Interface between Competition and Empowerment

Mihe Gaomab II leads the Namibian Competition Commission

Chief Executive Officer of the Namibian Competition Commission, Mihe Gaomab II, explains the background to and the raison d’Etre for the New Equitable Economic Empowerment Framework (NEEF), a development strategy alluded to by the Competition Act, but which remains undefined in law.

The Namibian Competition Commission was established in terms of the Competition Act (Act No. 2 of 2003). The role of the Commission is to promote a competitive market, and also to cure and prevent economic ills. Namibia’s competition law is not only there to punish or prevent anti-competitive behaviour of businesses but also to stop abuse of dominance, and to manage anti-competitive mergers.
The role of the Commission needs, however, to consider public interest issues, for instance the special requirement for the economy to protect and promote small enterprises as well as to promote greater ownership for historically disadvantaged persons. The Competition Act speaks to Broad-based Economic Empowerment or BBEE, hence there is an element of BEE in what is now called the New Equitable Economic Empowerment Framework (NEEEF).
The purpose is clear for the Competition Act to take into account such a provision on promoting greater spread of more people, particularly the previously disadvantaged. But the level of instrumentation to make that happen within the Act is missing. The Competition Act can not do this. It would be significant if the NEEEF, as a framework, is transformed into law to ensure legal provisions to make empowerment a reality.
 Ideally, the Commission should have had a legal provision for the empowerment and local participation of Namibians in businesses, especially those which are merging. The essence of decisions that the Commission is empowered to make should therefore be analyzed, investigated and adjudicated upon taking into account that there is an evolving need for empowerment transformation. This will ensure not only empowering the previously disadvantaged but the broader spectrum of Namibians for increased localization and involvement in businesses, especially those that are of a high foreign shareholding content. But because of the legal vacuum in the Competition Act and the fact that the Act considers the issue as secondary and not primary, it is a welcoming initiative by the Office of the Prime Minister on NEEEF to make it a law, which adds to the voice to effect empowerment transformation.
It is also particularly encouraging that the new Investment Bill, once it becomes law, as spearheaded by the Ministry of Industrialisation, Trade and SME Development, can actually ensure provisions on local participation thereby safeguarding or growing local domestic investment.
Complementary laws such as the competition law and the investment bill, can specifically support empowerment legislation where it will play a strong role to effect economic redress or better yet, transformation by incorporating more people into the economic mainstream through businesses, particularly SMEs. The Commission embraces the promulgation of the empowerment law but with cautious optimism. Namibia as an economy on the visionary path of 2030 can only grow if there is emphasis on the importance of empowerment. Before 1990, Namibia had low or negative economic growth, protracted and skewed economic development and high levels of unsustainable debt brought about by sanctions and an economic policy that promoted economic exclusion in favour of the minority and to the detriment of the majority of people.
The Government, since Independence realized that it faces developmental challenges based on an economy which was dualistic with high unemployment and an economic structure, enclaved and concentrated around few sectors. The developmental challenges which are to reduce poverty, create employment, reduce inequalities across individuals and regions, thereby ensuring balanced economic growth, became a prime driver for the Government.
One particular development challenge was the vast racial and gender inequalities in the distribution of economic opportunities and access to wealth, income, assets, capital, skills, and employment.
This was the result of a protracted period of economic exclusion, favouring infrastructure capital (ports, dams, roads, equipments, buildings) rather than human capital (people).
As a result, Namibia has some of the best infrastructure in Southern Africa (roads, rail, ports, power, etc) and seems to integrate with ease, regionally and globally, since political transformation in 1990. An argument can be given that the maintenance of this infrastructure can be termed an “apartheid dividend” in terms of capital accumulation due to its exclusionist apartheid policy before 1990.
Such “apartheid dividend” however could not have been applicable in terms of human resource accumulation for all Namibians to ensure that more people are integrated within and across the mainstream of the economy.
Namibia, as a collective, then lost out as the economy performed below its long-term economic potential, thus robbing Namibians of future growth dividends and higher economic growth rates. Namibia still suffers from that malaise as the economy is only growing at 4 percent which is below the 7 percent envisaged for meaningful transformation.
The structure of the Namibian economy has also not re-oriented or transformed to ensure all Namibians participate as a majority in the economic cake. There are still remnants of skewness in terms of resource endowments, entitlement, access to capital, positions and assets.
Unequal income and economic exclusion hindered economic development as the economic structure was geared to serve the few and oppress the majority. There is need as a Nation to address it as the pervasive situation is neither helpful for Namibians now, nor for the next generation to prosper. There is need to aim for Economic Inclusion that should ensure broader-based empowerment mechanisms for all the people.
Of course, there is need to ensure proper working process to achieve this and it is contained in NEEEF as it aims to promote broad-based transformation in business through five empowerment pillars of 25 percent each: (a) Ownership, (b) Management Control and Employment Equity, (c) Human Resource and Skills Development, (d) Entrepreneurship Development of small businesses through preferential procurement; and (f) Community Investment in social programmes and development initiatives.
It should be acknowledged that NEEEF is based on ensuring that this be done in a targeted fashion so that more people are empowered. It is by historical necessity that NEEEF needs to target the previously disadvantaged. But that does not mean to take the resources from the previously advantaged. In fact, it is by economic design that all Namibians are involved in the process of making NEEEF a reality by bringing the previously advantaged with the previously disadvantaged together for the growth and enlargement of the economic cake. NEEEF as law should aim to put in place an institutional architecture for a BEE Commission to be established to drive the process of empowerment.