I noticed that a considerable number of our Africa Business Jumpstart Community in the Diaspora are interested in investing in Africa on an individual level. I will therefore write more about such opportunities and how to access them. Having said that, the info in my investment posts will still be of much value to all those of you who are looking into starting a business on the ground – because I will continue to stick to providing ‘practicable’ insights and guidance that help you to get started in Africa either way.
Namibia is a big country. It is the world’s 34th largest country by land area, yet there is relatively little media buzz around it. The reason is probably two-fold: It is peaceful and has a total of only 2.3 Million people! Yep, that’s less than the inhabitants of – let’s say Cape Town – spread over the entire country! In fact it has a population density of only 2.6 persons per square kilometre, the lowest in the world after Mongolia.
The sense of ‘space’ goes hand in hand with being in Namibia and that can seem like a down-side for doing business or investing there.
But we shall remember that powerhouses South Africa and Angola next door make strategically good positioning, and Namibia attracts yearly over 1 Million tourists – half of its entire population! Now you have to confess: it’s getting interesting already !
Africa Business Jumpstarters based in Nigeria who are reading this right now, may stare at those facts in disbelief….what a world away from being stuck for three hours in Lagos traffic 🙂
Let’s have a look into some really interesting insights, that must get you excited!
Insiders spill the beans on why to invest in Namibia
Nothing provides more value to us in my view than listening to the rare insights shared by people who are doing business in the market already. So I have gathered a few across the Web from a rather lengthy UK government publication ‘Doing Business in Namibia‘ (must read once you get serious about investing!) and the wonderful site howwemadeitinafrica.com – all quotes are accounts from 2013 and 2014 – so, still fresh like yesterday’s bread!
Take your time to read and LISTEN.
“One of Africa’s best kept secrets”
Deon Landman, the country manager for DHL Namibia explained that despite Namibia’s small population of just over two million people, companies should still take this market seriously.
According to Landman, Namibia’s customs and excise regime is one of the most progressive in Africa. “There are little barriers to trade. If you combine that with the good infrastructure, there is a lot of opportunity to create a mini hub here for distribution or shipment into the rest of the continent. Right now we are involved with a project with a pan-African bank, where we bring their material in, configure it for the other countries in Africa, and send it out.”
He added that Namibia is one of the continent’s best kept secrets. “Everything works here – roads are good, infrastructure is good, the government is willing to talk to you. There is minimum corruption.” [note: other accounts reported corruption can be a problem in Namibia]
“There is still plenty of space for more development”
“I have been running a safari company in Namibia for the last 18 years and have seen huge changes in that time in terms of both volumes and client expectations. Fortunately, Namibia sells itself to visitors in many ways as it has tremendous resources in terms of scenery, wildlife and culture, as well as excellent infrastructure and a good road network. Accommodation was initially based on the use of informal guest farm type accommodation but there are now many more purpose built lodges, which allows the sale of a more professional product. However, there is still plenty of space for more development if done sensitively after taking into account the specific requirements of the unique Namibian tourism industry. There are a number of challenges when setting up a business in Namibia, but one of the largest is the lack of capacity in terms of skills as well as a lack of experience concerning the requirements of an international standard of service. […] Namibia as this does not always fit well with corporate structures, but this can be overcome if people coming in are prepared to fit in with the Namibian way of doing things rather than trying to impose their own.” ~ Martin Webb-Bowen, Managing Director, Ultimate Safaris
“High quality of life – although getting skilled staff is a major problem.”
