According to UNCTAD's 2022 World Investment Report, FDI flows to Namibia accounted for USD 412 million in 2021, compared to a negative flow of USD -156 million one year earlier. The total FDI stock stood at USD 6.3 billion, just above half of the country’s GDP (51.4%). The sectors that have been attracting the most FDI in Namibia include mining, tourism, agriculture, and infrastructure development. In particular, the country's mining sector has been a major recipient of FDI, with foreign investors attracted to the country's abundant mineral resources, such as uranium, diamonds, zinc, copper, oil, which attract the majority of FDI. China has made significant foreign investments, especially in Namibia's uranium mining sector. Similarly, South Africa has made considerable investments in the diamond mining and banking sectors, while Canada has invested in mining of gold, zinc, and lithium. Spain and Russia have investments in Namibia's fishing industry. Additionally, foreign investors from the United Kingdom, the Netherlands, the United States, and other countries have invested in oil exploration.
Although Namibia’s business climate suffered from a significant deterioration over the last decade, it remains positive. The country has implemented a range of policies to attract foreign direct investment, including the Investment Promotion and Protection Act (IPPA) which provides a legal framework for FDI and aims to protect foreign investors' rights; the One-Stop-Shop Investment Center that provides a streamlined process for investors to obtain permits, licenses, and other regulatory approvals; tax incentives (e.g. reduced corporate income tax rates for new investments in priority sectors, such as manufacturing, tourism, and agriculture); etc. 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. Namibia ranks 59th out of 180 economies on the 2022 Corruption Perception Index and 102nd out of 176 on the 2022 Index of Economic Freedom.
|Foreign Direct Investment||2020||2021||2022|
|FDI Inward Flow (million USD)||-146||697||945|
|FDI Stock (million USD)||7,047||7,216||7,848|
|Number of Greenfield Investments*||6||5||10|
|Value of Greenfield Investments (million USD)||159||4,594||540|
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.
Strong points of investing in Namibia include:
Weak points of investing in Namibia include:
• 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.
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Latest Update: September 2023