Sep 2022 Interview with Nangula Uaandja, CEO and Chairperson, Namibia Investment Promotion and Development Board
Prisma Reports (PR): What are some of the main trends that have shaped Namibia’s investment environment in recent years, and why did the government decide to establish the Namibia Investment Promotion and Development Board (NIPDB) in 2021?
Nangula Uaandja (NU): Namibia has always been a good country for foreign direct investment (FDI) — particularly between 2000 and 2015, when we experienced robust FDI inflows, steady economic development and growth in gross domestic product. After 2015, however, our economy slowed down and we had negative FDI inflows until the outbreak of COVID-19. That was due to several factors: some policy introductions were considered unfavorable for investors, plus there was a decrease in commodity prices and we experienced a prolonged drought. It was the “perfect storm,” as economists would say.
President Hage G Geingob introduced various measures to address this situation that included setting up a high-level panel to review the Namibian economy. This led to the appointment of the Harvard Growth Lab to help us analyze our economy and to determine a different approach going forward. Harvard identified our three growth drivers between 2000 and 2015 — commodities, non-tradables and government spending — which had led to economic growth, but not sustainable growth. As a result, we came to the conclusion that the country’s growth needs to be led by the private sector. Namibia is the second-most unequal country in the world and, to address these inequalities, we need a private-sector-led economy that will bring about inclusive growth. Therefore, encouraging private-sector investments began to take center stage in our strategies.
We started thinking about how we could better support investment promotion and the private sector, and that led to the birth of the Namibia Investment Promotion and Development Board (NIPDB). At its inception, President Geingob gave us a clear mandate to improve Namibia’s competitiveness and ease of doing business.
We’ve found that a lot of investors are attracted to Namibia because of our stability, democracy, independent judiciary and governance. There are some bottlenecks, of course, but we’re dealing with them. From the NIPDB’s perspective, Namibia’s outlook is very positive. We have a good pipeline of investment projects and we’re working with potential investors to make sure that they’re realized.
PR: As you say, in spite of the great opportunities in Namibia, some challenges for attracting investment to the country still remain. How are the government and NIPDB working to alleviate these?
NU: One of our key challenges is that Namibia has a policy gap in the investment promotion space when compared to its peers. This is an area we’re currently working on and a new Namibia Investment Promotion and Facilitation Bill will hopefully be passed shortly.
Another challenge is high energy and utility costs. To address this, the government has introduced a modified single buyer model. Previously, the Namibia Power Corporation (Nampower) had sole responsible for the generation, transmission and distribution of electricity — there was only a single supplier for anybody who wanted electricity in Namibia, and that was Nampower. With the new Modified Single Buyer model, people can now buy up to 30% of their electricity consumption from an independent power producer (IPP). This model has been adopted in order to encourage IPPs into the market and to make sure that renewables start playing a significant role in our electricity mix.
When it comes to investor services, a further area of challenge is bureaucratic processes — we had heard from investors that it wasn’t easy to do business in Namibia and one of the NIPDB’s tasks is to establish a one-stop center where all the major government agencies that deliver services to investors are housed. We’re also accelerating our drive to introduce e-services, so that investors don’t need to physically come to our offices. A final challenge is rail transportation, as our infrastructure needs investment. The government is considering various options and plans for this, including better encouragement of public private partnerships in this area.
Overall, there’s a lot of behind-the-scenes work happening to create a more conducive environment for investments as a conduit to achieving our national priorities.
PR: What would you say were the most exciting upcoming opportunities for investors in Namibia?
NU: The most exciting one at this stage is green hydrogen. At the United Nations General Assembly in September 2020, our president talked about Namibia’s possible role in climate change and, immediately after that, we started having conversations about our green hydrogen potential with investors. At the Climate Change Conference COP26 in Glasgow last year, we made significant announcements about Namibia’s green hydrogen ambitions — it’s one of our priority projects, because it will help us address our socioeconomic challenges, support our contribution toward decarbonizing the planet and help other nations that may not have the same significant resources that we have in terms of renewables to meet their decarbonization goals.
There are other projects that may be small in comparison but are equally exciting, such as ones relating to the blue economy. For example, a company called Kelp Blue is currently piloting the development of a kelp farm in our ocean. The economic diversification strategy Namibia is driving has a number of focus areas that would interest investors, which include agriculture and agro processing, as well as tourism. These two sectors are the largest employers in Namibia and we would like to make them more productive. We’re also looking to move beyond extracting toward value addition in mining. Manufacturing and other sectors also form part of our diversification strategy, and the film industry is on our list of targeted sectors, because we have to leverage the beauty of Namibia. Very successful movies have been filmed in Namibia, such as Mad Max and Angelina Jolie’s Beyond Borders, and we want to bring more top Hollywood productions to our country.
PR: Namibia has a large public sector and a high number of state-owned enterprises (SOEs). As a chartered accountant by trade and the former head of PwC Namibia, what progress has the country made in public and corporate governance?
NU: Good progress has been made in this regard. For instance, a few years ago, public enterprises were reporting to line ministries — there was no structured, consistent approach to how they should be governed. However, the Central Governance Agency was established specifically to implement one structure for governing public enterprises. That led to the establishment of the Ministry of Public Enterprises. What’s important here is to get the right formula, to make sure that the government becomes a good and strategic shareholder and partner for the SOEs.