“Tourism ATI Holidays has been operating successfully out of Windhoek for the past ten years and has enjoyed year-on-year organic growth since our establishment. Our decision to position here was based not only on the above factors, but a requirement for a good national infrastructure to facilitate tourism growth. Other important factors that were key included English being the official language, a reliable telecommunications network and internet connectivity, and direct intercontinental flights from our source market. Quality of life, especially with a young family, has to be a consideration and Namibia, with the second lowest population density in the world, offers a sense of space and freedom rarely matched. Quality English schools in the capital, good shopping, the Atlantic Coast and numerous quality restaurants, retreats and lodges, all bathed in over 300 days sunshine per year make for a great country in which to live and invest. There still lingers a sense of suspicion regarding European investors in some areas of Government and attaining work permits for specialised staff can prove difficult and take up to six months. Well-educated, skilled staff are at a premium, those that combine this with excellent spoken and written English skills are even fewer and further between. These requirements are a pre-requisite for my business, thus recruitment is one of the biggest challenges we face. ” ~ David J Cartwright, Managing Director, ATI Holidays
“Possibly the best in Africa”
“From the first impressions at passport control to negotiating with Government, Namibia is a very pleasant country in which to do business, possibly the best in Africa. Dealing with Government can at times be frustrating but, on the other hand, the Government is often prepared to explain what the problems are and to work cooperatively to find solutions.” ~ Paul Ellis, former CEO, of Serica Energy plc
“Namibia is safe and stable”
” Overall, as far as advising potential interested UK investors, I would reinforce the view that Namibia is safe and stable with good infrastructure and systems that generally work well, albeit sometimes slowly. Namibia has a Government strongly committed to job creation, skills enhancement, value addition, and local participation, and they are supportive of FDI to achieve these aims. Potential investors should not underestimate the impact that the reluctance to allow temporary skills importation can have, but if there is a genuine commitment by the investor to train and develop Namibians, you will get support. While corruption presumably exists, no one has ever even hinted at asking us for a bribe since I have been here, so it is far from pervasive.” ~ Craig Thomas, Managing Director, Weatherly Mining Namibia
And that brings to the next chapter….
You don’t have to be a warrior
I always clearly outline some of the risks that generally come along with investing in newly emerging markets and I even wrote an article a while ago titled: ‘Fearing the Challenges Of Doing Business In Africa? – Let Me Tell You Why They Are Your Biggest Opportunity’.
But here is the good news, Namibia does not need warriors or the extra-brave.
Jimmy or Maria from next door will do.
Namibia is peaceful, relatively safe, and makes it onto 6th place on the Ibrahim Index for Good Governance in Africa, which looks at Safety & Rule of Law, Participation & Human Rights, Sustainable Economic Opportunity, and Human Development.
It also makes it onto 6th place in Sub-Saharan Africa in terms of ease of doing business. Having said that, please be aware that starting a business and registering property remains relatively difficult.
Infrastructure and banking system are competitive to Western standards and compared to most of Africa’s countries you can truly relax.
Investment Sectors Magic Boxes
Retail Trade
Booming retail industry
Foreign visitors add to local demand
Potential for new retail space
Regulations on foreign participation in sector
Encouragement to stock local products
The purchasing power of Namibia’s relatively small population has been supplemented in recent years by large numbers of Angolans who come to Namibia to shop, buy property, do business, visit health facilities and educate their children. This has proven to be a tremendous advantage for Namibia’s retail sector and shows no sign of slowing down. In 2010, Angolans formed the largest number of foreigners visiting Namibia for more than one night. Many retailers now advertise in Portuguese.
Landman said the northern towns of Oshikango, Oshakati and Ondangwa (often referred to at the three Os – but really if you look at the Namibian map, there are many more Os!) are experiencing a lot of commercial activity with informal traders from Angola coming down to buy goods to re-sell them north of the border. Many retailers have capitalised on this informal trade by establishing outlets in the north of Namibia.
Tourism
Stunning landscapes and wildlife
Low volume high value tourism industry
Need to diversify tourism market
Enormous potential for growth
Strong industry organisations
Namibia’s tourist industry has enjoyed considerable growth since 1990. Tourist arrivals have risen from just over 200,000 a year in 1991 to just over one million in 2011. Pure leisure tourists now number some 300,000 people a year with UK the second largest European country of origin after Germany accounting for around 30,000 tourists each year. There is a lot of space for investment and the development for new tourist ventures for you!
