Foreign direct investment falls 80%
The value of foreign direct investment decreased by an astonishing 81.2% last year compared to 2010 according to statistics obtained from the Ministry of Trade and Industry.
Statistics provided to the Economist by the chief trade promotion officer at the Namibia Investment Centre, Angela Dau-Pretorius, shows that a total of N$570 million was invested in the country last year, a sharp contrast to 2010 when the value of foreign investment stood at over N$3 billion.
At N$180 million, mining and exploration received the highest investment followed by tourism and hospitality (N$156 million), and manufacturing which was a distant third with N$83 million worth of investment.
A total of 848 work permits were issued to foreign investors with the assistance of the Namibian Investment Centre down from 2082 in 2010.
Dau-Pretorius said her ministry is working closely with the Bank of Namibia on studies regarding measures for improved re-investment of capital by foreign companies into the Namibian economy.
She added that her ministry was drafting a new law that will enable the country to become more competitive to attract both domestic and foreign investment.
“We do have the Foreign Investment Act in place which protects all foreign investment as well as ensures equal treatment of foreign investors with locals. However, the Act is currently under review to put in place a more modern and clear legal law.
“The new law in conjunction with other factors of national competitiveness will assist Namibia in becoming more competitive to draw both domestic and foreign investment due to an increased transparent legal investment regime, simplified processes of admission and treatment of investors,” Dau-Pretorius said.
The sharp drop in foreign investment at a time when the country is faced with a staggering 51.2% unemployment rate and high levels of inequality will give credence to calls by politicians that local investments should be used to develop the country.
Namibia is a net exporter of capital and historically, the country has accumulated excess savings over investment. Capital outflow from the country from institutional investors alone is estimated at N$37.7 billion in 2009 and N$27.4 billion in 2010.
Speaking at the launch of RMB Namibia, late last year, Prime Minister Nahas Angula was critical about the export of local capital while the country had a number of projects that needed funding.
He said: “All too often we are told that projects are too big or too risky for the local banks and that foreign funding needs to be found instead.
“I have never understood why local funders including our own development finance institutions and even our pension funds, cannot be part of the funding of these big and exciting projects.
“I fail to understand why we export local capital only to import foreign capital to fund such projects.”