A CRITICAL EVALUATION OF THE NAMIBIA INVESTMENT

PROMOTION ACT 2016: HINDERING OR PROMOTING FOREIGN

INVESTMENTS?

A dissertation submitted in partial fulfillment of the Requirements for

the degree of Bachelor of Laws (LLB)

Of

The University of Namibia

By

Kaino Shatipamba

201202050

September 2017

Supervisor: Dr. D.P. Zongwe

Table of content

Declaration……………………………………………………………………………….……..3
Supervisor’s certificate………………………………………………………………………3
Acknowledgement………………………………………………………………….…………4
Dedication……………………………………………………………………………….….…..5
Abstract........................................................................................................................6
Chapter One……………………………………………………………………………...........7
Introduction…………………………………………………………………………...............7

1. Problem statement………………………………………………………………...…. 8
2. Central question…………………………………………………………...……...…...8
3. Significance of study………………………………………………………………….8
4. Research aims……………………………………………………………….………….9
5. Theoretical framework……………………………………………………………...…9
6. Hypothesis……………………………………………………………………………....9
7. Research methodology……………………………………………………………....10
8. Limitation of study……………………………………………………………...….…10
9. Ethical considerations…………………………………………………………...…..10
10. Chapter outline……………………………………………………………………....10

Chapter Two: Literature Review…….………………………………………………....…12

2.1 Do national policies affect FDI………………………………………………....…12
Conclusion…………………………………………………………………………...……15
Chapter Three: Promotion of FDI…………………………………………….……….....16
3.1 Importance of promoting FDI…………………………………………………..…18
3.2 Factors affecting foreign investment…………………………………………... 20
3.3 Promulgation of the new investment Act – What this means for Namibia...21
3.4 Why transparent framework for investments is central to promotion…......21
3.5 FDI and external financial resources in Namibia through recent years…….23
Conclusion…………………………………………………………………………...…….24
1
Chapter Four: Background of NIPA…………………………..……………………..…..25
Chapter Five: Evaluating NIPA……………………………………………………..….....27
5.1 Does the Act meet the country’s development objectives………………......27
5.2 The effect of restrictions in the Act……………………..………………….….....29
5.3 The impact of NIPA provisions aimed at FDI…………………..………….…....30
Conclusion………..………………………………………………………………….........34
Chapter Six: Conclusion and recommendations………………………………….......36
Bibliography…………………………………………………………………………...…......39

2
Declaration

I, the undersigned Kaino Shatipamba, hereby declare that this dissertation for the
purpose of obtaining the LLB degree, is my own work and has not been submitted for a
degree in any other institution of higher learning. I have properly quoted and indicated
all the sources used in the footnotes and in the bibliography.

Signature: ……………………………….

Date: …………………………………....

Supervisor’s certificate

I, D.P Zongwe hereby certify that the research and writing of this dissertation was
carried out under my supervision.

Supervisor’s signature: …………………………

Date: ……………………………

2017 ©
No part of this dissertation may be reproduced without prior written permission of the
author or that of the University of Namibia.

3
Acknowledgement

First and foremost, I would like to thank God The Almighty for giving me the strength
and courage that I needed to complete my studies. I express my profound gratitude to
my supervisor, Dr. D. P. Zongwe for the guidance and insightful comments on my
dissertation drafts. I would also like to extend my sincere appreciation to Dr. T.
Warikandwa for his patient academic guidance in research writing.

Secondly, a sincere thanks to my classmates and dear friends Pauline, Rutendo,

Iyaloo, Jessica, Selma, Elizabeth, Bernie, Annette, Laina, Lazarus and Pius for the
support rendered during my studies. Furthermore, I express my sincere gratitude to a
special friend Agostinho for the wise counsel, encouragement and support offered
during this period. Finally, I would like to extend my utmost and sincere gratitude to my
family: Winnie, Phillip, Laivi, Sergei, Nangula, aunt Ruth, uncle Andrew, Justice, and my
parents Solomon, Linda & Darren for the unwavering love, spiritual, emotional and
financial support offered throughout my studies. I will forever be grateful to you.

4
Dedication

I dedicate this dissertation to my mother, Linda Tulonga Gardner. Your prayers kept me
going.

5
Abstract

In August 2016, the Namibia Investment Promotion Act has been enacted and is set to
replace the Foreign Investments Act of 1990. Although the Act is not yet in force, it is
aimed at providing for the promotion of sustainable economic development and growth
through mobilization and attraction of foreign and domestic investments. This is to
enhance economic development, reduce unemployment and accelerate Namibia’s
economic growth. The core issue is that the Act has been criticized by the business
community on the basis that it might hinder foreign investments and change the
business environment. Thus, the central question is, to what extend the Namibia
Investment Promotion Act (NIPA) promotes foreign investments. The first chapter
introduces the study, while the second reviews current literature on the impact of NIPA
on the business environment. Chapter three focuses on the importance of promotion of
foreign direct investment (FDI), followed by the background chapter which provides the
background of the Act. Chapter five being of utmost importance embodies the summary
findings and evaluates NIPA. The final chapter sets out the conclusion of the
dissertation as well as conclusive recommendations. This study will be of benefit to the
legal fraternity and scholarship. Moreover, the research will further broaden the
understanding of the importance of foreign investments in Namibia and will bring to
light, the effect that national policies have on the Namibian economy. Such policies
have the effect of either promoting or hindering foreign investments. The study may also
be significant to policy makers in challenging them to revise or implement more
conducive legal frameworks to attract FDIs for sustainable economic growth.

6
Chapter One

1. Title
A CRITICAL EVALUATION OF THE NAMIBIA INVESTMENT PROMOTION ACT AND
ITS EFFECT ON THE BUSINESS ENVIRONMENT IN NAMIBIA

2. Introduction

In August 2016, the Namibia Investment Promotion Act has been enacted and is set to
replace the Foreign Investments Act of 1990. The purpose of the Act is to provide for
the promotion of sustainable economic development and growth through the
mobilization and attraction of foreign and domestic investment, to enhance economic
development, reduce unemployment and accelerate growth and diversify the economy. 1
However, from its inception, the Act has been criticized by the business community on
the basis that it might have a negative impact on the business environment by
discouraging particularly foreign investment in Namibia through the wide-range of
discretionary powers that the Act affords to the concerned Minister.2

Section 43 of the Act provides for such powers and functions and section 4(1)(a)
particularly states that where a foreign investor makes an investment proposal to the
Minister for consideration, the Minister must receive it together with the
recommendation of the Namibia Investment Centre and he/she will approve or
disapprove such a proposal depending on the requirements and conditions contained in
the aforementioned section as well as those contained in section 14 of the Act. The
significance of foreign investment and the relevant provisions of this Act have thus been
chosen as the key area of inquiry and major mechanism in critically evaluating the
claims of the business community as well as in determining whether the change of the
financial regime will be beneficial to the future economy of Namibia.
2.1 Problem Statement

1
Namibia Investment Promotion Act 9 of 2016, p.2.
2
Busch, S. 2017. The Namibia Investment Promotion Act, 2016: Hindering or promoting foreign
investment? Available at www.ensafrica.com; last accessed on 1 , September 2017.
3
No. 9 of 2016.
7
Foreign direct investment (FDI) being an effective and integral part of the international
economic system, it is also viewed to be a major catalyst to development in a
developing country.4 Namibia being a developing country, it is important to note that its
national policies have a significant influence in attracting FDIs and reaping benefits from
them. One of such policies is the Namibia Investment Promotion Act 9 of 2016 (NIPA).
Certain provisions of the Act give discretionary powers to the Minister to have discretion
over foreign investments in Namibia. It is thus imperative to evaluate such national
policies in order to determine whether they are hindering or promoting foreign
investments in Namibia.

