Policy uncertainty affecting FDI inflows

14 December 2018
Policy uncertainty on a number of government plans including the outcome of the Second National Land Conference and the National Equitable Economic Empowerment Framework (NEEEF) have affected Foreign Direct Investment (FDI) into Namibia, economist Mally Likukela has said. 
“There is very little hope for FDIs due to a combination of retroviral policies and uncertainty on the outcome of NEEEF and the recent land conference resolutions,” he said.
Among the resolutions of the conference was that foreign-owned agricultural land should be expropriated without compensation, a move seen as sending jitters to investors.
The conference also resolved that foreign investment in real estate should be regulated and no land should be sold to foreign nationals.
Likukela commended government’s decision announced in April to scrap a clause in NEEEF that would have forced majority white-owned businesses to sell a 25 percent stake to previously disadvantaged Namibians.
Likukela said the business environment continues to be investor unfriendly, while the cost of doing business has continued to increase.
Namibia dropped to 107 in the 2018 World Bank Easy of Doing Business ranking released in November from 106 last year. The report showed it takes 10 procedures to register a business, a process which takes 66 days.
Likukela said government must remove unnecessary bureaucratic red tape to attract investors.
“The government must pursue investor friendly policies and win back investor confidence in the country.”
He thinks that the economy will continue to struggle next year, although some economists expect the economy to grow modestly.
“The prospects for economic recovery in 2019 are gloomy. What will appear to be some form of recovery is actually unhinged GDP growth that will emanate from increased government spending in line with the upcoming national election activities. Once that artificial growth has cooled off, the economy will slip back deeper into recession. This unhinged GDP growth could bring about a recession deeper than the current recession,” he said.
Likukela said public debt to GDP is assumed to have grown to over 50 percent already.
He warned that with elections on the horizon, government may be forced to deliberately depart from national priority documents such as Harambee Prosperity Plan and the Fifth National Development Plan. 


The Windhoek Observer is an English-language weekly newspaper, published in Namibia by Paragon Investment Holding. It is the country's oldest and largest circulating weekly.

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