Government gives too much for low returns

16 August 2019
Recent cases of foreign billionaires, overseas companies and erstwhile investors buying land, privilege and protection in Namibia are a concerning trend. 
In making these purchases of national assets, promises have been made about infrastructure projects, social development programs, scholarships/bursaries, training courses, and fair wage job creation.  But we must ask, who is responsible for making sure that these promises are delivered?  Do these deals have contracts with nullification and penalty clauses if promises are broken?  Is government giving away too much for low returns?
We believe that in our largely non-reading, pass-the-buck society, no one is consistently using a check list or adequately verifying compliance with deals made. We wonder if iron clad penalty paragraphs are included in the original deals so that those skipping out on their obligations to Namibia, are held accountable.  Why is so much given away upfront, before a single deliverable investment is ever made?
Namibia has a problem with consistent monitoring and evaluation of programs, statistics collection and institutional memory.  In that inefficient bureaucratic atmosphere coupled with the tendency to focus on what is pending right now (usually rushing around at the last minute to get things done), it is not surprising to find that there is no one regularly checking to see that the promises made when mega deals are on the table, are fulfilled.  We struggle to remember a case where a donor or investor was sued or had their business licence or land tenure revoked or assets being impounded because they did not provide the benefits initially pledged to the Namibian people.
Recall the Export Processing Zone (EPZ) status handed out like candy back in 1995.  Over 140 enterprises were granted EPZ status. What, in the end, did the economy benefit in return for this, relative to the amounts lost in potential duty and tax revenue?  Companies in the EPZ also did not have to adhere to the Labour Act.  By the end of 1999 thru 2001, the EPZs had created few jobs and attracted no large corporate investment compared to the millions of dollars in public funds that had been spent on promoting the policy and on developing infrastructure. 
Unsurprisingly, a 2012 study by the Offshore Development Company (ODC), showed that processing zones failed and the initiative's contribution to the economy was insignificant.  In the March 2019 budget presentation after Namibia was listed by the EU as a tax haven country, Finance Minister Calle Schlettwein announced the phase out of the EPZ status because Namibia has been losing potential revenue from taxes and that it was only benefiting from the extractive industry.
Potential state revenues were given away on a silver platter for inequitable returns.
Recall the hype and praise about the Ramatex investment of June 2001.  Reportedly, Namibia assumed it was to be a permanent investment when the Malaysian company only intended to take advantage of the temporary US duty free exemption program for African exports.  Namibia, showing its desperation for this company at any cost, swallowed the bait.  The government allowed corporate tax holidays, free repatriation of profits and exemption from sales tax.  
NamWater, NamPower and the Windhoek municipality, provided subsidised water and electricity and a 99-year tax exemption on land and the government provided over N$100 million to prepare the site for the factory.   And yet, by 2003 there were reports of abuse of workers’ rights; low wages and no benefits; unsafe work premises; abuse by supervisors and a resulting labour strike.  By 2008, after all duty free export benefits for Africa expired, the Malaysian company packed their bags, shipped their equipment, transferred their money and left after creating (and eliminating) only 6,000 of a promised 10,000 jobs, making no permanent infrastructure or expansion investment and leaving a solid waste disaster area behind them. 
Consider the RUSSIAN billionaire Rashid Sardarov who now is the proud owner of reportedly 45,000 hectares near Dordabis.  Just before the land conference in October 2018 when the government declared that no land would be sold to foreigners, they allowed the ‘purchase’ of an additional 17,000 hectares by Sardarov.  The questionable paper shuffle that involved a ‘sale’ of land and then a subsequent donation and then a 99 year lease, fools no one.
Who is monitoring the ‘deal’ with Sardarov to ensure that the jobs and tourism industry developments that were promised when the original farms were bought, are being delivered?  Sardarov bought his first hectares of Namibian land in 2013.  That is enough time to see tangible results if someone bothers to measure it. 
When we heard the announcement by Sardarov’s company at the recent investment summit where a dubious US$1.5 billion for an oil refinery (Namibia doesn’t have any oil to be refined) and a new desalination plant (which experts say can cost triple the amount mentioned) was dangled in front of a blindly applauding audience, our credibility meter flashed red.  Even Cabinet, having already heard this proposal long before the summit, put on the brakes while awaiting a feasibility study. Is Namibia being sold yet another false bill of goods? 
Focus on the Erindi purchase by the aged Mexican billionaire Alberto Baillères through one of his companies.   During the State House announcement of the billion-dollar purchase, President Geingob was angered by probing questions.  Protective of Baillères, the Head of State told the media that their queries about the nature of the transaction were “None of your business!”  He further claimed that those questioning such deals are scaring away investors. 
A raft of goodies for Namibia were promised by Baillères, including roads, jobs, training, conservation efforts, and a partridge in a pear tree.  It sounds great, but who is permanently on duty, with a check list, guaranteeing that these things are done?  Is approval for the deal, dependant on fulfilment of these promises?
The honey-mouthed investors can promise much and deliver little unless they are held accountable within the original contract.  They should be given benefits as the promised investment materializes.  Government must stop ‘paying in full’ (via rosy benefits packages and exemptions) upfront without serious protective measures to ensure the product is actually delivered as promised.
We can debate the efficacy of allowing such large foreign land purchases and huge tax holidays to lure investors, but we should all agree that if it is done, Namibia as a whole (not just the deal brokers), must benefit in equal measure `- no more low returns. 


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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