2.2 Central Question

This study seeks to answer the questions
● to what extent do national (financial) policies promote foreign direct investment?
● does the Act impede foreign direct investment?

2.3 Significance of study

This study contributes to the field of international law, international economic law and
legislative and policy reforms in Namibia. It will also particularly be of benefit to the legal
fraternity and scholarship. Moreover, the research will further broaden the
understanding of the importance of foreign investments in Namibia and will bring to
light, the effect that national policies have on the Namibian economy. Such policies
have the effect of either promoting or hindering foreign investments. The study may also
be significant to policy makers in challenging them to implement more conducive legal
frameworks to induce and attract FDIs for sustainable economic growth.

2.4 Research Aims

4
OECD (2002), Foreign Direct Investment for Development, maximizing benefits, minimizing costs. p3.
8
This paper discusses the importance and benefits of foreign investments in Namibia
and to what extent the Act might hinder or promote foreign investments. Its main aims
are:
● to investigate the causal link between national financial policies and
development;
● to evaluate how effective the Act would be in promoting foreign investments in
Namibia; and
● to make recommendations on the amendment of the Act to improve and
consequently promote foreign investments for the benefit of the business
environment and Namibia as a whole.

2.5 Theoretical framework

This study reviews the theoretical link between domestic policies of foreign investment
and corruption and how such a link may affect the business climate. The focus of this
section is to document the methodologies; sources, findings and conclusions arrived at
by other researchers. This will be done by a comparative analysis of domestic foreign
investment policies of various developing countries through a comparative analysis of
case studies and evaluation.

2.6 Hypothesis
In order to achieve the research aims listed above, the study tests the following
hypotheses:
1.) The rigidity of national policies and corruption discourage Foreign Direct Investment.
2.) The causal relationship between Foreign Direct Investment and economic growth in
Namibia is dependent on the level of corruption and political instability.

3. Research Methodology
The study uses a qualitative desk research method, which include the reviewing and
evaluation of secondary materials and literature. Primary data collection will be done

9
through analytical reading of secondary materials such as Acts of parliament, books,
journals as well as electronic sources. Such data will be assembled to answer the
contemporary research questions.

3.1 Limitation of study

The limitation of this study is that due to limited time and financial constraints, the study
can only be done as a desk study.

3.2 Ethical considerations

Conducting research entails the acceptance of ethical responsibilities. Therefore, the
researcher will be responsible to fellow researchers, to respondents, to society as whole
and, most substantially, to herself. The researcher will acquire informed consent from
the University of Namibia, faculty of law and Ministry of Justice in carrying out research.
Accordingly, the researcher will provide adequate information regarding the purpose
and procedures of the study. This information will include credibility of the researcher
and also inform all potential participants conscientiously and completely. 5

4. Chapter outline
The study will be carried out sequentially in the form of chapters as follows:

Chapter 1: In the first chapter, the study is introduced. It envelopes the introduction and
background of the study, problem statement, research question, research aim and
objectives of the study. The research methodology that will be used in this study is
expounded in this chapter. The existing knowledge on the subject-matter of this
research as will be exhibited in Chapters 2 and 3 considerably, ranges from an analysis
and evaluation of the impact of NIPA on foreign investments and the business
environment.

5
Rugg, G., & Petre, M. (2007). A Gentle Guide to Research Methods. New York: Open University Press,
McGraw-Hill Education. p45.
10
Chapter 2: In this chapter, an analytical review of the current literature on the effect of
national policy on FDI is addressed. It further exposes the possible impact that NIPA
has on the business climate and how the Act's current state might hinder foreign
investments in Namibia.

Chapter 3: The third chapter brings to attention the promotion of FDI in general and
with particular reference to promotion of FDI in Namibia. It further enlightens how such
promotion is central to maintaining a steady and sustainable economic growth.

Chapter 4: The chapter provides the background of the Act and draws attention to the
origin of the central question.

Chapter 5: This chapter embodies the summary findings and evaluates the extent to
which NIPA promotes FDI in Namibia. The chapter aims at maintaining a sustainable
economic growth through a counterbalance between the promotion of foreign
investments and public policy.

Chapter 6: In this chapter, conclusions and recommendations will be made on the basis
of the findings of the study. The study will further recommend areas for further research
and gives final conclusions towards its end.

11
 Chapter 2: Literature Review

Introduction

Foreign investment can be defined as capital flow from one country to another that
grants extensive ownership stakes in domestic companies and assets. Foreign
investment denotes that foreigners have an active role in the management as a part of
their investment. Foreign investment is predominantly seen as a catalyst for
economic growth in the future and more so, for developing countries. 6 Foreign
investments can be classified into two main categories: Direct and indirect. Foreign
direct investments (FDIs) are investments of a physical nature and purchases made by
a company in a foreign country, by buying machines, buildings, opening plants, factories
and other equipment in that particular foreign country. These types of investments are
more favorable as they are generally weighed to be long-term investments and help
bolster the foreign country’s economy.7 On the other hand, foreign indirect investments
involve financial institutions buying positions in foreign companies that trade on a
foreign stock exchange. In general, this form of foreign investment is less favorable, as
the domestic company can easily sell off its investment very rapidly, sometimes within a
short period of the purchase. This type of investment is also sometimes referred to as a
foreign portfolio investment (FPI).8

2.1 Do national policies affect FDI?

The main factors motivating FDI into Africa in recent decades appear to have been the
availability of natural resources in the host countries (e.g. investment in the oil industries

6
This general definition is based on IMF (International Monetary Fund) 1993, Balance of Payments
Manual 5th Edition, Washington DC.
7
Balasubramanyam, V.N., Salisu, M. & Sapsford, D. 1999. Foreign direct investment as an engine of
growth. The Journal of International Trade and Economic Development, 8(1). London: Routledge. p92-94.
8
Nishiotis, G. (2004). Do Indirect Investment Barriers Contribute to Capital Market Segmentation?
Journal of Financial and Quantitative Analysis, 39(3), London: Cambridge University Press. p31.
12
of Angola and Nigeria) and, to a lesser extent, the size of the domestic economy. 9
Recent studies have however also shown that other factors holding back FDI is the
perceived sustainability of national economic policies, poor quality of public services
and rigid trade regimes.10

Although investments in Namibia have always been present, the new Investment
Promotion Act11 provides the perimeter needed to take national investments to another
level. The Act states that the Minister may, in writing, delegate any power, except the
power to make regulations, to the Namibia Investment Centre or a body designated by
the Minister for that purpose by notice in the Gazette .12 The functions of the Namibia
Investment Centre (NIC), particularly in light of NIPA, are to:

(1) assist the Minister in implementing this Act by exercising or performing the
powers or functions conferred or imposed on it by this Act or delegated or assigned
to it by the Minister;13

(2) promote both foreign and domestic investment by identifying specific projects
and inviting interested investors for participation in those projects;14

(3) undertake, either in Namibia or outside Namibia, promotional activities to attract

foreign investments that are beneficial to the economy and development objectives
of Namibia;15

(4) register and keep the register of Namibian and foreign investors and their
investments in accordance with the prescribed requirements;16

