NEEEF Bill keeps investors waiting on the sidelines
The independent research unit of the Fitch Group, Business Monitor International (BMI), stated in a recent update on Namibia’s investment environment that high income inequality will probably see the government move forward with its New Equitable Economic Empowerment Framework (NEEF) in 2017.
BMI said in a bulletin that NEEEF proposals are keeping investors on the sidelines while the government has increasingly engaged with businesses in the country to improve the empowerment agenda of the framework.
According to the Africa Monitor newsletter published by BMI, NEEEF will continue to dampen investor sentiment.While the framework seeks to address inequalities in the country, BMI is of the opinion that investors will remain wary of its empowerment stipulations.
“The Namibian government will likely push forward with its proposed NEEEF over 2017 in an effort to redress persistently high income inequality and unemployment in the country.” BMI said.
The requirement for businesses to accommodate 25% shareholding for previously racially disadvantaged individuals, under the empowerment component of the NEEEF will weigh on investor sentiment, according to BMI.
“There have been mixed statements from the Namibian government regarding the 25% NEEEF clause and this will add to investors’ concerns over investing in the country.”
“While Apartheid laws were abandoned once the country gained independence from South Africa in 1990, economic integration of the wider population continues to be sluggish” BMI said, adding that Namibia, second to South Africa, has one of the highest measures of inequality in Southern Africa.
“We believe that this will provide impetus for the government’s proposals for NEEEF to be implemented as the framework highlights SWAPO’s drive towards increasing integration of previously disadvantaged citizens in the economy” BMI said.
The African Monitor newsletter advises entrepreneurs and foreign investors to refrain from setting up new businesses until uncertainty surrounding the requirement for racially disadvantaged persons to receive 25% shareholding in businesses, is resolved.
According to local news sources, BMI quoted the Chairman of the Law Reform and Development Commission who stated that the provision for businesses to sell a mandatory 25% of their businesses to ethnic black people may be reconsidered. By way of response, the President, HE Dr Hage Geingob indicated that NEEEF is a SWAPO party initiative and that the party would not move away from the principle of alleviating inequality in Namibia.