Namibia flag Namibia: Investing in Namibia

Foreign direct investment (FDI) in Namibia

FDI in Figures

According to UNCTAD's 2021 World Investment Report, FDI flows to Namibia accounted for USD -75 million in 2020, compared to USD -175 million in 2019, partly due to the global economic crisis triggered by the Covid-19 pandemic. The total FDI stock grew to USD 6 billion in 2020. According to UNCTAD’ Investment Trends Monitor, global FDI flows rebounded strongly in 2021, but FDI flows to African countries (excluding South Africa) rose only moderately. Namibia boasts substantial natural resources (uranium, diamonds, zinc, copper, oil), which attract the majority of FDI. The main countries investing in the mining sector are South Africa, the United Kingdom, the United States and Germany.

Namibia’s business climate suffered from a significant deterioration over the last decade. From ranking 54th in the World Bank 2008 Doing Business report, the country dropped to the 104th position (out of 190 countries) in the Doing Business 2020 report. President Hage Geingob has introduced new measures aiming at strengthening the national economy, some of which restrict investment opportunities for foreign groups and strengthen state control in certain areas, especially in the exploitation of natural resources. Property rights are constitutionally guaranteed, but the parliament can legally expropriate property and regulate the property rights of foreign nationals. In a context of high inequalities, debates over land redistribution and economic empowerment are increasingly popular. Labour regulations are relatively flexible, but the labour market lacks dynamism and the workforce is small and not highly skilled. Nonetheless, Namibia benefits from significant mineral resources, fisheries, good transport infrastructure, a stable democracy, and enforcement of commercial regulations is fairly effective and consistent. Namibia has launched very large infrastructure projects in the country (including railroads that will open transportation with its neighbouring countries, the enlargement of the Walvis Bay Port and several mines), all of which are expected to bring in significant FDI inflows.

 
Foreign Direct Investment 201820192020
FDI Inward Flow (million USD) 209-179-75
FDI Stock (million USD) 6,9066,8276,071
Number of Greenfield Investments* 8116
Value of Greenfield Investments (million USD) 6592,257149

Source: UNCTAD, Latest available data

Note: * Greenfield Investments are a form of Foreign Direct Investment where a parent company starts a new venture in a foreign country by constructing new operational facilities from the ground up.

 
Country Comparison For the Protection of Investors Namibia Sub-Saharan Africa United States Germany
Index of Transaction Transparency* 5.0 5.5 7.0 5.0
Index of Manager’s Responsibility** 5.0 3.5 9.0 5.0
Index of Shareholders’ Power*** 6.0 5.5 9.0 5.0

Source: Doing Business, Latest available data

Note: *The Greater the Index, the More Transparent the Conditions of Transactions. **The Greater the Index, the More the Manager is Personally Responsible. *** The Greater the Index, the Easier it Will Be For Shareholders to Take Legal Action.

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What to consider if you invest in Namibia

Strong Points

Strong points of investing in Namibia include:

  • Stable democracy and strong adherence to the rule of law
  • Relatively developed road infrastructure
  • Affordable construction permits (and allowances for investors in the manufacturing sector)
  • Preferential access to the Southern African Development Community (SADC) market
  • Duty-free access to Southern African Customs Union (SACU)
  • Duty-free access to the European Union for a wide range of manufactured and agricultural products (as part of the Cotonou Agreement)
  • Duty-free and quota-free access to the United States (under the Africa Growth and Opportunity Act (AGOA))
Weak Points

Weak points of investing in Namibia include:

  • The government's willingness to raise state ownership of mining assets in the industry (mining being the most lucrative and attractive industry for foreign investors)
  • Limited domestic market and low population density
  • Time-consuming, costly and cumbersome business setup process
  • Low regional competitiveness (due to high import and export costs)
Government Measures to Motivate or Restrict FDI
Incentives apply equally to domestic and foreign investors, and include the following:

• Tax incentives for registered manufacturing enterprises – Companies that meet certain criteria may qualify for the following incentives (which may not increase or create an assessed loss):
– An additional income tax deduction of 25% of employment costs and approved training costs in respect of employees directly involved in a manufacturing process
– An additional income tax deduction of 25% for specified export marketing expenditure
– An additional income tax deduction of 25% for certain land-based transportation costs for the first 10 years of registration
– For exporters of goods manufactured in Namibia, an allowance equal to 80% of taxable income derived from the export of manufactured goods (excluding fish or meat products)
– An 8% annual capital allowance on qualifying buildings and
– An exemption from import duties on the importation or acquisition of manufacturing machinery and equipment, subject to ministerial approval.
– The Minister of Finance’s 2018/2019 budget speech announced his intention to phase out manufacturing allowances. Further discussions will be conducted before any changes will be made.

• Export Processing Zones (EPZs) – EPZ enterprises qualify for total relief from income tax, VAT, customs and excise duties, stamp duty and transfer duty (but not employment related taxes and WHT). Requirements for EPZ status include conducting a manufacturing activity and exporting at least 70% of the manufactured goods outside the Southern African Customs Union (SACU). The Minister of Finance’s 2018/2019 budget speech announced his intention to repeal the EPZ Act, with a “sunset” clause for entities that have EPZ status. The EPZ Act would be replaced by a Special Economic Zone Act; no further details were provided.

• Capital allowances – For buildings used for the purposes of trade, 20% of the construction cost may be written off in the first year of use, and 4% may be written off annually over a 20-year period (the 4% allowance is increased to 8% for certain manufacturing buildings, and the write-off period is reduced to 10 years). A general three-year write-off period applies for fixed assets other than buildings (e.g. plant, machinery, equipment, aircraft and ships), with an accelerated write-off period for certain expenditure relating to mining operations and farming operations.

Find out more about Investment Service Providers in Namibia on GlobalTrade.net, the Directory for International Trade Service Providers.

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Latest Update: June 2022

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