9
E. Hernández-Catá (2000), “Raising Growth and Investment in Sub-Saharan Africa: What Can Be
Done?”, IMF Policy Discussion Paper, PDP/00/4.
10
D. Dollar and W. Easterly (1998), “The Search for the Key: Aid, Investment and Policies in Africa”,
World Bank Working Paper.
11
Namibia Investment Promotion Act no. 9 of 2016.
12
Namibia Investment Promotion Act, s 3(2).
13
Namibia Investment Promotion Act, s 6(2) (a).
14
Namibia Investment Promotion Act, s 6(2) (b).
15
Namibia Investment Promotion Act, s 6(2) (c).
16
Namibia Investment Promotion Act, s 6(2) (d).
13
 (5) provide support services to investors and investments after establishment in
order to assist them in their on-going relations with the State;17

(6) assess economic sectors and investment proposals and projects for investment
potential, opportunities and socio economic impact, including local and public-sector
participation;18

(7) undertake periodic reviews on investment policies and trends in Namibia and
globally in achieving the overall objects of the Act, including the review of levels of
domestic and foreign investment in different sectors and the development benefits of
these investments;19

(8) review compliance with any approval, registration requirements and conditions by
investors and investments; and20

(9) coordinate the investment related functions of commercial representatives. 21

The Namibia Investment Centre seems to play a significant role in the Act in that it is the
enabling body or agent in carrying out the promotion of foreign investments in Namibia.
In order to evaluate the Act's effectiveness in promoting FDIs, there must be substantial
evidence of what the Namibia Investment Centre has accomplished in recent years.

According to Hilary Mare22, during the 2015/16 financial year, the Namibia Investment
Centre promoted new investments to the value of N$409 million, which created about
260 jobs in various economic sectors such as hospitality, agriculture, tourism,
manufacturing, construction and other services. During the same period of reporting, the
Ministry of Trade, through its investment promotion framework and agencies
implemented measures aimed at maintaining domestic investment as well as attracting

17
Namibia Investment Promotion Act, s 6(2) (e).
18
Namibia Investment Promotion Act, s 6(2) (f).
19
Namibia Investment Promotion Act, s 6(2) (g).
20
Namibia Investment Promotion Act, s 6(2) (h).
21
Namibia Investment Promotion Act, s 6(2) (i).
22
Mare, H. (2016). Pivotal Investment Promotion Bill must sail through. Available at www.
http://www.confidente.com.na/2016/07/pivotal-investment-promotion-bill-must-sail-through/; last accessed
on 14, October 2017.
14
foreign direct investment. The ministry further promoted 13 new investments worth
N$2.8 billion and committed to create 835 permanent jobs. These investments are from
countries such as Germany, South Africa, Zimbabwe, Italy, Belgium and Portugal.23
Therefore, given the aim of the new Act is to safeguard the rights of investors as well as
protect public interest, the Government pursues important public policy objectives by
giving protection for outward and inward investments. This may result in creating and
attracting a conducive environment for foreign investments in Namibia.

Conclusion

Notwithstanding the knowledge and evidence of the various factors that affect foreign
investment; It is undoubtedly noticeable that although factors like a lack in natural
resources and weak enforceable frameworks for foreign investment are among factors
that hinder foreign investment, there is a gap between such factors and the effect of
national policies and the influence that possible corruption has on the promotion of
foreign investments in a developing country such as Namibia. It is on this premise, that
the Namibia Investment Promotion Act 2016 (NIPA) is in question. This does not only
have an impact on foreign investors, but likewise on domestic investors and ultimately
the entire business environment in Namibia. Although not much is written on the
subject, it is important to understand how an Act such as this can be further moulded
into a FDI national policy that attracts foreign investors.

23
National Tourism Investment Profile & Promotion Strategy 2016-2026. p10-24.
15
 Chapter 3: Promotion of FDI

Introduction

Foreign direct investment is important to most economies and is particularly vital for
developing countries such as Namibia. In many instances, developing countries have
the demand for both goods or services as well as the labor and natural resources, but
they lack the capital to begin the production process.24 One of the development
challenges facing African leaders today, among others, is how to attract FDI to the
continent. Numerous efforts have been made in the past years to boost FDI flows to
Africa but they have not had any significant impact. These efforts were unsuccessful
because they did not lift underlying constraints on FDI to the continent and failed to
confront the challenges to the attraction of FDI to Africa posed by the globalization
process.25 In crafting policies and measures to promote foreign investment as well as
reverse the current FDI trend in Africa, it is important to take note of three facts. Firstly,
that FDI requires a long-term commitment to the host country and involves very high
costs and that, it is difficult for foreign investors to recover their initial investments if
there would be a sudden change in the degree of risk associated with their location. 26
Secondly, Africa is also perceived to be a high-risk region due to potential political
instability. The final fact to be considered is the promotion of FDI, which is the primary
focus of this chapter.

3.1 Importance of promoting FDI and its effect on economic growth

24
Forte, R & Moura, R. 2013. The Effects of Foreign Direct Investment on the host's country's economic
growth: Theory and empirical evidence. 58 (3), World Scientific: Singapore. p16.
25
Bende-Nabenfe, A. (2002). Foreign direct investment determinants in Sub-Saharan Africa: a
cointegration analysis. Economics Bulletin 6, p.14.
26
Asiedu, E. (2002b). Aggressive trade reform and infrastructure development: a solution to Africa’s
foreign direct investment woes. Department of Economics, Mimeo: University of Kansas press. p25.
16
Theoretically, foreign direct investment focuses to directly impact growth through capital
growth, and the embodiment of foreign technologies and new input in the production
function of the host country.27 Analytically, neoclassical and endogenous growth models
have been extensively used to test those theoretical benefits of foreign direct
investment. Furthermore, FDI’s interaction with human capital has received
considerable attention.28 Borensztein, De Gregorio & Lee29 found in a cross-country
regression groundwork for 69 less-developed countries in the period 1970-89, that
inward FDI has positive effects on growth through its interaction with human capital.
They also stated that FDI contributed more to economic growth than domestic
investment although it also had the impact of both improving and increasing domestic
investment. In a panel data framework for a sample of 18 Latin American countries for
the period 1970-99, Bengoa & Sanchez-Robles30 assert that in order for a positive effect
from FDI to be achieved, the country must have a sufficiently adequate level of
economic stability, capital markets that are liberal, as well as human capital. Li & Liu31
similarly had the same findings based on a panel data analysis for 84 countries over the
period 1970-99. They found that FDI induces growth directly and also indirectly through
its interaction with human capital.

Furthermore, with respect to the interdependence between domestic and foreign

investment, Kentor32 calculated foreign capital reliance and showed that countries with a
relatively high reliance on foreign capital display a slower economic growth than less-
dependent countries for the years 1940-1990, which also supports the earlier findings of

27
Sarkar, P. (2007). Does Foreign Direct Investment Promote Growth? Panel data and Time Series
Evidence from Less Developed Countries, 1970-2002), Elsevier Ltd: London. p18.
28
Solomon, E.M. (2011). Foreign Direct Investment, Host Country Factors and Economic Growth. Ensayos
Revista de Economia, 30(1), p44.
29
Borensztein, E., De Gregorio, J., & Lee, J.-W. (1998). How does foreign direct investment affect
economic growth? Journal of International Economics, 45(1), p.121.
30
Bengoa, M., & Sanchez-Robles, B. (2003). Foreign direct investment, economic freedom and growth:
new evidence from Latin America. European journal of political economy, 19(3),p.539.
31
Li, X., & Liu, X. (2005). Foreign direct investment and economic growth: an increasingly endogenous
relationship. World development, 33(3), p.394.
32
Kentor, J. (1998). The Long-Term Effects of Foreign Investment Dependence on Economic Growth,
1940-1990. American Journal of Sociology, 103(4), p.1026.
17
Dixon and Boswell33. They argued that foreign investment initially has a positive effect
on growth but in the long run the reliance on foreign investment exerts a negative effect
on growth, because the infrastructure and institutions that advance with foreign
investment support further foreign investment; and negative external factors such as
over-urbanization, unemployment and income inequality perpetuate the issue.

