sectors, such as domestic and agricultural work, and its occurrence and prevalence are difficult to verify. Although Namibia has ratified all key international conventions concerning child labor, there continue to be gaps in Namibia’s domestic legal framework.
There is a shortage of specialized skilled labor in Namibia. Employers often cite labor productivity and the shortage of skilled labor as the biggest obstacles to business growth. The most recent Global Competitiveness Report (2019) ranked Namibia 94th out of 141 economies. An inadequately educated workforce, access to financing, and low innovation capability are listed in the report as the most problematic factors for doing business.
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.
As of April 1, 2014, the Namibian government implemented a Vocational Education and Training (VET) levy to facilitate and encourage vocational education and training. The levy, which is payable to the Namibia Training Authority (NTA), is imposed on every employer with an annual payroll of at least NAD 1,000,000 (approximately USD 54,000), at the rate of one percent of the employer’s total annual payroll. The NTA will collect and administer the levy and will use the funds to provide financial and technical assistance to employers, vocational training providers, employees, students, and other bodies to promote vocational education and training. In addition, companies can get a rebate from NTA of up to 50 percent of training costs for their employees.
The role of the informal economy in Namibia cannot be underestimated, as it provides integral support to more formal business activities. According to the most recent Namibian Labour Force Survey (2018), the informal economy employs more than half of employed Namibians. Informal economic activity includes small-scale entrepreneurs, traders, and service providers such as cleaners, cooks, and laborers. Informal economic activity is the primary employment means of women in rural areas. Namibian economic analysts posit that informal sector activities contribute to around 70 percent of GDP in any given year.
13. Foreign Direct Investment and Foreign Portfolio Investment Statistics
* Source for Host Country Data: Namibia Statistics Agency and Bank of Namibia
A glaring omission from the International Monetary Foundation’s (IMF) report on inward direct investment to Namibia is China’s contribution, which the Bank of Namibia reports as 42.4% of the total in 2021 and 39.5% in 2020. China is included in the Bank of Namibia’s report but is omitted from the IMF reports. The Embassy assesses that China’s investment in Namibia is increasing not decreasing. Notorious tax haven British Virgin Islands is a notable top destination for inward direct investment sources into Namibia. There are some other discrepancies between the information reported in the IMF report and the Bank of Namibia’s report, such as the inclusion of Botswana in 2020.
|Direct Investment from/in Counterpart Economy Data (2020)|
|From Top Five Sources/To Top Five Destinations (US Dollars, Millions)|
|Inward Direct Investment||Outward Direct Investment|
Data Not Available
|British Virgin Islands||136||2.3%|
|“0” reflects amounts rounded to +/- USD 500,000.|