Namibia
INVESTMENT CLIMATE STATEMENT

VII. INVESTMENT CLIMATE

Openness to Foreign Investment

The government is actively seeking foreign investment as a way to develop the economy, generate employment and boost foreign exchange earnings. In this regard, the government has taken a number of positive steps to establish a system and environment conducive to foreign investment. Namibia's Foreign Investment Act guarantees foreign investors treatment equal to that given to Namibian firms, fair compensation in the event of
expropriation, international arbitration of disputes between the 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.

Right to Private Ownership and Establishment

There are no restrictions on the establishment of private businesses. However, under the commercial agricultural land reform legislation there are certain restrictions concerning the foreign ownership of agricultural farmland.

Protection of Property Rights

The legal system protects and facilitates acquisition and disposition of property rights. The Namibian Constitution
guarantees against expropriation without compensation. Registration of patents, trademarks and designs is administered by the Registrar of Companies, Patents and Trademarks in Windhoek. IPR infringement is not a major problem in Namibia.

Foreign Trade Zones/Free Ports

Foreign firms will enjoy the same investment opportunities as local companies. There are no free ports in Namibia.

Export Processing Zones

The government has been encouraging overseas investment through the establishment of export processing zones (EPZ's). While the Foreign Investment Act is not applicable in the EPZ's, special incentives for investment exist in these zones. The port of Walvis Bay has been designated as Namibia's first, full-scale export processing zone. EPZ incentives for investors include:

exemption from customs, import and export duties and any
tax on equipment and goods;
exemption from income, profit and sales taxes;
no taxes on corporate profit; and
no labor strikes and lockouts permitted in the EPZ.

Further EPZ sites are being considered in other major towns. In addition companies can apply for single status. EPZ treatment anywhere in Namibia. The single status EPZ program enables companies to be close to raw material sites without geographical restrictions on their exporting policies.

Performance Requirements

Namibia imposes no performance requirements on foreign investors, but in certain industries, local content requirements must be met in order to exempt final products from duties under
the SACU.

Transparency of the Regulatory System

The regulatory system is transparent. Labor regulations are equally applicable to all employers, local and foreign, except as noted in the EPZ.

Corruption

Allegations of alleged favoritism and nepotism in the awarding of some significant contracts to SWAPO-affiliated concerns are raised from time to time.

Labor

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. Businesses operating within the EPZ are required to adhere to the Labor Act. In terms of EPZ legislation, however, strikes and lockouts are prohibited within the zone.
While there is a large pool of qualified workers in varying professions in Namibia, a shortage does exists in the highly skilled labor force. The government offers special tax deductions of up to 25 percent to manufacturing companies that provide technical training to employees. Government will also reimburse companies for costs directly related to employee training under approved conditions.

Efficient Capital Markets and Portfolio Investment

There is a free flow of financial resources within Namibia and throughout the Common Monetary Area (CMA). Capital flows with the rest of the world are relatively free, subject to South African exchange controls (discussed below under Conversion and Transfer Policies). The Ministry of Finance registers portfolio managers and supervises actions of the Namibian Stock Exchange (NSE) through the Director of Financial Institutions.
The NSE currently lists over 30 companies and continues to grow. It provides an alternative means of raising cash to Namibian companies. The government has also introduced investment incentives to attract the kind of mutual funds and foreign portfolio investors that have energized emerging stock markets elsewhere in the developing world. The NSE is the second largest African stock market in the total value of shares listed, although this distinction is largely due to the double listing of huge South African firms.

Conversion and Transfer Policies

The Foreign Investment Act offers investors the opportunity to apply for a Status Investment Certificate (SIC). The award of a SIC entitles the holder to:
preferential access to foreign exchange in order to repay foreign debt, pay royalty and similar charges, remit branch profits and dividends;
preferential access to foreign currency in order to repatriate proceeds arising on the sale of the enterprise to
a Namibian resident;
exemption for a certified investor from regulations in terms of Section 3(4) of the Foreign Investment Act,
according to which the Minister may reserve certain business or categories of business for Namibians (provided that the SIC was issued prior to any such reservation being declared);
and the right to international arbitration in the event of a dispute with the government.
Non-status investors are subject to the exchange controls under South African regulations applicable to the CMA. In general, the Namibian banking system is modern and efficient, and local commercial banks are fully capable of handling international financial transactions and trade financing.

Expropriation and Compensation and Dispute Settlement

The Foreign Investment Act protects the investor from expropriation. It also guarantees settlement of any disputes by international arbitration. The local court system provides an effective means to enforce property and contractual rights.

Political Violence

Namibia enjoys a relatively stable political system under a multi-party democratic constitution. Thus, political risk in the country is low.

Bilateral Investment Agreements

Currently there is no bilateral investment agreement between the U.S. and Namibia.

OPIC and other Investment Insurance Programs

The Overseas Private Investment Corporation (OPIC) provide political risk insurance to qualified U.S. investors in Namibia. Namibia is also a member of the World Bank's Multilateral Investment Guarantee Agency (MIGA), which performs a similar function.

Capital Outflow Policy

No restrictions exist regarding capital outflows.

Major Foreign Investors

The five major foreign investor countries in Namibia are South Africa, Germany, Britain, the United States and Malaysia.

Source: U. S. Department of Commerce - National Trade Data Bank, September 3, 1999

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