Kentor & Boswell34 preferred a different dimension of foreign investment concentration,

stating that the percentage of total foreign direct investment stocks accounted for by the
top investing countries, still exemplify a long term negative effect on growth. Moreover,
similar to Borensztein et al35, De Mello36 concludes that the long-term growth in host
countries is determined by the spillovers of knowledge and technology from the
investing countries to host countries, and its ambit is determined by the substitution and
interdependency between FDI and domestic investment. Along this same argument,
Blomstrom, Lipsey, and Zejan37 in a cross-country study of 78 developing countries also
found that FDI had positive effect on growth rates for higher income developing
countries compared to the ones with lower income. Finally, the trading system also
plays a role in conveying of positive growth effects from FDI.38

3.2 Factors affecting foreign investment

33
Dixon, W. J., & Boswell, T. (1996). Dependency, disarticulation, and denominator effects: Another look
at foreign capital penetration. American Journal of Sociology, 102(2), p.545.
34
Kentor, J., & Boswell, T. (2003). Foreign capital dependence and development: A new direction.
American sociological review, 68(2), p.303.
35
Borensztein, E., De Gregorio, J., & Lee, J.-W. (1998). How does foreign direct investment affect
economic growth? Journal of International Economics, 45(1), p.118.
36
De Mello, L. R. (1999). Foreign direct investment-led growth: evidence from time series and panel data.
Oxford Economic Papers, 51(1), p.134.
37
Blomstrom, M., Lipsey, R. E., & Zejan, M. (1994). What explains developing country growth? In W. J.
Baumol (Ed.), Convergence of Productivity: Cross-National Studies and Historical Evidence (9th ed.).
New York: Oxford University Press. p241.
38
Choe, J. Il. (2003). Do Foreign Direct Investment and Gross Domestic Investment Promote Economic
Growth? Review of Development Economics, 7(1),p 44.
18
The clear benefits from FDI do not simply accrue automatically, and their importance
differ according to host country and their context.39 The various factors that hinder the
full benefits of FDI in some developing countries include the following: the level of
general health and education, the technological level of host-country enterprises, the
lack of openness to trade, unsteady competition and regulatory frameworks that are
inadequate.40 Conversely, a level of educational and technological infrastructure
achievement in a developing country does equip it better to benefit from a foreign
presence in its markets.41

By appeasing financial restraint, FDI enables host countries to achieve the higher
growth rates that generally emerge from a faster rate of gross fixed capital formation.
The consequent economic effect of FDI on economies with little recourse to finance is
crucially dependent on the policies pursued by authorities of the host-countries.42 The
sectoral structure of an economy can also make a significant difference. While the
service sectors of many developing countries may be underdeveloped and hence
unable to attract generous FDI inflow, extractive industries in countries with
considerable natural resources can be beneficially developed with the aid of foreign
investors. However, in cases where legal, domestic, competition and environmental
structures are weakly enforced, the presence of financially strong foreign enterprises
may not be sufficient to aid or assist economic development. 43 Moreover, FDI can be
said to act as a catalyst for the underlying weaknesses and strengths in the host
countries’ business environments, possibly aggravating the issues in non-governance

39
Jenkins, C., Thomas, L. (2002): Foreign Direct Investment in Southern Africa: Determinants,
Characteristics and Implications for Economic Growth and Poverty Alleviation. Globalization and Poverty
Project. University of Oxford. p146.
40
Julius, R. (1990). Global Companies and Public Policy. New York: Council on Foreign Relations for the
Royal Institute of International Affairs.
41
Barry P. Bosworth and Susan M. Collins, 1999, "Capital Flows to Developing Economies: Implications
for Saving and Investment," Brookings Papers on Economic Activity:1, Brookings Institution, p. 143.
42
Lipsey, R. E., 2003. “Foreign Direct Investment and the Operations of Multinational Firms: Concepts,
History, and Data,” in E. Kwan Choi and James Harrigan (eds.) Handbook of International Trade. Oxford:
Blackwell. p.231-233..
43
Antras, P., 2003. “Firms, Contracts and Trade Structure,” Quarterly Journal of Economics 118, 1374-
1418.
19
zones, while evoking the advantages in countries with a more conducive business
climate and surpassing governance.44 This reinforces the point stated above about the
need for host countries to endeavor to improve both legal and regulatory frameworks
together with other elements that would help in enabling the business sector.

3.3 Promulgation of new Namibia Investment Promotion Act – What this means
for Namibia

The Namibia Investment Promotion Act45 was published on 31st of August 2016. The
Act will be effective on a date that will be determined by the Minister of Trade and
Industry. Some of the fundamental changes being brought to the country's trade and
investment environment through the Act include:46

● clear and transparent framework for investments in Namibia;

● the introduction of agreements on investments; and
● efficient dispute resolution mechanisms involving investments

3.4 Why is a clear and transparent framework for investments in Namibia central
to FDI promotion?

Transparent information on how governments change and implement rules and

regulations dealing with investment is an important determining factor concerning an
investor's decision.47 Transparency and predictability are particularly significant for small
and medium sized enterprises that tend to face specific challenges in entering the
formal economy. It is also important for foreign investors who may have to deal with
cultures, regulatory systems and administrative frameworks that are different from their

44
Umoh, O., Jacob, A., & Chuku, C. (2012). Foreign Direct Investment and Economic Growth in Nigeria:
An Analysis of the Endogenous Effects. Current Research Journal of Economic Theory, 4(3), 53-66.
45
No. 9 of 2016
46
Business Law Quarterly: Namibia Newsletter, April 2017: PWC.
47
Bushee, Brian J., and Christopher F. Noe, 2001, “Corporate Disclosure Practices, Institutional
Investors, and Stock Return Volatility,” Journal of Accounting Research, Vol. 38 Supplement 2000.
20
own.48 A predictable and transparent regulatory framework dealing with investment
helps businesses to assess potential investment opportunities on a more well-informed
and timely basis, which in turn shortens the period before the investment becomes
productive.49 Whenever economic performance slows down in emerging markets,
analysts are commonly heard lamenting what they call a “lack of transparency”. 50 What
they mean is that some countries may contribute to their woes by failing to fully disclose
information about economic and financial conditions while also being vague about the
laws and regulations that govern their markets.51 An example is when a government
might be viewed as withholding information on fiscal policies, debt levels and regulatory
requirements.52 Moreover, when dealing with less transparent governments, investment
decisions are more likely to be determined by what other fund managers are engaging
in as opposed to an independent, rational assessment of market essentials. This
activity, in which investors suddenly take their money and run, is often cited as
contributing to economic instability by aggravating crises in emerging markets. 53
Therefore, foreign investors are likely to invest in countries that are more transparent as
opposed to non-transparent countries.

