“It has been said, that a legislator should have two things in view when he frames his laws, the country and the people. He will also do well, if he has some regard to the neighbouring states, if he intends that his community should maintain any political intercourse with them”[i]
Can friends criticise?
During my student years (+/-1988), I was confused by the various political systems and teachings that were touted by others. The book that had the most influence on me during this time was “The Ragged Trousered Philanthropists” by Robert Tressell. The story concerned life in a small southern English town. The author “intended to explain what Socialists understand by the word `poverty': to define the Socialist theory of the causes of poverty, and to explain how Socialists propose to abolish poverty.”
At this time I was also gladdened by the support of our socialist friends such as Cuba, USSR, and of course our southern African neighbours who supported our freedom struggle. Thus it was with great anticipation that I toured to Zimbabwe and Botswana in June 1990, the year of our Independence. The tour was part of a sport and cultural exchange between our universities.
I was however rudely awakened to the realities of what was happening in Zimbabwe before 1990. Some members of the Students Representative Council came to me late one night and requested me to go with them to a meeting. During this meeting they shared with me some horrific (and to me unbelievable) stories about the socialist program in Zimbabwe. They were especially unhappy about the education system in Zimbabwe which was creating a large number of educated teachers. This sounded good, however the problem was that the government decided where the teacher was to be posted, and the salary itself was very low. In fact, they stated, “the salary of a teacher is not enough to buy a pair of jeans”.
The comrades in Zimbabwe begged us to assist in their struggle against the government by smuggling video recorders to the University. The very thing that we had requested for our work during the student uprisings in 1988!
Upon my return to Namibia, I understood the futility of explaining the problems of our comrades in Zimbabwe. All of us were too thankful (and possibly in awe), of Robert Mugabe and his assistance to our own struggle. It was difficult to smuggle the requested machines and when I was caught trying to put together a food package for the University in Harare decided it would be best to refrain from informing my friends and colleagues about who the request had originated from and why.
Less than ten years later, I was once again in Harare and it was clear that things had definitely become worse. At the time I was the Managing Director of a foreign company with interest in Southern Africa and was visiting one of our projects, the Harare International Airport. This was definitely the type of project that was making money for certain individuals in the government at the expense of the citizens.
It was clear that all of us were closing our eyes and ears to the reality of the failed socialist state that is Zimbabwe.
In 2007, I found this quote that is appropriate to the situation:
"Without moral and intellectual independence, there is no anchor for national independence." - David Ben-Gurion
Namibia has a duty to speak out against all acts that deprive any individual of their fundamental human rights. The first line of the preamble to our Constitution states “Whereas recognition of the inherent dignity and of the equal and inalienable rights of all members of the human family is indispensable for freedom, justice and peace;”
It is therefore the duty of each Namibian citizen, and all our political leaders to show moral leadership in our undertakings with all countries of the world.
Promoting Foreign Investment
Many developing countries look to Foreign Direct Investment (FDI) to promote growth and sustainable development. However, close to two-thirds of the FDI in the world is among the rich countries in the world and these are in the form of mergers and acquisitions.
Many of the foreign investment in Namibia have not brought foreign exchange into the country but rather loaned from local financial institutions, such as the Namibia Development Corporation or Development Bank of Namibia.
During the first few year of Independence the investors were thought of as bringing big bags of money into the country. This phenomenon is known as carpet-baggers. These large bags are generally empty and need to be filled once the investor leaves the country. The most common investor in Namibia has been the “10-percenter”. They can arrange almost any type of investment project the Government wishes to have, from water desalination plants to agriculture projects. Once granted the project, with the accompanying media attention, they then market this project to the technologically capable firms in Europe or the USA and exchange get their 10% match making fee.
A typical example occurred in the middle 1990’s with the Government programme to create Export Processing Zones (EPZ’s). The foreign investors in the Offshore Development Company (ODC) hoped to get certain projects granted to them in return for their investment.
Creation of the Offshore Development Company (ODC)
The ODC was created as a joint public-private company in 1996. The Government of Namibia would have a 30% shareholding with the rest being held by private individuals. The ODC receives money from the government through the National Planning Commission. These allocations are for infrastructure developments (industrial parks, etc.) throughout the country. Some of the money is from government revenue or long-term development projects, however a certain amount of donor funding is also channelled to the ODC.
The ODC is an EPZ management company, and as such has a zero tax rating (for ever) and is allowed to hold foreign currency accounts at local banks. Furthermore, the company is exempted from certain provisions in the Labour Act.
The company has created industrial parks throughout Namibia and this has created numerous business opportunities. This in turn has led to job creation in certain areas that would not have occurred previously.
Unfortunately, the ODC invested in some rather dubious financial investments and has to date (April 2009) not been able to account for the amount of N$ 100 million so invested.
At present, very little investment of the type expected is taking place in the EPZ parks.
The International Labour Organisations states:
“(We don't know) why export processing zones (EPZs) have failed to take off in some countries. While political stability and investment in the basic infrastructure in ports, airports, roads, water, sanitation and power supply are necessary conditions for EPZs, they are not sufficient on their own to attract FDI. Macroeconomic conditions such as extreme inflation and high interest rates (are important) ...
