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Foreign direct investments improve in third quarter of 2021

Foreign direct investments improve in third quarter of 2021

The positive momentum of foreign direct investments was maintained in the third quarter of 2021 as net inflows stood at N$93 million compared with a smaller inflow of N$17 million during the previous quarter, according to the latest statistics from the Bank of Namibia.

The cumulative net foreign direct inflows in the first three quarters of 2021 were N$262 million, which is the best performance since 2018.

The central bank ascribes this improvement to the increase in loans granted to domestic subsidiaries by their non-resident parent companies, as well as retained profits, particularly those within the mining industry. Almost 62% of Namibia’s foreign direct investment stock is in mining quarrying while nearly 23% is in financial services and about 6% is in manufacturing.

Namibia’s net foreign direct investments, on an annual basis, fell steadily since reaching a peak of N$1.05 billion in 2012 and ultimately turned negative in 2019.

This period, PSG Namibia research analyst, Shelly Louw said was associated with poor sentiment towards emerging market destinations and a slowdown in foreign direct flows globally.

She adds that the Namibian government also scored some own goals in this time, in terms of certain mooted investor unfriendly policies (since shelved but causing investor uncertainty at the time).

“However, the strong recovery in global commodity prices since the first half of 2020 especially those of diamonds, uranium, zinc, copper, and tin, which are abundant in Namibia has reinvigorated mining investment,” Louw said.

Louw added that further, this year will see the arrival of Debmarine Namibia’s new N$468 million diamond mining vessel (AMV 3), while other planned revival or expansion projects for gold, zinc, copper and tin mining also bode well for mining investment in the medium term.

“Meanwhile, the government’s new green hydrogen policy could also unlock further foreign investments in the renewable energy sector,” she noted.

PSG Namibia forecasts net foreign direct investments to exceed N$350 million in 2022 which would be the best year for foreign direct investment since 2016.

About The Author

Donald Matthys

Donald Matthys has been part of the media fraternity since 2015. He has been working at the Namibia Economist for the past three years mainly covering business, tourism and agriculture. Donald occasionally refers to himself as a theatre maker and has staged two theatre plays so far. Follow him on twitter at @zuleitmatthys