48
Gil, M. & Kaufmann, D. (2000), “Transparency, Liberalization, and Banking Crises,” World Bank
Working Paper 2286 (Washington: World Bank).
49
ibid.
50
Institute of International Finance, 1999, Report of the Working Group on Transparency in Emerging
Markets Finance,” Washington, D.C.
51
Disyatat, Piti and R. Gaston Gelos, 2001, “The Asset Allocation of Emerging Market Mutual Funds,”
IMF Working Paper 01/111 (Washington: International Monetary Fund)
52
Graciela,K. Lyons,R. & Schmukler, S. (2000), “Managers, Investors, and Crises: Mutual Fund
Strategies in Emerging Markets,” World Bank Working Paper 2399 (Washington: World Bank).
53
Scharfstein, D.S. & J.C. Stein, (1990) , “Herd Behavior and Investment,” American Economic Review
80, pp.465-467.
21
3.5 FDI and external financial resources in Namibia through recent years

Source: United Nations Conference on Trade and Development (UNCTAD) of 15

September 201754

The data of the net investment flow is represented and calculated in the table below:
(In millions of US$ unless specified otherwise)

Year 2005 2010 2015 2016

FDI inflow 385.24 793.02 1 095.05 274.85

FDI outflow 12.64 -4.47 -55.18 4.52

Personal 0.24 0.13 0.07 ..

remittances

Symbol for missing value(s):

.. Not available or not separately reported

54
UNCTADstat available at http://unctadstat.unctad.org; last accessed on 14, October 2017.
22
Namibia boasts substantial natural resources (uranium, zinc, diamond, oil, copper),
which attract the majority of FDI. The main countries investing in the mining sector are
South Africa, the United States, the United Kingdom and Germany. Based on the
information from the data, a drop of FDI inflows is observed considerably in 2016 to
USD 275 million (against USD 1.1 billion in 2015).55 This is according to the United
Nations Conference on Trade and Development (UNCTAD).56

The Namibian economy slowed substantially in the year 2016, registering only modest
growth of 1.2%, which contrasts with average, annual gains of more than 5% in the
preceding five years.57 The economic slowdown was noticed across all productive
sectors, linked to consistently low mineral prices, regional drought, and an action of
fiscal consolidation. Subdued growth in the global economy has also affected mining in
Namibia, delaying the startup of the already-completed Husab uranium mine. This has
yielded significant negative spillovers to many other sectors of the economy, including
public sector finance and external trade.58

Conclusion

Namibia’s economy has been steady over the years, but it however slowed down in the
recent years, particularly in the year 2016. This lower surplus is mainly due to
decreased capital inflow and it has been established earlier in the preceding chapters,
that capital inflow is directly linked to FDI inflows. Given the statistics above, it is evident
that the promotion of FDI is central to Namibia’s economic growth.

55
Santander Trade portal; Namibia: Foreign investment. Available at
https://en.portal.santandertrade.com/establish-overseas/namibia/investing-3. Last accessed 14 October,
2017.
56
UNCTADstat available at http://unctadstat.unctad.org; last accessed on 14, October 2017.

57
The World Bank in Namibia. Available at http://www.worldbank.org/en/country/namibia/overview#1.
Last accessed 14 October, 2017.
58
ibid.
23
 Chapter 4: Background of NIPA

In August 2016, the Namibia Investment Promotion Act has been enacted and is set to
replace the Foreign Investments Act of 1990. The purpose of the Act is to provide for
the promotion of sustainable economic development and growth through the
mobilization and attraction of foreign and domestic investment, to enhance economic
development, reduce unemployment and accelerate growth and diversify the
economy.59 However, from its inception, the Act has been criticized by the business
community on the basis that it might have a negative impact on the business
environment by discouraging particularly foreign investment in Namibia through the
wide-range of discretionary powers that the Act affords to the concerned Minister.60

This Act will commence on a date to be determined by the Minister of Trade and
Industry by notice in the Gazette.61 This development however does not mean
evaluating NIPA is fruitless. The Act has been enacted to: provide for the promotion of
sustainable economic development and growth through the mobilisation and attraction
of foreign and domestic investment, to enhance economic development, reduce
unemployment, accelerate growth and diversify the economy; to provide for reservation
of certain economic sectors and business activities to certain categories of investors; to
provide for dispute resolution mechanisms involving investment; and to provide for
incidental matters. The Act defines an investor to include both Namibian and foreign
investors when used without reference to either a Namibian or a foreign investor. It
further defines investment to be any enterprise that is lawfully established, acquired or
expanded by an investor in accordance with the laws of Namibia and that carries out a
business activity through a substantial operation in accordance with the investment
proposal and the nature of the business in Namibia. 62 The Namibia Investment Center

59
Namibia Investment Promotion Act 9 of 2016, p.2.
60
Busch, S. 2017. The Namibia Investment Promotion Act, 2016: Hindering or promoting foreign
investment? Available at www.ensafrica.com; last accessed on 1 , September 2017.
61
Namibia Investment Promotion Act, s 36(1)(b).
62
Namibia Investment Promotion Act, s 1(a).
24
is an institution founded on this Act. It is the enabling body or agent in carrying out the
promotion of foreign investments in Namibia. The Act states that the Minister may, in
writing, delegate any power, except the power to make regulations, to the Namibia
Investment Centre or a body designated by the Minister for that purpose by notice in the
Gazette.63 In essence, the Act’s main objective is to promote investments. Although the
Government intends to promote foreign direct investment, it seems that certain
provisions of it would work antagonistically and as a result hinder foreign direct
investment in Namibia. These provisions include the powers of the Minister, delays in
approval of investments and costs to be incurred by foreign investors to mention a few.
The main concern of the business community however, is the discretionary powers
granted to the Minister. The Act has been criticized on the grounds that it would
encourage corruption and hinder foreign direct investment in Namibia. Despite the
criticisms however, NIPA is set to change the country’s business environment by the
introduction of technology transfer. This was not provided for in the former Foreign
Investment Act. Although not much is written on the subject, it is important to
understand how an Act such as this can be further moulded into a FDI national policy
that attracts foreign investors.

63
Namibia Investment Promotion Act, s 3(2).
25
 Chapter 5: Evaluating NIPA

Introduction

In recent years, foreign direct investment (FDI) has become an important driver of
employment creation and economic growth in many developing countries. 64 Hence,
efforts to attract foreign direct investment to developing countries like Namibia have
been supported by the promulgation of the Act under current evaluation. This chapter
focuses on evaluating the Act in light of the country’s development objectives in terms of
FDI. Therefore, various criteria will be employed in testing the extent to which NIPA
promotes FDI. The main criteria that will be used, is measuring the provisions of the Act
against the country’s development objectives as well as the criteria of impact and
benefit of certain provisions on the business environment. The author has chosen these
criteria because, with regard to FDI, the development objectives of any country can only
be achieved if the regulatory policies, investment policies in particular, are aligned with
such objectives.65 Moreover, it is important to test the potential impact and benefit of
such a policy in order to determine the changes it might bring to the business
environment.

5.1 Does the Act meet the country’s foreign investment objectives?

One of Namibia’s 5th national development plan66 objectives is to achieve inclusive

sustainable and equitable economic growth. One of the ways to achieve this, is through
foreign direct investment. One of the development objectives that the Act actively
meets, is centred on the manufacturing sector.

64
National Planning Commission, (2000). Second national development plan (NDP2): 2001/2002-
2005/2006. Windhoek: National Planning Commission.
65
Conway, P., D. De Rosa, Nicoletti, G and Steiner, F. (2006) Regulation, Competition and Productivity
Convergence, OECD Economics Department Working Papers, No. 509.
66
National Planning Commission, (2017). Fifth national development plan (NDP5): 2017/2018-
2021/2022. Windhoek: National Planning Commission. p.13.

26
5.1.1 Technology transfer

The Namibian economy’s manufacturing activities remain highly dependent on inputs

from primary industries. The entire sector contributes just about 11% to GDP. 67 The
sector contracted by an average of 1.4% during the NDP4 period and there was a
contraction of about 2% in manufactured products exports over the 2012-2015 period.
In order to break out of the middle income trap, Namibia needs to diversify its economy
while also producing a diverse range of exports at increasingly high levels of
sophistication.68 According to Namibia’s 5th national development plan (NDP5), the
challenges that the sector is facing is the limited manufacturing technology & skills for
agro-processing and modernisation.

