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Namibia: a vast country with a small population and endless opportunities

Namibia is a vast, sparsely populated country situated along the south Atlantic coast of Africa. “Second to Mongolia, Namibia is one of the least densely populated countries in the world,” says Irvin Titus, partner at Koep & Partners, the LEX Africa member firm in Namibia. Approximately two thirds of the country is savanna and semi-arid with a third of its landmass, being the Namib desert, one of the oldest deserts in the world. The terrain is much greener towards the north and northeastern parts of the country. 

Prior to gaining independence in 1990, Namibia fell under South African administration under a 1920 League of Nations mandate. “Historically, there have been strong similarities between Namibia and South Africa’s   legal and fiscal regimes, and to a certain extent these similarities prevail, given the close socio-political and economic relationship between the two countries,” says Titus.

With a population of 2.5 million people, spread across a vast expanse of land mass, it is problematic getting services to some areas. “Although investment in infrastructure remains significant to deliver water and electricity and the like to especially rural areas, this remains a challenge for government given rural communities being so sparsely populated,” says Titus. 

The newest democracy in Africa

When Namibia became independent it became the newest democracy in Africa. “At 34 years old we are very young. But we have made great strides in constituting our democracy and living up to our constitutional values, and in that sense the government has done well.”

Namibia is a stable democracy and has been since inception. It plays a significant role in the diamond trade and other commodities, and it has recently made significant offshore oil discoveries in the Orange Basin, which is south of the Walvis Volcanic Ridge along the southern South Atlantic coast of Namibia and South Africa. “Namibia has projected itself onto the upstream international market, in the oil and gas space,” says Titus.

The government has also rolled out a significant programme to establish Namibia as the trailblazer in hydrogen technology and development in Africa. And earlier this year it signed a feasibility and implementation agreement with Hyphen, a company that seeks to leverage the opportunities that are arising in Namibia in relation to green hydrogen. 

“There is a strong political will to see this long-term project come to fruition. A significant investment has already been committed that is backed by the Germany’s Federal Ministry for Economic Cooperation and Development in supporting Namibia in urban planning around green hydrogen production locations and training, given Namibia’s potential for expanding green hydrogen production.”

From an infrastructure viewpoint Namibia has the best roads in Africa and the government remains committed to investing in and maintaining infrastructure, says Titus. There are also some significant construction projects underway, including at the Walvis Bay Harbour as well as renewable energy projects and the upgrading of railway infrastructure. The latter will provide a gateway to Central Africa, including Zambia and the Democratic Republic of the Congo, for the transportation of raw materials from those areas to the port in Walvis Bay and from there to international markets, says Titus.

Although Namibia is a land of opportunity, capital constraints pose risks to projects being turning around in a fair amount of time. “The hope is that the fiscal regime underlying the exploitation of Namibia’s oil and gas, and green hydrogen resources, will significantly contribute to alleviating these developmental risks” says Titus.

Looking at the big picture view of mining activity in the country, price surges in commodities dictate mining investment. This has resulted in quite a lot of deal-making and investment in existing and new mining activity, says Titus. “Koep & Partners has been involved with some significant mining transactions during the past two years involving mines that have been in maintenance and new investment coming in to bring those mines back to being operational and profitable again.” 

Rich in commodities

In the commodities space, diamonds are a large contributor to Namibia’s revenues. The country is also uranium rich – and there is a lot of activity and investment around mining it, and it also has gold, zinc, nickel, lithium and copper. Tourism also plays a significant role in the Namibian economy and is showing signs of recovery after being badly affected during the Covid lockdown. 

“One of the great things about Namibia is that this vast expanse of un-spoilt nature is a five-minute drive away from urban areas,” says Titus. He says foreigners who visit Namibia are by and large of German descent or Italians, Portuguese, English, French, and South Africans as well as a growing number of easterners – especially the Chinese. One of the great tourist attractions is the Namib desert, which is one of the oldest deserts in the world. 

Titus says the rule of law plays a significant role in Namibia from a legislature and executive perspective. “Our judiciary is truly independent and has often made adverse findings against the government, which has been respectful of the courts pronouncements and has demonstrated adherence to court orders that are not in its favour”. 

Namibia is not overly regulated

“Namibia is an outstanding example of a stable democracy with good infrastructure, it’s easy to do business there, the thresholds for coming in and establishing a business are fairly low, and it’s not overly regulated. It has good growth projections from a GDP perspective and opportunities abound in the country. It has a good investment environment, and it has investment protections in its prevailing legislation,” says Titus. 

However, that situation may change because of the profound issues the government is dealing with in relation to unemployment and the alleviation of poverty. “The government is earmarking legislation to create a more inclusive environment for more meaningful economic participation by Namibians in the domestic economy. In that sense we anticipate that there may be changes coming in the way that foreign investment will be regulated.” 

He says legislation in the form of Namibia’s Investment Promotion Act may be promulgated in the foreseeable future. “There are some contentious issues around the legislation, but there is a political will to see it being promulgated.” In light of the recent oil discoveries, the Ministry of Energy is also working on a policy to ensure more local content participation in the industry. 

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