Experts knock US$1bn investment drive

Experts are sceptical about government's plan to attract new investments worth US$1 billion from both locals and foreigners during the 2019 Namibia Economic Summit that will take place next month. They also cautioned that policy uncertainty remains a concern, as policies such as the controversial New Equitable Economic Empowerment Framework (NEEEF) loom in the background.The summit, which is expected to resuscitate the country's ailing economy, was announced by President Hage Geingob during his State of the Nation Address (Sona) early this year. Local economic analyst Dr Omu Kakujaha-Matundu said he was sceptical about the figure, adding there was no clarity around the investments attracted by the 2016 Invest in Namibia Conference.“I am sceptical whether we could attract that level of investment and my scepticism is based on our first investment conference, which did not attract the level of investment that we hoped for,” he said.Dylan van Wyk, a research analyst at IJG Securities, said a conference would not do much to change investors' perceptions about the country. “To be quite honest, the last thing Namibia needs is another investment jamboree. What we need is clear action regarding policies like NEEEF, addressing the bottlenecks that have already been identified and not unnecessarily raising taxes. Without addressing these problems and taking action to make Namibia investor-friendly, direct investment will likely continue to suffer as a result,” he said.Van Wyk also pointed out that ease-of-doing-business remains a challenge.“In my opinion, policy uncertainty created over the last three years, combined with impending tax amendments, make the business climate in Namibia less conducive to growth and has been a contributing factor to the decline in direct investment. Additionally the immense bureaucracy and slow turnaround times when it comes to the registration of new businesses and the application of licences and permits, restrict the number of new entrants into Namibian marketplace,” he said. According to Cirrus Capital economist Robert McGregor, the US$1 billion figure is very optimistic, given the status quo.“Namibia is currently characterised by a weak economic environment, with a forecast for very low growth in the medium-term, underpinned by the weak macroeconomic fundamentals that have been well-publicised over recent months. Beyond this, the aspiration to attract this US$1 billion would mean that Namibia needs to be a more attractive investment destination than alternatives, which quite frankly does not appear to be the case,” he said. McGregor added that the country continues to rank poorly, both regionally and globally, in global surveys such as the Ease of Doing Business Index, Global Competitiveness Report and Economic Freedom Index, etc.“At this point the concern lies not only in what these proposed policies will impose on businesses and investors, but whether they will be enacted or withdrawn. So long as this uncertainty remains, investors will remain cautious and rather adopt a strategy of 'wait-and-see'. In addition to this, domestic policy and rhetoric continues moving in a more leftward and investor/business-unfriendly direction, as demonstrated by the likes of rent control, disallowing land ownership by 'foreigners', increased taxation and socialism 'with a Namibian character',” said McGregorHe added that tax burdens can scare off investors.“Increasing bureaucratic and tax burdens increase the hurdle rate for investors, meaning they would need to realise a greater return than were these burdens are not present. The policy uncertainty, on the other hand, leaves investors unsure of what return they can expect and if they will be able to return capital if the need arises. “The reality of the matter is that we compete with many other jurisdictions for investment, and thus we need to ensure we provide a more attractive environment to secure investment,” McGregor added.A statement issued by Geingob's high-level economic panel, through the information ministry, said the Namibia Economic Summit will take place under the theme 'Economic Revival for Inclusive Growth - Strengthening the Namibian House'.JEMIMA BEUKES

Experts knock US$1bn investment drive

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Namibian Sun 2024-11-22

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Experts knock US$1bn investment drive

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Namibian Sun 2024-11-22

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