Section 2 of the Act however meets this country’s development objective by providing
for technology transfer. It particularly states in section 2(i)69 that part of the Act’s
objective is to: enhance the economic development objectives of Namibia to build a
prosperous, industrialised society with adequate direct investment to, among other
things, encourage the creation of employment, wealth, technology transfer, capacity
building, value addition to natural resources and foreign currency generation.

On the other hand, mining is another potential area for FDI. Namibia’s abundant
minerals have made the mining sector one of the major source of foreign direct
investment. Namibia’s mineral resources include diamonds, copper, uranium, lead, zinc,
gold dimension stone, and semiprecious stones.70 With the Swakop’s Husab uranuim
mine, the country is set to become the second largest producer of uranium in the world.
Mining contributes 12% to GDP and provides critical upstream, downstream and side
stream linkages for the Namibian economy. Swakop uranium’s contributions will be

67
Odada, J. & Godana. T. (2002). Sources of Growth in Africa: A case study of Namibia. Namibia
Economic Policy Research Unit. Windhoek. p13-14.
68
National Planning Commission. (2014). Vocational Education Job Attachment Report. Windhoek.
69
Namibia Investment Promotion Act, s 2(i).
70
Coakley, G. J. (2002). The mineral industry of Namibia. AngloGold Ltd operational review: Windhoek.
p.23.

27
long-lived. The life of the Husab mine is currently projected at over 20 years, with
exploration continuing to find further resources and provide job security and continued
economic and social contributions for many years thereafter.71 This projection will
however only become a reality if certain FDI provisions are designed to promote FDI.

5.2. The effect of restrictions in the Act on the Namibian business climate

It is worth noting that much of the prevailing attitude toward foreign investment in Africa
is rooted in ideology, history and the politics of the post-independence period. This is
particularly true in terms of the specific concern that FDI disables the citizens of the
host-country by being dependent on foreign managed markets.72 Moreover, many of the
purported benefits of FDI are often challenged directly, both on empirical and ideological
grounds. There is thus a common critique that foreign investors crowd out local
companies that cannot compete because of financing, marketing power, size or some
other unfair advantage.73 Section 8 of the Act74 sets out the reservation of categories of
economic sectors and business activities for certain categories of investors. This
provision was signed into law by President Hage Geingob with the aim to reserve
specific sectors for Namibians. The Act would reserve business activities, such as
hairdressing, take-way businesses, street vending, beauty salons, retail and catering to
Namibians.75 Although these measures are aimed at strengthening the Namibian
economy, they seemingly affect the foreign investors and thus might discourage FDIs

71
Staff reporter (2016). First production achieved from Swakop Uranium’s Husab mine. Available at
https://www.newera.com.na/2017/01/27/first-production-achieved-from-swakop-uraniums-husab-mine/.
Last accessed on 22 October, 2017.
72
Asiedu, E. (2003). “Policy Reform and Foreign Direct Investment to Africa: Absolute Progress but
Relative Decline,” forthcoming in Development Policy Review. Mimeo: University of Kansas. p121-122.
73
Dunning, J. (1993), Multinational Enterprises and the Global Economy. Addison-Wesley: Wokingham.
p55.
74
Namibia Investment Promotion Act 9 of 2016.
75
Geingob signs law that reserves certain jobs for locals. Available at
https://www.newera.com.na/2016/08/15/geingob-signs-law-reserves-jobs-locals/; last accessed 14,
October 2017.
28
and ultimately pose possible implication of hindering FDI for a long period of time.
Notwithstanding this fact, the author is of the opinion that foreign capital is not needed in
every sector of Namibia’s economy and that the development needs of the country are
to be the guiding principle of a sound foreign-investment policy.

5.3 The impact of (NIPA) provisions aimed at FDI76

5.3.1 The length of time and costs that a foreign investor needs to incur for the approval
of investment

Section 13 of the Act provides for provisional approval of investments and subsection 2
states:77The granting of a provisional approval of investment under subsection(1) does
not imply or in any other manner guarantee the granting of a final approval of the
investment by the Minister in accordance with this Act. Furthermore, section 15 78 makes
provision for the time period for approval of investments and states that the Minister
may prescribe time periods for the approval of any application or review of any decision
relating to the approval of investment. This uncertain length of time of approval of
investments may have an impact by dissuading foreign investors and may ultimately
have an impact on future FDI in Namibia. These provisions of the Act have a negative
impact as they are likely to discourage foreign investors. Such provisions are not
considered to be of benefit to the FDI objectives of the country.

76
Grant, R. 2016. Namibia Investment Promotion Act, ACF presentation. Available at
https://home.kpmg.com/content/dam/kpmg/na/pdf/Namibia-Investment-Promotion-Act-2016.pdf. last
accessed 17 October, 2017.
77
Namibia Investment Promotion Act, s 13(2).
78
of the aforementioned Act.
29
Regardless of the length of time and costs that foreign investors have to incur, section
27(1) of the Act states that “a foreign investor may transfer into and outside Namibia
funds relating to his or her investment subject to laws of Namibia”. This border transfer
of funds may be considered as a FDI incentive as it is convenient and provides financial
security and freedom to foreign investors.

5.3.2 There is implication for growth on the expansion of the existing businesses or
firms invested into by foreigners

This is mainly because of the restrictions that are imposed by the Act mentioned earlier
in this chapter. Moreover, section 35(3)79 states that anything done under a provision of
the repealed Foreign Investment Act, 1990 (Act No. 27 of 1990), and that could have
been done under the Act is deemed to have been done under a corresponding provision
of the Act. This provision poses an implication of growth to the already existing
businesses untaken by foreign investors. It is further stipulated in subsection (2) of the
aforementioned section that despite subsection(1), the investment contract or permit
contemplated in that subsection:

a. is subject to review by the State and may be aligned to the requirements of this Act
if the circumstances so require; and80
b. ceases to be of effect upon its expiry, unless the Minister and the investor agree to
its renewal on terms consistent with this Act.81

What is not clear in this provision is what “investment permit or contract” is intended to
mean. The former Foreign Investment Act did not provide for such permits of contracts.

79
Namibia Investment Promotion Act s 35(3).
80
Namibia Investment Promotion Act s 35(2) (a).
81
Namibia Investment Promotion Act s 35(2) (b).
30
It is however not clear whether such permits refer to permits that were issued to foreign
investors not under the Foreign investment Act or those issued in terms of other
legislation. Moreover, if the permit included mineral licenses for example, and they
expire subject to renewal, then the holder of such a license would be required to obtain
the Minister’s approval to be issued with a new license.82 This may result in lengthy
administrative procedures. It is also evident that the meaning and extent of these
provisions are not clear and might have retrospective effect if they are to apply to
investors who had investment permits under the former Act.

5.3.3 Discretionary powers granted to the Minister might encourage corruption

Under section 33(a) of the Act, the Minister has the authority to suspend, withdraw or
cancel the approval of the investment issued under the Act or the license, permit,
authorization or concession issued under any law; 83 and cause the investment to cease
operations until the suspension, withdrawal or cancellation is lifted or until the offence is
remedied.84 It ultimately implies that the Minister has the authority to cancel a
foreigner's ability to conduct business in Namibia. Furthermore, the approval by the
Minister is required in the event that assets are required to be attached to settle debts of
the foreigner. The powers of the Minister in essence, take away the rights of foreign
investors which may lead to litigation. This could be detrimental to attracting FDI in
Namibia.

