FDI is not the solution

23 November 2018
Foreign Direct Investment (FDI) is not the silver bullet to solve Namibia’s employment and recessionary woes.  It has a major downside that could stifle wealth creation and indeed, undercut national sovereignty. 
When will this government wake up and understand that being able to provide for ourselves is the key to breaking the cycle of poverty and creating wealth in this country? 
“Foreign direct investment is an investment in the form of a controlling ownership in a business in one country by an entity based in another country.”  In other words, a foreign business or individual invests money and controls an entity based in Namibia.
If you take someone’s money, then you follow their directives and priorities.  Foreign entities investing money can exert control that supersedes Namibian laws and customs. 
We’ve seen it before with waivers of taxes, export/import regulations, foreign exchange limitations, environmental laws, labour laws, visa regulations and other ‘benefits’ that have been granted to a range of foreign entities operating in Namibia over the years, in exchange for their investment in our economy.
There are too many uninformed leaders in our government who make speeches calling for more FDI without a single notion of what it actually means for Namibia.  This is dangerous. 
No businessperson from a foreign country puts their cash into Namibia just because they like us.  The only thing they want is a high return on their investment, as fast as possible with low risk.  The needs and priorities of the Namibian people are mostly irrelevant to them.
We do not oppose FDI in and of itself – true investors are welcome; we oppose our government’s fervent commitment to it as if it is the manna from heaven that will salvage our economy, employ our youth, inject money into public spending and government infrastructure programmes, and feed and educate our people.  We must be realistic about what FDI is, and most importantly, what it is not.
FDI is not a donor gift or development assistance or low interest loan.  Foreign entities investing their money in Namibia want to take profits and products out, that is why they put their money in.  They are not interested in building anything that stays in Namibia which does not promote their margins. 
Contrary to the administration’s claims that Namibia is in the driver’s seat with donor assistance from the Chinese (or any other country), the truth is that those with beggar bowls have no say in the conditions of the donation.
This administration has overseen Namibia’s relegation to needy international finance beggar status and that must be admitted, not as an accusation, but as a building block to effective solutions going forward.  Identifying the problem is the first step towards solving it.
Take our agriculture sector for example.  A country that can feed itself is a viable nation.  If Namibia applies its limited resources to growing food so our people have enough to eat and exports the excess, then we are strong. 
If our agricultural products that have worldwide markets are the focus of the limited government funds still available, then we can grow.  But, if we wait for FDI to be able to implement national food security or increase agricultural exports, we are weak.  It is just that simple.
Giving farmland, for example, to Chinese so they can raise cattle locally to export to their own country is not building wealth in Namibia.
The country’s ravished economy does not get a boost from this kind of FDI. It is not a total agricultural development programme that could be providing food for all of our people.
This country still imports a large portion of what it eats; correcting this reality should be attacked with vehemence rather than pushing for long-term FDI for all sectors.

Why can’t the imprisoned value of meat north of the red line be unlocked and those animals be sold to feed lots for the required time.
The animals could be slaughtered and appropriate meat products sold throughout all areas above the red line, leaving other cuts and products to be processed according to health requirements and sold at locations around Namibia. 
This meat cannot be exported, but it can be used in government facilities across the nation including prisons, schools, army bases and Food Banks.
Food imports can be decreased when local food replaces foreign grown products.  Why hasn’t government cut the amount of meat being imported by consistently pushing Namibia towards meat self-sufficiency?
Why not invest state and local funds into the Green Schemes to grow food to augment the insufficient Old Age Pension with (for example) 20 kgs of meat each month.
These are quite do-able food security ideas that can be promoted with more vigour.  Why spend so much effort and place such emphasis on seeking FDI for the agricultural sector when it is, in effect, a continuous “Black Friday” sale on Namibia’s assets.
We believe it is more important to empower the country by providing food security first, before selling off land to Chinese, Russians, South Africans, Germans or anyone else who offers power brokers a little ‘candy’ for their individual pockets and very little for the economy as a whole.
The struggle for independence in Namibia was not so that our people could work as cattle minders, maids and laundresses in the businesses of foreign investors.  While these jobs are honourable and increased employment opportunities are beneficial for Namibia, they are not the only way our people can generate wealth.
Being self-employed, owning one’s own productive farm or business enterprise or managing one’s own investments/stocks/bonds wisely are ways to generate healthy returns without working for someone else as an employee. 
We must stop telling the world that Namibia is only interested in growing opportunities that keep our people as employees. 
Indeed, foreign investment in some sectors (for example mining or tourism) can lead to lucrative deals if each contract is done with no illusions and mutual benefits included. 
This country does not need FDI like Ramatex where the country’s laws are waived and benefits for the investment are offered at such discounts as to make that foreign investor more valuable than the Namibian people.  We note how that ended in spite of all the ‘give-aways’.
There is no doubt that foreign investors can bring in skills and technology that may not be readily available otherwise.  FDI deals should include access for locally produced Namibian products to be exported to the markets of the foreign countries concerned.  For these aspects, FDI can have benefits if the deal is negotiated from a position of strength, which is not the case for Namibia right now.
FDI can be one of many weapons for economic development, but it is a tricky double-edged sword that must be used with extreme caution.


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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