Foreign Investment Act: The Foreign Investment Act No. 27 of 1990 (amended in 1993) is the cornerstone of Namibia’s policy on foreign investment. This Act brought the Namibia Investment Centre within the Ministry of Trade and Industry into being, to facilitate the promotion and administration of foreign investments. The Namibia Investment Centre is the first point of contact in order to obtain up-to date information on, and assistance with investment incentives, introductions and administration requirements. The Act provides for: liberal foreign investment conditions; equal treatment of foreign and local investors; openness of all sectors of the economy for foreign investment; full protection of investments; and granting of Certificate of Status Investment (CSI).

The Certificate of Status Investment provides preferential access to foreign exchange in order to repay foreign debt, royalty, remit branch profits and dividends as well as proceeds of sale of enterprise. It gives the right to retain abroad all part of foreign exchange earnings from exports. It also gives right to international arbitration in the event of dispute with the government, as well as payment of just compensation without undue delay and in freely convertible currency.

The Certificate of Status Investment is granted if the following conditions are satisfied:

§ A foreign investment should be an amount of at least N$ 2 million;

§ Foreign investment in a Namibian enterprise should not constitute less than 10 percent of its share capital;

§ Contribution to Namibia’s development objectives;

§ Contributes to the Namibian economy in terms of employment opportunities, provision of training for Namibians, use of raw materials and locally produced goods;

§ Potential for earning foreign exchange and;

§ Positive impact on the environment.

The incentives are designed to give Namibian based entrepreneurs who invest in manufacturing and re-export trade a competitive edge. These are accessible to both existing and new manufacturers. In all sectors, manufacturing activities include local value-added of processing of Namibia’s minerals, fish and agricultural products, which are currently exported largely in raw form, stand to benefit from these incentives. Namibian based entrepreneurs who invest in manufacturing are given the following incentives:

§ Exemption from VAT on purchase and import of machinery and equipment;

§ Factory buildings written off at 20% in the first year and the balance at 8% for 10 years;

§ Export promotion allowance of 25% is deducted from taxable income;

§ Additional deduction of incentives for training and production wages of between 25% and 75%;

§ Deduction of 50% of cash grants for direct cost of approved export promotion activities;

§ Corporate tax abatement of 50% for 5 years and phasing out of abatement over the following 10 years.

Enterprises which export manufactured goods, excluding meat and fish products, whether manufactured in Namibia or not, are given 80% allowance on income derived from exporting manufactured goods.

The Export Processing Zone (EPZ) was launched in 1996 through the enactment of the EPZ Act. This EPZ regime is now vibrant and represents a whole new territory for the discerning investors to exploit. The EPZ has attracted and continue to attract tremendous local and international response. About 65 companies engaged in activities ranging from the manufacture of car par to soft toys as well as variety of re-export activities have been grated EPZ status certificates.

International response is attributed mainly to the fact that Namibia EPZ provides the most attractive fiscal incentives in Africa against a backdrop of one of the most pleasant and peaceful environments on the continent. EPZ offers the following incentives:

§ EPZ companies do not pay corporate tax, VAT tax, stamp duty and transfer duty;

§ Enterprises can set up any place in Namibia where it suits their interests, there is no geographical limitations;

§ EPZ companies authorised to hold foreign currency account in local banks, and no foreign exchange control;

§ Industrial facilities are provided by the Ministry of Trade and Industry as well as Offshore Development Corporation (ODC) at economic rather that commercial rates;

§ Investor facilitation services are fast and free of charge, and they are provided by the ODC and the Investment Centre;

The eligibility for EPZ status is that enterprises must engage mainly in manufacturing for export outside Southern African Customs Union (SACU). Sale of up to 30% of production on the local market may be allowed upon on request. Other re-export operations allowed include repackaging.

Local incorporation is not necessary, and foreign incorporation is acceptable, but EPZ status must be acquired before start of operation. Applications must be submitted to the EPZ Committee chaired by the Minister of Trade and Industry.

This information has been taken from the Namibia Investment Guide.