Research suggests that zones are most effective when they form part of an integrated economic strategy that includes fiscal incentives, investments in infrastructure, technology and human capital, and the creation of linkages into the local economy. It is important for EPZs to upgrade their activities to higher value-added products and services (requiring a more skilled workforce) and find their niche in the international production network ... (EPZs strategies must, therefore, be) continually adapt(ed)."
The past experiences with PIDICO, ODC, etc. have led to Namibia not paying as much attention to investment promotion as we should.
We must realise that foreign investment is not about the foreign exchange entering the country but more about the transfer of management skills, intellectual property and technology. FDI creates jobs and it improves the quality of goods and services we have in Namibia. Most importantly, it boosts our export sector.
FDI does not foster growth and stability. Rather it follows them. The managers making decisions on where to invest are not often basing their decisions on the particular country’s investment regime. They tend to look at:
- level of protection of property rights – land as well as intellectual rights;
- degree of corruption – often focussing on the Transparency International reports;
- transparency in government tender processes;
- what is the state of the physical and social infrastructure;
- how good is the education; and
- geographical position and proximity to markets.
In addition many of the newer investors in FDO are looking for knowledge of foreign languages, as well as the culture and mentality of the country’s residences.
Investors are interested in success stories and will invest in countries that are already growing, are politically stable, and have a sizeable purchasing power.
Let us look more closely at these three criteria:
- Success stories
Is Namibia a success story? YES. Are the foreign investments in Namibia a success? At first glance most Namibians would answer NO to this question. The reason is that most failures are reported in the news, with very little being known about our success. (We are often our own best kept secret.)
The failures have primarily been in the industrial sector with low value-added products such as textiles. The emphasis has been on attracting investors that create many jobs. However, we often exempt these same companies from abiding by the labour laws and thus have little long-term employment with career development opportunities.
- Growing and politically stable
Our country is known as being politically stable. There are still some worrying signals sent out by politicians when mentioning land reform and Zimbabwe, but generally we have a good political system.
- Sizeable Purchasing Power
This is an area where Namibians have to radically change their way of thinking. Whenever we talk about problems facing Namibian businesses the argument comes up that “the Namibian market is too small”. WRONG.
The Namibian market consists of more than 200 million people.
Our Big Brother – South Africa
South Africa used to be our colonial master. The ant-apartheid struggle in South Africa was also our struggle. Many of us have family on both sides of the Orange River. We import most of our consumer goods from South Africa. Our money, the Namibian Dollar is directly equal to the Rand. All, but one, of our banks is South African owned. These are facts we must accept, there are the good, the bad and the difficult things in this relationship.
The Good
Namibia is a member of the oldest custom union in the world, namely the Southern Africa Customs Union (SACU). The members are Botswana, Lesotho, Namibia, Swaziland and South Africa.
Being part of a customs union means that all goods brought into the Union will face the same amount of customs duty. More importantly, all goods produced by any member will not face duty when sold in one of the other member countries.
In effect this means a company can choose to produce in Durban, Port Elizabeth, Gaberone, or Oshakati and have the same access to all the consumers in our countries. The only difference is in the local labour or services, transport costs between markets, and the quality of life in each of these locations.
So, Namibia should have an active investment promotion policy to:
a) attract companies wishing to penetrate the southern African market; and
b) encourage South African companies to open factories in Namibia
To do this will mean preparing a comparison list to other localities in the region, and making sure we are the first choice in all regards. It is important to remember that all aspects, such as the quality of education available to children at the investment location, can be pivotal in decision-making by the management who have to relocate.
SO HOW BIG is the Namibian Market? The Namibian market consists of more than 200 million people – all residents of SACU are our market.
The Bad
Just like any big brother, South Africa can sometimes use its muscle to bully the smaller states in the Union. This can lead to companies “protecting” their markets by using dumping for example to prevent a business from being able to establish itself locally. Because of a larger range of products, companies can also insist retailers do not stock any of their competitor’s products. This has happened in the case of candles, toilet paper, cement, school desks, to name just a few.
Namibia must use the facility (already written in the SACU agreement) to protect its infant industries.
At the same time, I must warn about the measures sometimes used to protect local industries. In the early 1990’s the government enacted regulations to stop empty glass bottles from leaving Namibia. This was to protect our local Namibia Breweries. It was possibly a good measure, but inadvertently has led to a pollution problem. If you investigate any of the glass bottles being thrown away, you realise bottles are all from foreign bottlers. The reason, only Namibian Breweries offers a refund and reuses their bottles – the others cannot take the empties across the border.
The Difficult
Our dependence on South Africa also means that when something goes wrong there it affects us directly. If the World Cup is held in RSA, we receive indirect benefits, but when there is a political problem, we also receive the negative coverage.
The Foreign Experts
The foreign expert (ex-pat) is a common feature of many aid programmes and government institution building exercises. Generally, it is hoped that the experts provide experience and information from developed countries where such programmes are thought to have been successful.
