Namibia’s policy perception index score drops by 33 places globally – survey
In its annual survey of mining companies, the Fraser Institute reported that Namibia dropped 33 places globally on its Policy Perception Index score, drastically losing the 14th place it held in 2019.
In Africa, the country fell from first place in 2019 to fifth position in 2020. This is most concerning given that investors regard other jurisdictions as having more stable and favourable policy frameworks in comparison to Namibia.
The Canadian based Fraser Institute released its 2020 Report on the Annual Survey of Mining Companies towards the end of last month. The report shows that Namibia only marginally increased her score on the overall Investment Attractiveness Index and several other jurisdictions performed far better.
Namibia’s underperformance on the Investment Attractiveness Index was driven by a drastic decline on the Policy Perception Index by 12.92 points. The report cites Namibia as the only African jurisdiction that did not improve on this particular index.
Investors expressed concerns over the availability of labour/skills, regulatory duplication and inconsistencies, and infrastructure. Challenges with VAT registrations and input value added tax refunds for exploration companies were a so cited as hurting Namibia’s competitiveness.
These issues dampened the major positive outcome with government’s pronouncement during 2020 on the complete withdrawal of the non-deductibility tax proposal from the Income Tax Amendment Bill of 2018.
The Chamber of Mines of Namibia said the survey solicited between five and nine responses from Namibia, which is not representative of the whole mining industry.
“Had a higher number of responses been received, the Chamber holds the view that Namibia would have received higher scores on the overall Investment Attractiveness Index and the Policy Perception Index as a result of revoking the non-deductibility tax proposal,” Chamber CEO, Veston Malango, said.
Malango said the Chamber remains committed to working with Government to ensure all outstanding policy obstacles are resolved, and that Namibia once again becomes the most attractive investment destination in Africa, a feat that was achieved in the 2014 Fraser Report.
Namibia’s Investment Attractiveness Index (IAI) marginally increased by 1.5 points, from 58.22 in 2019 to 59.72 in 2020, due to the significant increase recorded in the Best Practices Mineral Potential Index, which was offset by a substantial drop in the Policy Perception Index.
The Investment Attractiveness Index combines the Policy Perception Index and the Best Practices Mineral Potential Index and is an overall measure of a country’s competitiveness. The Policy Perception Index carries a weighting of 40% and the Best Practices Mineral Index carries a weighting of 60%.
“Although the mineral potential index carries more weight, investors are sensitive to policy uncertainty and will prefer jurisdictions that have a stable policy environment and are conducive to mining,” Malango explained.