Our public enterprises are now classified into tiers and categories — commercial, budgetary, regulatory and so forth. Consistency on how the spending and performance of SOEs is evaluated is also being implemented. The implementation is not always as fast as one wants it to be, but the law has been passed, the structure has been put in place, some of the decisions have been implemented and, as a result, we’re seeing great things starting to happen and tough decisions being made.
When it comes to government, we have a good split between central, local and regional government. There’s evidence of impressive progress in decentralization within some bodies, such as the Ministries of Health and Education, which have done well to put directors into the regions who are serving people on the ground and are accountable to those grassroots structures in a structured, transparent manner. However, more remains to be done in this area.
A lot has happened since Namibia’s independence to make sure that we build excellent institutions and yet more remains to be done. Our president always says democracy is not a one man or woman show, it’s about strong institutions, systems and processes. That’s his message and that’s the message we need to convey to our teams.
PR: Does the creation of special economic zones come under NIPDB’s mandate?
NU: Our mandate is not to create special economic zones, but to promote such zones. The mandate to help industrialize Namibia lies with the Ministry of Industrialization and Trade, and the ministry is currently working on special economic zones and the investment policy related to them. We realize the need to fast track the development of this policy and it’s one of Namibia’s policy gaps I referred to earlier. NIPDB is working together with the Minister of Industrialization and Trade, as well as the Minister of Finance, to finalize this soon in order to effectively meet the needs of investors that are already asking for the establishment of special economic zones and the benefits that come with them.
PR: Expo 2020 Dubai was widely leveraged by investment and promotion agencies, including NIPDB, as a stepping stone to promote their countries. What other channels are you using voice Namibia’s investment needs and opportunities?
NU: We’ve realized that investors generally seek the assurance that they are welcome in a country and they like to make sure that the political leadership buys into what they’re doing. Therefore, they appreciate direct engagement with our political leaders, especially our president. We’re currently finalizing our policy for attracting targeted investment but, for general promotion, we strategically leverage our president’s presence in other markets to promote Namibia. At the recent World Economic Forum annual meeting in Davos, for instance, our president was invited to showcase Namibia’s green hydrogen potential and we took that opportunity to make sure that we fully promoted Namibia, which was a success.
We’ve also identified key activities around the globe to leverage as platforms to promote investment opportunities in Namibia. These include the Green Hydrogen Investment Forum in Singapore, the World Association of Investment Promotion Agencies annual conference in Geneva, the Africa Investment Conference in London and our team attended the Commonwealth Heads of States meeting held in Rwanda recently. When we attend these events, we ensure we make time to meet investors that may be at the same events or are in those markets. Our strategy is centered on leveraging investment conferences around the globe to gain the attention of investors, to attract them and to tell them about Namibia as an investment destination.
PR: How important is the U.S. as a source of investment and where do you see opportunities for American companies or investors?
NU: The U.S. is one of the largest potential sources of FDI, but it’s not a market that we’ve attracted well in the past. However, our relationship has started to grow and we now export three main products to the U.S.: meat, charcoal and beer. We’d also like to see more American companies setting up bases in Namibia and, so far this year, we’ve already had two delegations of American companies coming to engage with our business community, which is a very good start. In terms of bilateral relations, we have the African Growth and Opportunity Act (AGOA) in place, which enables companies in Namibia to access the American market. Through our Ministry of Industrialization and Trade, a lot has been done to create and sustain this opportunity, but we haven’t adequately leveraged it yet.
In addition, we need to look at how Namibia can produce more goods for U.S. companies. Many of them would like to diversify their sources of supply and Namibia is definitely in a great position to serve those companies.
PR: What are the top five reasons to invest in Namibia?
NU: There are numerous reasons to invest in Namibia, but let’s stick to your limit of five. Number one is safety, security and stability—that’s something Namibia is known for, although people here don’t normally mention it because we take it as a given. The second one is the rule of law and the independence of the judiciary. In Namibia, if you enter into a contract, you know that contract is enforceable, even if it’s with the government.
Another is the quality of life for investors and employees, thanks to the beauty of our country and great health, infrastructure and education systems. We also have a young, trainable workforce and we’re currently working on a policy to enable investors to import the skills they need, while that workforce is being trained.
In terms of stability, Namibia has been independent for 30 years and, to date, we’ve had only three presidents. Each president’s term has been respected and the transfer of power has taken place smoothly. The political commitment to investment and private-sector-led growth is another key in Namibia. The government listens to the private sector and works with it to solve challenges. That openness of our political leadership to dialogue with the private sector and to come up with solutions is one of Namibia’s advantages.
PR: What would be your final message for readers of Foreign Policy?
NU: Many international companies have never invested in developing countries or Africa, possibly due to pre-conceived ideas they have about Africa. My answer is always: please pay us a visit, because you won’t believe what is possible here until you see it for yourself. At the NIPDB, we’re here to welcome investors to Namibia.
Potential investors might think that Namibia’s market is too small, but that doesn’t limit the opportunities. The market access that we can offer is huge: there is the Southern African Customs Union trade agreement, which gives you access to about 70 million people in Botswana, Namibia, South Africa, Lesotho and Swaziland. The African Continental Free Trade Area agreement will give access to over 1.3 billion people in Africa. There’s also our AGOA agreement with the U.S. and Economic Partnership Agreement with the European Union. When you look at Namibia, focus beyond its 2.5 million population — the opportunities in Namibia are limitless because of the market access and trade agreements we have, plus everything is in place for investors to be successful here.