Through my dealings with these foreign experts, I have come to recognise at least four different types:
- The first group have lots of work experience but have never been able to make sufficient money out of it themselves. The projects they suggest are often “going to make us both rich”.
- The second type has studied in a specific area of work and come to the developing world to complete their studies. Once their period of time is over, they tend to be seen as experts in an area and often join local research institutions. They however remain aloof to the local population and intend to return to their country of origin.
- The third type of expert, often works for large multinationals such as the World Bank and bring a “menu” of solutions they wish to prescribe to the patient. The fact that the prescribed medicine has not worked for the last patient is obviously not their fault.
- The last group, are normally entrepreneur consultants which provide know-how in almost any field from SME development to economic empowerment, desktop publishing to internet café’s, can be obtained from them.
The last group is the foreign expert I prefer to work with. Even though they are mostly profit-driven, their goals are realistic and they know their area of expertise. In their own way they provide leadership in obtaining finance, getting others to buy into the cause, constructing projects, educating, and through this process often find themselves falling in love with our land and its people.
Getting help in growing our economy
In 1993 I was appointed as the delegate for Namibia to the United Nations Industrial development Organisations Investment Promotion Office in Paris, France. One of my first tasks was to identify an economic growth sector that I would promote for foreign direct investment (FDI). At the time, the Government had made new laws governing the fishing sector whereby previously disadvantaged Namibians were encouraged to participate. This was the right time to become more knowledgeable about the sector and the opportunities present in the country. Thus began a process of information gathering and investment promotion identification which has been used in other sectors.
Over the next two years the UNIDO Investment Promotion Service in Paris supported the efforts of investment promotion in the fish, meat, agriculture and mining sectors.
The Government of Mauritius participated in the UNIDO IPS programme and it was so successful, they created their own Mauritius Export Development and Investment Authority (MEDIA). Their network of offices is often found in close proximity to the UNIDO offices.
Namibia still has access to the United Nations family, but sadly we have made little use of the promotion of investment and industrial development assistance offered.
Namibia and BRICSA
At present the USA is the only superpower. In the past countries had to choose between superpowers, ideologies and economic systems. Communism has been overthrown, and now it is only the western capitalism that is available. The economic superpowers are the G6 - USA, Japan, United Kingdom, Germany, France and Italy.
Hold on!
Namibia should recognise that the emerging powers, known as the BRICSA countries, do not have always have the same ideological, or even economic system of the West. (The BRICSA countries are Brazil, Russia, India, China and South Africa.)
Just as we became part of the non-aligned movement during our fight for Independence, I suggest we get to know the policies of these future world powers, and work now to getting a mutual working relationship.
Our relationship to China
Many Namibians have expressed alarm at the number of Chinese workers and business people entering Namibia. The most often heard complaint is that the Chinese are taking work away from Namibian workers because they are “willing to work for too little and much harder – even over weekends”.
Historically since the 1960’s, SWAPO has been a close ally of the Communist Party during the struggle for liberation. After Independence, these ties are still very good. Since 1990 China has provided more than N$ 1,2 billion in concessional and interest free loans. A further US$ 100 million credit line signed in 2007 has not yet been utilised.
Looking at the trade statistics, Namibia already imports 25% of its products (2006), and the rate is growing at 53% per year for African states. (These numbers refer to countries other than SACU members.)
In my opinion the relationship with China is beneficial to our country. One of the most important things we can learn from the Chinese is the ability to work. I believe that rather than complain at the willingness of the Chinese worker, we should emulate their example.
As for the traders that have sprung up all over, this has been a good thing for our economy. It has increased the spending power of our consumers, provided jobs for our workers, and many of these entrepreneurs are marrying into our community. All of these have very beneficial long-term benefits. We must however guard against the creation of “china towns” that will lead to segregation rather than integration.
I would further propose we invite the Chinese Government to open a Confucius Institute in Namibia so we can learn more about their cultures, and also have the opportunity to learn the Chinese language. It is a good opportunity for Namibia to offer our country as gateway for Chinese investment in the continent, specifically into the Southern Africa Customs Union.
Market Branding Namibia
In the past few years Namibia has realised the importance of a national brand. This has resulted in the “Team Namibia” programme. This is a good idea and should be supported.
However, we need to go further. If we look at the traditional marketing plan maybe we can create a step by step approach for Namibia too. We must keep in mind our clients are our citizens, investors, tourists, the international community, non-governmental organisations and neighbouring states.
For example, we can create:
- A Namibia Retirement Authority with the role to promote and develop Namibia as a retirement haven for foreign nationals; and
- A restaurant franchise using Namibian Game and Beef for Europe. The concept is used similarly by the Argentinean Restaurant Chain “Maredo”. (Maredo is a chain restaurant in Germany and Austria serving Argentine or Brazilian cuisine, steaks, and roasts. They market the adventurous lifestyle of the Gaucho or cowboy of South America - with wide open spaces for the cattle.)
I propose a permanent government structure, within the Ministry of Foreign Affairs, to be responsible for the country branding of our product. This is an on-going task to promote our products.
[i] A Treatise on Government by Aristotle - translation by William Ellis (1912)