5.3.4 Inflexible dispute settlement procedure may discourage foreign investors

82
International Comparative Legal Guides, Namibia Mining law 2018. Available at
https://iclg.com/practice-areas/mining-laws-and-regulations/namibia. Last accessed on 23 October, 2017.
83
Namibia Investment Promotion Act s 33(a).
84
Namibia Investment Promotion Act s 33(b).
31
Part of NIPA’s objective is to promote a dispute resolution mechanism which is provided
for in section 28 of the Act. This provision states: “the jurisdiction over disputes relating
to this Act lies exclusively with the courts of Namibia, but the Minister and investor or
investment, as required by the circumstances of the alleged breach of rights or
obligations, may, by written agreement, agree to arbitration in accordance with the
Arbitration Act, 1965 (Act No. 42 of 1965) in Namibia.”85

Settlement of disputes in the local courts is an important factor in protection for foreign
investors in certain instances. This is because in the absence of any present alternative,
disputes arising between the foreign investor and the host country will be dealt with by
the local courts. It is therefore important for the investors to have a sense of security
that the local legal system is robust enough to undertake a fair consideration of all
issues being presented to it. Nonetheless, this provision does not present an attractive
choice for foreign investors because in the past, local courts have shown less flexibility
in similar situations, and have based decisions on the local laws, which do not include
sufficient protection for foreign investors.86 In addition, using the country’s state
domestic courts for the resolution of disputes such as these, has proven inefficient and
unpopular for a variety of reasons. This includes the unpredictability of the rules
applicable and where the state whose courts are to be used is a party to the transaction,
questions of impartiality become inevitable.87 Therefore, the limited nature of the
jurisdiction of international courts in respect of investment disputes may result in
hindering, rather than promoting FDI in Namibia.

85
Namibia Investment Promotion Act s 28(4).
86
Hamida W,B. (2007) Two Nebulous ICSID Features: The Notion of investment and the Scope of
Annulment Control-Ad hoc Committee’s Decision in Patrick Mitchell v Democratic Republic of
Congo.Journal of International Arbitration. Kluwer Law International: Netherland. p.296.

87
International dispute resolution update. Available at: http://www.trlplaw.com/wp-
content/uploads/2015/04/Nigeria_TRLP_Layout-1.pdf. Last accessed on 22 September, 2017.
32
Conclusion

Despite the fact that the Act is not yet in force, the Namibia Promotion Act is set to
transform the business environment. Although the Act is aimed at promoting
investments, it negatively affects the promotion of foreign direct investment to a certain
degree. Among other defects contained in the aforementioned provisions of the Act, the
length of time and costs that foreign investors need to incur for approval of their
investments is a cause of potential drawback of FDI. Moreover, the Act places such
power in the hands of the Minister to approve investments and reserve sectors for
certain categories, which might encourage corruption and create uncertainties among
potential investors. Notwithstanding these concerns, the Act also provides for positive
changes such as reserving certain sectors to local businesses which will empower the
Namibian nation. Furthermore, the Act introduces technology transfer in the context of
FDI, and this will have the effect of creating employment. Sectors that would benefit in
this regard would be the manufacturing, mining and transportation sectors. The policy
conclusion that can be drawn from this dissertation is that FDI should be aimed at
supplementing domestic investment and not at substituting it; the economic benefits of
FDI are evident and in most instances outweigh the costs, however they do not accrue
automatically. Therefore, to reap optimum benefits from foreign corporate presence, a
healthy enabling climate for business is paramount. This does not only encourage
domestic as well as foreign investment, but it also provides incentives for improvement
of skills and innovation contributing to a competitive corporate environment. Strong legal
and administrative FDI regulatory policies are thus central to promote FDI opportunities
that are aimed at creating sustainable economic development.

33
 Chapter 6: Conclusion and recommendations

Investors are looking for an investor climate that offers stability and predictability over
the long term.88 It is thus important for any foreign investment promotion body to have
mechanisms established for the evaluation of the costs as an investment incentive.
Providing financial and other incentives to attract foreign investors is not a substitute for
pursuing policy measures that create a stable investment environment for foreign and
domestic investors.89 Without a sound investment environment, competition among
countries for FDI may possibly divert public resources away from more productive
purpose with no effect on investment. However, in some circumstances, incentives may
complement an already attractive environment for investment or serve as a partial
rectification for market deficiencies that cannot be addressed by direct policy reforms. 90
Each individual incentive granted may make sense at the time, but the cumulative effect
offered might eventually become counter-productive or unaffordable by giving investors
an incentive to delay investments until they are able to obtain concessions.
Consequently, authorities offering incentives to attract investment must annually
evaluate their relevance, appropriateness and economic benefits against their budget
and other costs, including the long-term impact on resource allocation.91 It is evident
from the findings in preceding chapters of this dissertation, that most of the NIPA
provisions relating to particularly FDI, have a hindering effect to attracting FDI in
Namibia.

88
Jonathan, K and Zamparutti,A. 1995. Foreign Direct Investment and Environment in Central and
Eastern Europe: A Survey. Washington, D.C.: The World Bank.p67.
89
The Investment Promotion Toolkit: investment promotion and facilitation.Available at
http://www.oecd.org/investment/toolkit/policyareas/investmentpromotionfacilitation/41246119.pdf. last
accessed 18 October, 2017.
90
ibid.
91
Morriset, J. “Does a country need a promotion agency to attract foreign direct investment?” Policy
Research Working Paper 3028, World Bank, April 2003. Washington DC: World Bank.
34
Notwithstanding the weaknesses of certain provisions of the Act such as the powers
granted to the Minister among others, the Act’s introduction to technology transfer can
be considered to be a potential positive achievement of NIPA. This will provide
technology and management resources that would otherwise not be available.

Recommendations

Certain provisions of the Act relating to the introduction of technology transfer,

reservation of categories for domestic investors, border transfer of funds and effective
dispute resolution will be of benefit to the Namibian investment environment and should
be retained and repeated in future investment policies.

Section 1392 provides for provisional approval of applications of foreign investors by the
Minister which can be a lengthy process. A reasonable time frame should be used so as
to prevent foreign investors from being dissuaded.

Section 2893 relates to exclusive compulsory recourse to domestic courts. This method
of arbitration is not only unusual but it also raises questions of impartiality and
corruption and might not be favorable to foreign investors. It would benefit the business
environment to employ international dispute resolution bodies to work in conjunction
with the Namibian courts to settle matters involving foreign investors.

92
Namibia Investment Promotion Act, s13.
93
Namibia Investment Promotion Act, s28.
35
Section 3394 sets out the discretionary powers of the Minister to suspend, withdraw and
cancel a foreigner’s ability to conduct business in Namibia. The business community
reiterated the danger of this particular provision to attracting FDI. Notwithstanding the
importance of regulatory measures that should be in place, these administrative powers
are to be monitored by an anti-corruption body to ensure transparent transactions that
are free from any external influence.

Section 35(3)95 provides that anything done under the amended Foreign Investment Act
shall be deemed to have been done under NIPA. Although this provision implies
retrospective effect, it is important for continuity. It is important to note that the
aforementioned Act was amended due to its inability to carry out its foreign investment
objectives. Thus, clarity as to what exactly will be deemed to be done under NIPA is of
importance to forge a conducive investment climate.

94
Namibia Investment Promotion Act, s33.
95
Namibia Investment Promotion Act, s35(3).
36
Bibliography

List of books

Asiedu, E. (2003). “Policy Reform and Foreign Direct Investment to Africa: Absolute
Progress but Relative Decline,” forthcoming in Development Policy Review. Mimeo:
University of Kansas.

Blomstrom, M., Lipsey, R. E., & Zejan, M. (1994). What explains developing country
growth? In W. J. Baumol (Ed.), Convergence of Productivity: Cross-National Studies
and Historical Evidence (9th ed.). New York: Oxford University Press.

