Russian tycoon gets thumbs up

24 October 2014 Author  

Front Russian 24 OctTHE Ministry of Lands and Resettlement has confirmed that it will consider granting a Russian-owned company permission to purchase agricultural land provided it meets all the requirements set out in the Land Reform Act of 1995.

This follows the recent public backlash the ministry encountered after it emerged that Russian tycoon Rashid Sardarov, through his company Comsar Properties SA, had embarked on another round to amass large tracts of land for building his game ranch.

This came against the backdrop of the ministry previously having stated that it opposed the principle of foreign absentee landlords acquiring land in the country.

However, in an interview this week, Minister of Lands and Resettlement Alpheus !Naruseb put Sardarov’s purchase into context of the existing law.

Firstly, the minister said the land fell under private ownership and therefore it was not Government selling it.

Secondly, he said the land could no longer be considered agricultural land, but as an investment for commercial purposes.

The minister said therefore, this did not constitute a classic case of absentee landlordism, because the company had proved that it would use the land for business purposes.

In addition, Article 16 of the Namibian Constitution stated that all persons – foreigners included – had the right to own immovable or movable property provided that parliament may through legislation prohibit or regulate ownership by non-Namibians as it deemed fit.

Comsar Properties SA, which the Comsar Energy Group owns, last year purchased 28,727 hectares of land in Dordabis in the Khomas Region.

The company seeks to buy another 17,300 hectares of land to build its massive Marula Game Ranch in the area. The project needs 46,000 to 50,000 hectares in totality.

 

All the farms are next to each other and Sardarov will consolidate them into a huge game ranch to allow wildlife to roam freely.

Sources familiar with the deal said the acquisition of the land took place in phases because negotiations with individual farmers were at different stages.

As a result, Comsar would only conclude the purchase of the remaining farms this year.

!Naruseb said that although he had not personally seen the application, he was aware that it had come through the office of the permanent secretary at his ministry as per standard procedure. From there it had gone to the Law Reform Advisory Commission.

As was the case with the Russian company’s 2013 application, the minister stated that the ministry would request all documentation as stipulated in sub-sections 4, 5 and 6 of Section 58 of the Act before it could consider the latest application.

Muyenga Muyenga, Chairman of the Popa Group, a partner in the project, confirmed that Comsar Properties SA had so far received all relevant certification.

This includes an Environmental Clearance Certificate from the Ministry of Environment and Tourism and a Certificate of Status Investment from the Ministry of Trade and Industry.

Comsar Properties also submitted a Business Case detailing all investments, plans, and proposed use of land at the Marula Game Ranch.

“We have confidence in the minister and that he will exercise his juristic mandate in terms of the Land Reform Act regarding this matter,” Muyenga stated.

As with the company’s first application, !Naruseb said ministry officials would have to ascertain whether the farms offered were affordable to Government or whether they had conditions attached to the deed of sale, prohibiting Government from buying land for resettlement purposes.

“For example, Government is currently involved in a legal battle after it bought Zuurverdien farm in Otjozondjupa without checking at the Deeds office. Someone already had usufruct over the farm, meaning they could continue to use it even if it is sold,” the minister explained.


“With the first application the prices were quite high and we would likely only afford two farms and opted to rather buy six farms in other areas for resettlement purposes,” he noted.

Investment

The ministry initially classified the farmland Comsar Properties SA had bought, and wishes to buy, as agricultural land.

However, because the company will use it for commercial purposes, the ministry will henceforth classify it as an investment, the minister explained.

In order to qualify for a Certificate of Status Investment, a foreign national must meet several criteria, as stipulated in Sections 5, 7 and 8 of the Foreign Investment Act of 1990.

These include increase employment opportunities in Namibia; generate development in the less developed areas of Namibia and earn or save foreign exchange.

According to business case documents made available to the Windhoek Observer, Comsar has already pumped over N$250 million into the country through the purchase of the first three farms, the purchase of game, as well as a property plant and machinery.

The second phase will see the company invest a further N$477 million in additional farms and the construction of a new lodge complex.

By the time the company completes the project during the second quarter of 2015, Sardarov would have invested over N$700 million in the project, making it possibly the biggest investment ever made by an individual in the tourism sector in Namibia.

During the construction of the Marula Game Ranch Lodge, construction work will create close to 50-100 direct jobs.

The venture will create 150 full-time jobs when the game ranch becomes operational during the third quarter of 2015.

The company will give employment priority to the communities of Stinkwater and Dordabis, with only specialised skills sourced from Windhoek and other places.

 

Ownership

 


While Government has been vocal about its disapproval of absentee landlords, people had ill perceived and misunderstood the Russian case, the minister explained.

 “The perception is that this land belongs to Government, and Government is selling it to foreigners. It belongs to private owners whom Article 16 of the Constitution protects.

“Government only has the first right of refusal in terms of buying and cannot stop them from selling the land if they meet all conditions in the Act,” !Naruseb said.

Therefore, if Government cannot afford the land, it is not in a position to prohibit the sale of land to others who can afford it. It would then grant a waiver to the applicant, allowing the owner to find another buyer.

In the case of Marula Ranch, commercial farmers own the land. “It is a private property in which the owners would have the final say,” the minister said.

According to documentation, Comsar stated that it would prepare and submit an offer for the purchase of the agricultural land by 14 July 2014.

It would also prepare and submit an application for consent to acquire agricultural land by the same date.

“In terms of the size of the land, it is sufficient for what they want to use the land for. Erindi [Private Game Reserve] is larger, even with the second Russian application,” the minister concluded.

 

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