By Robinson Hangula
In June 2023, I embarked on my first Investment Promotion mission to Changsha – China for the 2nd China Africa Economic Trade Expo (CAETE).
At the time, I was in my first year as the Senior Consultant: Investment Attraction at the Namibia Investment Promotion and Development Board (NIPDB), and still getting the hang of this concept of investment promotion.
This mission was an eye opener. What an experience it was, some of my highlights at the event included the Zimbabwean and DR Congo pavilions which were huge, well branded and I could tell they cost a fortune.
For the obvious reasons I asked myself the same question like everyone else, Is it worth it? Let me take you back to where it all started.
On 16 March 2020, His Excellency, Dr Hage G. Geingob, the 3rd President of the Republic of Namibia, announced the establishment of the NIPDB as he inaugurated his new government.
The NIPDB ensued the likes of Zambia Development Agency (ZDA) est. 2006, Rwanda Development Board (RDB) est. 2008, Botswana Investment and Trade Centre (BITC) est. 2012, as well as many others across the globe.
With the establishment of the NIPDB, Namibia is amongst the last countries in Sub Sahara Africa to establish an Economic Development Board (EDB) or as more widely known an Investment Promotion Agency (IPA).
Amongst others, EDBs/IPAs strategically engage in investment promotion activities with the aim of attracting and facilitating investment, including Foreign Direct Investment (FDI), to boost economic development as well as economic diversification.
This involves creating a favorable environment for investors and highlighting the country as a compelling investment location to investors.
The NIPDB also facilitates investments by local investors and provides personalised guidance tailored to each investor’s unique needs and interests through its One Stop Centre (OSC) located at the Investment House.
Let’s unpack the concept of investment promotion. This is a practice undertaken by countries to enhance a country’s investment appeal through image building which is vital in positioning it as an attractive investment destination.
This involves strategic and active participation in international events that bring business and government leaders, investors and financiers from all over the globe together, presenting a valuable opportunity to engage decision makers.
Furthermore, targeted meetings where pre-packaged proposals are presented one on one with potential investors, as well as bilateral Business Forums where various entities in sectors of interest are invited to participate in and engage in Business-to-Business (B2B) meetings are equally as important for investment promotion.
Investment promotion is a very competitive environment, and Namibia is continuously competing for investor attention with over 200 other countries. If we consider our immediate neighbours, Namibia,
Zambia and Botswana to a certain degree have similar economic conditions. What then sets Namibia apart from her peers? Is it the Rule of law? The recently refurbished world class port of Walvisbay?
The best roads in Africa? Or perhaps our stable political environment? Abundant Natural Resources and Emerging Energy Opportunities? Whatever our comparative advantages are, they must be compounded and amplified through strategic destination marketing in order to get this message across to the right audience, at the right time and in the most cost effective and efficient manner.
One might say that IPAs are comparable to retail store sales agents, they stand there in shelves like a trader waiting for Microsoft Corporation stocks, as soon as they notice your presence they approach and ask “Excuse me sir, may I assist you?” Though often seeming unnecessary and bothersome, they point you to the right shelf right away in turn saving you time and effort.
Investment Promotion is the best and most efficient way to attract FDI. Furthermore, Investment Promotion is a collective, cross-sectoral effort that involves multiple stakeholders working in coordination to create a seamless and attractive environment for investors, from issuing of industry specific certifications, permits and approvals to quality assurance standards.
According to the World Bank, Investment promotion is a long-overhaul game that can take up to 3 years before a project can reach Final Investment Decision (FID). With that in mind, Zambia
established ZDA in 2006, the following year the country attracted $1.3 billion FDI in 2007 compared to $616 million the prior year, South Africa established InvestSA in 2016 seeing a strong positive growth in FDI of $5.3billion in 2018 compared to $1.7billion in 2015, similarly Zimbabwe created ZIDA in 2020 seeing an emerging positive growth in FDI of $588m in 2023 compared to $280 in 2019 this is according to the FDI intelligence report published October 15 2020 as well as the Herald online.
Bank of Namibia (BoN) in collaboration with NIPDB recently launched an FDI report that highlights that in four years, since 2021 a year after the formation of NIPDB, the cumulative net FDI inflows reached N$114.9 billion, a figure that far exceeds the N$50.5 billion in net FDI inflows recorded over the entire period from 2009 to 2020. While total FDI inflows between 2021 and 2024 amounted to N$114.9 billion, this surge has been largely driven by oil and gas investments (N$58.9 billion).
However, net FDI excluding this sector still amounts to N$56.0 billion over the period. This suggests that, even without the oil and gas sector, recent investment inflows remain robust, reflecting notable growth sustained and investor interest in other sectors of the economy.
The report further highlights that 6,835 new jobs were created over the past five years and foreign-owned enterprises employed an estimated 62,817 people in 2023, up from 55,982 in 2019 accounting for over 11% according to the employment survey.
Answering the question, Is investment promotion worth it? Let’s look at the Pros: it Attracts FDI and Local Investment, Job Creation & Economic Diversification, Positions Namibia Globally, Builds Investor Confidence, Encourages Policy Reforms, Fosters Public-Private Dialogue. Cons: Pressure to Show Quick Wins, Long Conversion Timelines (3 – 5 years), high Cost of missions, dependence on external factors such as political stability and environmental conditions outside the control of the IPA, Mismatch Between Investor Interests and local capacity such as skills, coordination complexity with various Ministries, Offices and agencies.
Investment promotion is justified when it is strategic, targeted, and aligned with the country’s long-term economic goals.
While costs can be significant, the economic benefits such as FDI inflows, job creation, and competitiveness often far exceed expenditures when executed effectively. Therefore, focus on reviewing performance of an EDB/IPA should be on the cost benefit analysis as well as benchmarking with other EDBs/IPAs.
The tendency to look at the cost of promotion without due regard to the outcomes can be misleading.
*Robinson Hangula is the Manager for Investment Attraction at the Namibia Investment Promotion and Development Board (NIPDB)