Coakley, G. J. (2002). The mineral industry of Namibia. AngloGold Ltd operational

review: Windhoek.

Forte, R & Moura, R. 2013. The Effects of Foreign Direct Investment on the host's
country's economic growth: Theory and empirical evidence. 58 (3), World Scientific:
Singapore.

Jenkins, C., Thomas, L. (2002): Foreign Direct Investment in Southern Africa:

Determinants, Characteristics and Implications for Economic Growth and Poverty
Alleviation. Globalization and Poverty Project. University of Oxford.

National Planning Commission, (2000). Second national development plan (NDP2):

2001/2002-2005/2006. Windhoek: National Planning Commission.

Odada, J. & Godana. T. (2002). Sources of Growth in Africa: A case study of Namibia.
Namibia Economic Policy Research Unit. Windhoek.

37
Rugg, G., & Petre, M. (2007). A Gentle Guide to Research Methods. New York: Open
University Press, McGraw-Hill Education.
Sarkar, P. (2007). Does Foreign Direct Investment Promote Growth? Panel data and
Time Series Evidence from Less Developed Countries, 1970-2002), Elsevier Ltd:
London.

List of articles

Antras, P., 2003. “Firms, Contracts and Trade Structure,” Quarterly Journal of
Economics 118.

Balasubramanyam, V.N., Salisu, M. & Sapsford, D. 1999. Foreign direct investment as

an engine of growth. The Journal of International Trade and Economic Development,
8(1). London: Routledge.

Barry P. Bosworth and Susan M. Collins, 1999, "Capital Flows to Developing

Economies: Implications for Saving and Investment," Brookings Papers on Economic
Activity:1, Brookings Institution.

Bengoa, M., & Sanchez-Robles, B. (2003). Foreign direct investment, economic

freedom and growth: new evidence from Latin America. European journal of political
economy, 19(3).

Borensztein, E., De Gregorio, J., & Lee, J.-W. (1998). How does foreign direct
investment affect economic growth? Journal of International Economics, 45(1).

Borensztein, E., De Gregorio, J., & Lee, J.-W. (1998). How does foreign direct
investment affect economic growth? Journal of International Economics, 45(1).

38
Choe, J. Il. (2003). Do Foreign Direct Investment and Gross Domestic Investment
Promote Economic Growth? Review of Development Economics, 7(1).
Conway, P., D. De Rosa, Nicoletti, G and Steiner, F. (2006) Regulation, Competition
and Productivity Convergence, OECD Economics Department Working Papers, No.
509.

De Mello, L. R. (1999). Foreign direct investment-led growth: evidence from time series
and panel data. Oxford Economic Papers, 51(1).

Disyatat, Piti and R. Gaston Gelos, 2001, “The Asset Allocation of Emerging Market
Mutual Funds,” IMF Working Paper 01/111 (Washington: International Monetary Fund)

Dixon, W. J., & Boswell, T. (1996). Dependency, disarticulation, and denominator

effects: Another look at foreign capital penetration. American Journal of Sociology,
102(2).

Dollar, D. and Easterly, W. (1998), “The Search for the Key: Aid, Investment and
Policies in Africa”, World Bank working paper.

Gil, M. & Kaufmann, D. (2000), “Transparency, Liberalization, and Banking Crises,”

World Bank Working Paper 2286 (Washington: World Bank).

Graciela,K. Lyons,R. & Schmukler, S. (2000), “Managers, Investors, and Crises: Mutual
Fund Strategies in Emerging Markets,” World Bank Working Paper 2399 (Washington:
World Bank).

Hamida W,B. (2007) Two Nebulous ICSID Features: The Notion of investment and the
Scope of Annulment Control-Ad hoc Committee’s Decision in Patrick Mitchell v
Democratic Republic of Congo.Journal of International Arbitration. Kluwer Law
International: Netherland.

39
Hernandez-Cata, E. (2000), “Raising growth and investment in Sub-Saharan Africa:
What can be done?”, IMF policy discussion paper, PDP/00/4.

Jonathan, K and Zamparutti,A. 1995. Foreign Direct Investment and Environment in

Central and Eastern Europe: A Survey. Washington, D.C.: The World Bank.

Julius, R. (1990). Global Companies and Public Policy. New York: Council on Foreign
Relations for the Royal Institute of International Affairs.

Kentor, J. (1998). The Long-Term Effects of Foreign Investment Dependence on

Economic Growth, 1940-1990. American Journal of Sociology, 103(4).

Kentor, J., & Boswell, T. (2003). Foreign capital dependence and development: A new
direction. American sociological review, 68(2).

Li, X., & Liu, X. (2005). Foreign direct investment and economic growth: an increasingly
endogenous relationship. World development, 33(3).

Lipsey, R. E., 2003. “Foreign Direct Investment and the Operations of Multinational
Firms: Concepts, History, and Data,” in E. Kwan Choi and James Harrigan (eds.)
Handbook of International Trade. Oxford: Blackwell.

Morriset, J. “Does a country need a promotion agency to attract foreign direct

investment?” Policy Research Working Paper 3028, World Bank, April 2003.
Washington DC: World Bank.

Nishiotis, G. (2004). Do Indirect Investment Barriers Contribute to Capital Market

Segmentation? Journal of Financial and Quantitative Analysis, 39(3), London:
Cambridge University Press.

40
Scharfstein, D.S. & J.C. Stein, (1990) , “Herd Behavior and Investment,” American
Economic Review 80.

Solomon, E.M. (2011). Foreign Direct Investment, Host Country Factors and Economic
Growth. Ensayos Revista de Economia, 30(1).

Umoh, O., Jacob, A., & Chuku, C. (2012). Foreign Direct Investment and Economic
Growth in Nigeria: An Analysis of the Endogenous Effects. Current Research Journal of
Economic Theory, 4(3).

International Instruments

IMF (International Monetary Fund) 1993, Balance of Payments Manual 5th Edition,
Washington DC.

OECD (2002), Foreign Direct Investment for Development, maximizing benefits,

minimizing costs.

Internet sources

Busch, S. 2017. The Namibia Investment Promotion Act, 2016: Hindering or promoting
foreign investment? Available at www.ensafrica.com.

Geingob signs law that reserves certain jobs for locals. Available at
https://www.newera.com.na/2016/08/15/geingob-signs-law-reserves-jobs-locals.

Grant, R. 2016. Namibia Investment Promotion Act, ACF presentation. Available at

https://home.kpmg.com/content/dam/kpmg/na/pdf/Namibia-Investment-Promotion-Act-
2016.pdf.
41
International Comparative Legal Guides, Namibia Mining law 2018. Available at
https://iclg.com/practice-areas/mining-laws-and-regulations/namibia.

International dispute resolution update. Available at: http://www.trlplaw.com/wp-

content/uploads/2015/04/Nigeria_TRLP_Layout-1.pdf.

Santander Trade portal; Namibia: Foreign investment. Available at

https://en.portal.santandertrade.com/establish-overseas/namibia/investing-3.

Staff reporter (2016). First production achieved from Swakop Uranium’s Husab mine.
Available at https://www.newera.com.na/2017/01/27/first-production-achieved-from-
swakop-uraniums-husab-mine/.

The Investment Promotion Toolkit: investment promotion and facilitation.Available at

http://www.oecd.org/investment/toolkit/policyareas/investmentpromotionfacilitation/4124
6119.pdf.

UNCTADstat available at http://unctadstat.unctad.org.

Acts of Parliament

Namibia Investment Promotion Act 9 of 2016

42
43
44