Geingob announced on Tuesday that government was going ahead with the contentious National Equitable Economic Empowerment Framework (NEEEF) which will make it mandatory for mostly white-owned businesses to sell a 25 percent stake to previously disadvantaged Namibians.
Namibia is among one of the most economically unequal countries in the world.
The Construction Industries Federation (CIF), the Namibia Chamber of Commerce and Industry (NCCI) and the Namibian Employers Federation (NEF) have all previously expressed concern about the empowerment plan.
In an interview this week, NEF Secretary General, Tim Parkhouse, said he hoped that the new bill will be investor friendly and not racially targeted.
“I understand what the president is trying to do, but we have to do it in such a way that somebody who lives in Havanna has the possibility to advance,” Parkhouse said.
He said he is concerned about the shareholding clause in the current bill which forces companies to make shares available to employees, saying that not every employee will have money to buy in.
“If not careful, we can do more damage than good,” Parkhouse warned.
Geingob said government has no choice but to address the underlying structural impediments which make it difficult if not impossible for Namibians to effectively participate in the economy.
He emphasized that although Namibia will draw comparative experiences from other countries such as South Africa, the country’s economic empowerment legislation will be unique.
The government of neighbouring South Africa has a regulation that at least 26 percent of the ownership of mining companies be in black hands.
Companies say they should be considered to have met the rule even after black owners have sold their shares, which has become a bone of contention.
Last year, rating agency Fitch cited the empowerment plan as one of the reasons it had downgraded Namibia’s Long-Term Foreign-Currency Issuer Default Rating to junk, saying the policy would scare away potential investors who might not be willing to cede stakes in their companies.
Geingob encouraged businesses to start the process of implementing NEEEF before the bill is passed. But, he did not offer information on what steps would be taken to fairly reconcile any differences between industry or individual businesses’ empowerment regulations with the NEEEF law that would be eventually passed.
Former Namibia Chamber of Commerce and Industry Chief Executive Officer, Tara Shaanika, said he was happy government was finally making strides to conclude the process as there has been a cloud of uncertainty in the economy with regard to the legislation.
He welcomed the president’s comments that the legislation will not only target white businesses.
“It is comforting to note that it calls for all businesses, white and black to embrace the tide of economic transformation which the proposed legislation will bring about.
“Economic transformation should not be seen as an act of revenge, but a corrective action aimed at ensuring that all Namibians, black and white, share the gains of our revolution in an equitable manner as far as possible. It is unacceptable and unsustainable for the levels of economic inequalities that we have in this country to continue,” Shaanika said.
He, however, said the version of the legislation that he had previously seen did not cut deep enough to bring about genuine and far-reaching economic transformation.
“Unfortunately there appears to be a heavy focus on the ownership pillar which for me is not the most important factor in transformation. I believe that our transformation efforts must, as a matter of priority, pay greater attention to the creation of and support to competitive black owned enterprises.
“We must create a critical mass of black industrialists and competitive enterprises which can compete with existing white establishments. Right now, the playing field is not levelled. White entrepreneurs have better access to capital than their black counterparts and the proposed legislation must actually skew the playing field in favour of black entrepreneurs,” Shaanika said.
Whites make up only about six percent of Namibia’s population of 2.4 million, but overwhelmingly dominate business and land ownership.