April 27, 2024
Economy

Policy uncertainty a threat to FDI in Namibia

June 07, 2023
Policy uncertainty a threat to FDI in Namibia

Authorities must expedite efforts to improve the investment climate in the country and ensure policy certainty to attract meaningful foreign direct investment (FDI) inflows, an official has said.

Namibia, a country rich in natural resources and investment potential, is facing a significant challenge that could hinder its economic growth and development.

Managing Director of High Economic Intelligence and Economist Salomo Hei said policy uncertainty has emerged as a major threat to FDI in the country.

Hei highlighted, "the urgent need for policy clarity and a well-defined framework to attract and retain foreign investors as he emphasised that the success of FDI relies not only on appreciation but also on the ability to generate profits."

He acknowledged that Namibia possesses valuable resources and products that can attract FDI, similarly stressing: "The importance of aligning investment opportunities with the country's transformation agenda."

Hei believes that a win-win situation can be achieved by effectively combining FDI with a robust transformation strategy and that uncertainty in policy formulation can have severe consequences for FDI.

"It can lead to fluctuations in share prices and discourage investors from committing their resources. To prevent such disruptions, swift action in establishing policy certainty is important as investors need to know what they are signing up for to make informed decisions and mitigate risks," he emphasised.

Addressing the issue of policy certainty, Hei called for the involvement of industry experts and knowledgeable individuals.

"Their expertise could help in making informed decisions and formulating policies that create a favourable investment climate," he said.

Hei emphasised the significance of designing a framework that works and provides stability to potential investors.

"One crucial aspect of policy certainty is local content, there is a need to define local content, particularly in terms of corporate beneficiation and the transformation of the business sector," he said.

He drew attention to countries like Qatar and Norway, which have clear objectives for their natural resources.

While Namibia may lack the same level of capital, Hei believes that collaboration with local banks and leveraging their expertise can help create a ripple effect on the broader economy.

The economist also underscored the importance of involving legal professionals in shaping investment contracts.

"It's important to note the need to ensure that contracts not only attract inward investment but also contribute to a sustainable and thriving economy, whilst policy certainty is essential to fulfil the promises and potential of Namibia's investment landscape," he said.

This comes as the Ministry of Mines and Energy is working on finalising a local participation policy for the country’s emerging oil sector.

 The National Upstream Petroleum Local Content Policy aims to create an internationally competitive petroleum sector that maximises the benefits to the country through meaningful and sustainable participation by Namibians and local companies across all areas of the value chain.

The development follows as Namibia’s oil sector is expected to become a game changer for the domestic economy following oil discoveries by TotalEnergies and Shell off the coast of Namibia, with a third discovery having been announced earlier this year.

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Last modified on Thursday, 08 June 2023 19:58
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