Financial Data
Updated 25 Mar 2017


Namibia

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Business opportunities and risks

Opportunities for you to do business in Namibia

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When compared to some of its neighbouring countries in Africa, Namibia remains politically stable. Political governance is strong, with the government subject to judicial review.

Key features that make investing in Namibia an attractive option are a government policy that supports and encourages free enterprise; the incentives available for manufacturing and the export of manufactured goods; and a highly developed financial sector.

Because Namibia is located near the bustling economies of South Africa, Angola and Botswana, it provides good cross-border networking opportunities for businesses to take advantage of.

Thanks to the country’s financial sector and its financial market’s continual expansion, Namibia presents strong opportunities for economic growth.

Most food and consumer goods purchased in Namibia are imported from South Africa, alluding to import-substitution opportunities.

A five-year, N$223 billion infrastructure development plan began in early 2015 to boost Namibia’s status as a regional transport hub.

Moreover, the country’s real estate sector is experiencing a boom in prices and development due to a housing shortage and high demand from abroad.

There are also opportunities for foreign investors in the natural resources sector, thanks to the country’s positive medium- to long-term outlook. The Namibian government has provided incentives aimed at stimulating manufacturing, attracting foreign investment and promoting exports. To take advantage of these incentives, companies must be registered with the Ministry of Trade and Industry and the Ministry of Finance.

Incentives for manufacturing enterprises include, a 50% tax reduction for five years, phased out over a further ten years on a straight-line basis; accelerated depreciation on factory buildings, which can be written-off over ten years; and export promotion costs are deductible between 125% to 175%.

If you’re looking to upskill Namibians, training costs are tax deductible at 125%, and direct production wages deductible at 125%.

Depending on the sector you’re interested in, industrial studies can be made available to you at 50% of cost. Furthermore, cash grants of 50% of approved export promotion expenses and new investment or relocation packages are also available.

Incentives for exporters of manufactured goods include an 80% allowance on taxable income derived from the export of manufactured goods (except for fish and meat products).

Business opportunities
  • Key features that make investing in Namibia an attractive option are a government policy which supports and encourages free enterprise, the incentives available for manufacturing and the export of manufactured goods, and the highly developed financial sector.
  • Incentives for manufacturing enterprises include:
    50% tax reduction for five years, phased out over a further ten years on a straight-line basis;
    Accelerated depreciation on factory buildings, which can be written off over ten years;
    Cash grants of 50% of approved export promotion expenses.
  • Incentives for exporters of manufactured goods:
    An 80% allowance on taxable income derived from the export of manufactured goods (except for fish and meat products).
Operational risks to consider

While there a number of sectors that require investment, and its population’s growing demand for goods and services, there remains a number of challenges you should be prepared to face when investing in Namibia.

The country’s lengthy and administratively complex process to get work permits is one of investors’ biggest concerns in Namibia. It could take you three to six months to receive a work permit to bring skilled labour from abroad. The country has an inadequately trained workforce and a skills mismatch, which means you’ll need to bring in a strong foreign team first, and then upskill the locals that you employ.

Labour laws are a challenge for enterprises operating in Namibia, as it is difficult to dismiss unproductive people. Companies are choosing to rather invest in labour-saving technologies or hire part-time staff, and pay overtime, than hire and train new full-time staff. This has a negative effect on job creation.

The business registration process is also challenging in terms of local and foreign investment. The time taken to open a business as well as challenges in tracking the processing of applications can delay investments.

If you’re looking to claim a stake of the country’s manufacturing sector, Namibia’s underdevelopment of its national electricity-generating capacity and over-reliance on imported electricity from South Africa are seen as challenges. This can lead to uncertainty in power supply and may disrupt your manufacturing operations.

Agri-businesses must also be prepared to face droughts and shifting climatic conditions, while geographic distances between cities and sparsely populated towns will require intricate logistics processes.

According to statistics, labour productivity could be negatively impacted by the high prevalence of HIV/AIDS in the country. It’s important that you educate your new Namibian staff on the dangers of HIV/AIDS, its impact on their productivity in your business and offer them assistance where they need it to fight the disease.

While the country’s population is in need of low-cost products and services, long-term economic growth could be negatively affected by the restricted extension of consumer credit.

Business challenges
  • Electricity shortages and higher power tariffs are constraining energy-intensive investment, including mineral processing.
  • Extensive and tight labour regulations have resulted in a rigid labour market. Employers are obliged to meet racial and gender- based employment quotas.
  • The country’s export-oriented mining and manufacturing sectors are continuously being challenged by an unpredictable exchange rate and labour issues.
  • Reliance on the country’s roads for freight transportation increases the threat of congestion and heightens logistics risks.
  • There is a lack of sufficient local skills as a result of weak education levels and a brain-drain of well-educated workers looking for better job opportunities.
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