Manufacturing
Advantageous location between South Africa and Angola
Attractive tax incentives
Growing market access within Southern Africa
Infant Industry Protection available
The Namibian Government has long placed special emphasis on the manufacturing sector believing it has a crucial role to play in achieving Vision 2030 and the objective of becoming an industrialised economy. However, because it was believed Namibia possessed few inherent advantages in manufacturing and was doubly disadvantaged by membership of the Southern African Customs Union (SACU) and its location far from major markets, Government has over the years offered a variety of mostly tax-based incentives in order to “level the playing field”.
Mining
Mining has historically formed the backbone of the Namibian economy. Foreign investors play a critical role in Namibia’s mining industry, bringing the capital and expertise necessary to search for, build and operate operations that are almost exclusively geared to supplying international commodity markets. Mining in Namibia generally consists of sophisticated operations employing world-class technology and working to the highest of safety standards. Mining investors are increasingly expected to put up much of the infrastructure they require and act as good corporate citizens.
Fishing
To increase the output of fishing has become a Pan-African effort I would say, and it has great potential for local manufacturing, intra-African trade, as well as export.
Namibia’s N$6.5 billion sea fishing industry is based mainly on its 1,500km coastline which has exceptionally high biological productivity thanks to the upwelling of nutrients arising from the Benguela Current. Namibia’s fishing policy and legislation makes provision for the allocation of rights by the Minister of Fisheries and Marine Resources to qualifying companies and individuals for the following range of marine species: Small and large pelagic fish – primarily pilchard, tuna and tuna-like species albacore Midwater fish – primarily horse mackerel and juvenile hake Demersal fish – primarily hake and monkfish Deep sea fish – primarily orange roughy Crustaceans – primarily rock lobster and deep-sea red crab Other marine resources – primarily mullets, cape fur seals, guano, oysters and seaweed Fishing rights are allocated for periods of seven, ten, 15 and 20 years, preference being given to those applicants that meet key criteria on Namibianisation, employment creation
Agriculture
Well, Namibia has a large lands mass, but much of it is desert. Agriculture is still a relatively dynamic sector with some key benefits as long as you focus on certain niches. Here are some benefits:
World-class export-oriented commercial farming sector
Thriving organic beef industry which meets EU and other international standards
World-class table grape industry serving the EU market
Government encouragement for domestic production, import substitution, agro-processing and value addition
Infant Industry Protection available
Land ownership by foreign investors tightly regulated
You should keep in mind that Namibia is especially known for prime free range beef. Have a look at this beef company here. So if you are into trading or luxury culinary and food, this provides a gem of a niche for you.
The Namibian Stock Exchange
Don’t forget considering to invest in stocks!
By the beginning of 2014, 26 companies were listed on the main board of the NSX, 15 of which were dual-listings of companies with primary listings on the Johannesburg Stock Exchange and only six of which were local primary listings. In terms of market capitalisation, the NSX likes to claim it is the second largest stock exchange in Africa but this is due to the presence of dual-listed companies, especially Anglo American. Three local companies, FNB Namibia Holdings, Namibia Breweries and Bidvest Namibia have consistently performed well. Shares are trading at all time highs but are scarce to buy. The NSX also has a Development Board where companies with little or no profit histories are listed. At the beginning of 2014, six companies were listed on the Development Board, all mining or oil and gas exploration companies.
Now, I would like to add another benefit for investing and doing business in Namibia: With just over 2 Million people in Namibia you have a much, much higher chance to get noticed and become an industry leader than compared to let’s say……hmmm……Nigeria ? 🙂
TIP: Check out the UK Government guide on ‘Doing Business in Namibia’ (2014) if you are looking for more market and regulatory details. It’s a great document. Or visit the site of the Namibian Ministry of Trade and Industry for the latest investment opportunities that are currently open! The Ministry will be a great first point of contact for first-time investors.
It’s your turn again, please share your experiences, feedback, or questions in the comment section below! Tick the little box under the comment section if you would like to receive my blog posts in your inbox as soon as they get published.
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Has to be on my list of destinations. I have always wanted to visit as a tourist but now you have given me a whole lot of other reasons to go there.