Proposed Investment Act: Good intentions, grave risks

Revisit, urgently
Ogone Tlhage
  • 1 Day Ago
The proposed Namibia Investment Promotion and Facilitation Bill has sparked widespread concern that it may create a bureaucratic bottleneck and stifle the very economic growth the country urgently needs.

The warnings follow the release of the draft bill for public consultation.



The bill aims to promote investment by establishing a clearer regulatory framework, facilitating both domestic and foreign capital, and reserving certain sectors for specific investors. However, many stakeholders have responded with deep caution.



Reacting to the draft, economist Rowland Brown wrote on LinkedIn that the proposed legislation risks undermining investment – the opposite of its stated intention. “As has been the case for many years, there are grave concerns that the bill (if enacted in its current form, or even through the uncertainty it creates) will be deeply detrimental to investment. This is a material issue, as Namibia desperately needs investment to drive job creation, tax revenue recovery and more,” he said.



Act to affect all investors

Brown stressed that the law will apply to all investors, not only foreign nationals or entities as many assume – a critical point given that foreign direct investment has all but disappeared outside the capital-intensive mining sector over the past decade.



“Importantly, the law will apply to all investors, not just foreign investors as many inaccurately assume. Investment has been on the retreat over the past decade, with the exception of capital-intensive mining activity. This is very bad news for the unemployed Namibian populace,” he said.



He warned that the draft contains several highly problematic clauses that would create excessive administrative processes and pose major barriers to investment.



“In the current draft, there are a number of very pernicious and concerning clauses that will create vast administrative bureaucracy and be a significant barrier to investment. These are very command-and-control, and will cause investors to run a mile – local and foreign alike,” Brown added.



Local ownership under the spotlight



Auditing and tax specialist Stefan Hugo welcomed the intention behind the bill but called for a rethink of several provisions, especially local ownership requirements. The draft restricts foreign participation in small-scale retail and agricultural businesses valued below N$7.5 million – one of the most significant shifts in investment policy since independence.



“Immediate Namibian ownership may not always be practical; consider phased approaches with clear timelines, supported by local content, supplier development and other measures to ensure broad economic benefits,” Hugo said.



He recommended that the bill outline clear key performance areas, link incentives to verified audits, publish summary results for transparency, and require decisions to follow published criteria with written reasons and access to independent review or appeal.



“Namibia needs investment that works for everyone. A predictable, transparent and efficient system is key to making Namibia a top destination for investors and a leader in inclusive development,” Hugo said.



The bill contextualised



Under the current draft, the entire retail sector valued below N$7.5 million is reserved exclusively for Namibian citizens - a measure policymakers say protects local entrepreneurs from being pushed out by foreign-owned shops. It remains unclear whether existing foreign-owned outlets in this category will be allowed to continue operating or will be required to close.



Agricultural ventures below the same threshold are similarly reserved for citizens, except for produce grown in enclosed facilities or by hotels and restaurants for their own consumption.



The legislation introduces a far more centralised system for regulating investments, especially in strategic sectors. These sectors will require explicit approval from the trade minister before any investor - local or foreign - can operate. Although the list of strategic sectors has not yet been published, central banking remains strictly reserved for the State.



Proposed Namibia Investment Promotion Agency



The new Namibia Investment Promotion Agency (NIPA) will process applications, consult the Namibia Competition Commission where necessary, and issue non-binding recommendations to the minister. Approvals will only take effect once all sector-specific licences are secured.



Changes of control through mergers, acquisitions or restructuring will require new ministerial consent, and investors seeking incentives or public procurement opportunities must register on a national database. NIPA will also have expanded powers to monitor compliance and, in serious cases, recommend the suspension or cancellation of approvals.



Despite the tighter controls, the bill maintains equal treatment between foreign and Namibian investors outside reserved sectors, allows free repatriation of capital and profits (subject to exchange-control rules), and protects against expropriation without just compensation in line with Article 16 of the Constitution.



Existing investors will have 12 to 18 months to register under the new regime once the law comes into force.