To judge by the long queues of people turning out to participate in local polls, Namibia’s newfound enthusiasm for elections is infectious. This is made more remarkable given the fact they may have had to walk half the day to get to a polling station – the country is about 824,000km2, yet has a population of fewer than two million.

Prime concerns of this recently enfranchised electorate, who only got the vote in 1991, include the fair provision of fundamental services, such as water and electricity, and jobs creation. Voters want to ensure that the government, be it local or national, remains accountable and, to its credit, the government appears keen to ensure the correct checks and balances are in place.

Sound legal system

“One of the great attractions of the country is its sound legal and political system – an investor is not going to be threatened with sudden expropriation and if there is a problem there is fair representation in court,” says Tom Minney, manager of corporate finance at NIB Namibia, a project finance company part owned by South African investment bank Nedbank, based in Windhoek.

Namibia promotes its stable and open political system as one of its key attractions for foreign investors. Since gaining independence from South Africa in 1990, the government of Namibia under President Sam Nujoma has set about creating a business environment in which both local and foreign companies can operate without the constraints often associated with operating in emerging African economies.

“Bribery is not something that happens here, we have a more European way of doing business,” says Inge Zaamwani, managing director of Namdeb, the largest diamond mining company in Namibia, co-owned by De Beers of South Africa. Diamonds account for 10% of Namibia’s GDP.

Good infrastructure

Besides an open political and business environment, the government has established some of the best infrastructure in Africa. In the Africa Competitiveness Report 2000-2001, published by the World Economic Forum and the Centre for International Development at Harvard University, Namibia achieves top rankings in infrastructure based on the extent and quality of roads, railways, ports and airports as well as telecommunications.

Although the latter operates as a monopoly, the Telecommunications Policy and Regulatory Framework sets provisions for deregulation with a target date of this year. “We are looking to reduce the number of monopolies, increase competition and provide more choice to the Namibian public,” says Freddie Gaoseb, acting executive director of the Namibian Investment Centre (NIC).

State operator Namibia Telecom has been responsible for investing extensively in a fully digital network. Use of mobile phones is extensive, with coverage and services reaching up to 70% of the population.

A key part of Namibia’s infrastructure is its extensive road network. Since independence, roads have been upgraded with the help of donor aid. Forming part of what is known as the Walvis Bay Corridor (a transport corridor linking the west coast to landlocked Southern Africa), the Trans-Kalahari Highway, stretches from Walvis Bay harbour in the west of the country, through Gaberone in Botswana and down to Johannesburg in South Africa.

Highway upgrade

The Trans-Caprivi Highway stretches north through to Lusaka and Ndola, the copper belt in northern Zambia. The latter has recently been upgraded with the addition of the Sesheke Bridge, a N$90m ($14.4m) bridge across the Zambezi River, creating a more efficient route into Zambia.

This infrastructure also provides access to an “unfolding giant” in the region: Angola. Businesses in Namibia are already using its borders to serve a population that “has nothing and needs everything”, according to Jerome Mouton, marketing and strategic business development manager for the Namibian Ports Authority in Walvis Bay.

An export processing zone (EPZ) set up by the Namibian government’s Offshore Development Company (ODC) in Oshikango on the Angolan border is already attracting investment. Situated in what used to be no-man’s land under apartheid, its activities include a N$2m furniture assembly plant and a mattress-making company exporting into Angola.

Better facilities

Philip Namundjebo, general manager for industrial development at the ODC, says that there used to be nothing in the area and people had to walk for a half a day to get to a bank. Now, thanks to the EPZ and associated investment, there are banks and hotels in the town.

Improved inf

rastructure with links to the Namibian ports has put the country – and to some extent the region – on a more secure economic footing. “Location, location, location,” emphasises Mr Mouton.

This is what sets apart the Port of Walvis Bay – and therefore the entire country of Namibia – from the rest of the emerging economies of southern Africa, many of which are land-locked. The port, strategically located halfway down Namibia’s vast coastline, is a natural stopping point for shipping routes from the Americas and Europe; it is the main building block in Namibia’s bid to attract investment and develop its economy.

Companies frequently complain about the logistical difficulties involved in doing business in Africa because of poor infrastructure and the long distances involved. But Mr Mouton insists that costs are not that expensive and that Walvis Bay has added sophistication to logistics in the region. He says the port provides an efficient entry and exit point for southern African markets.

“Any investor wants a reliable, cost effective logistics chain,” says Mr Mouton. “It takes 48 hours to transport goods by road from Walvis Bay to Johannesburg. Why, if a ship is coming from Europe should it add to its journey time and expenses to reach Cape Town and then still have to truck the goods up to Johannesburg?”

Mr Mouton adds, however, that the port is seeking to complement South Africa’s ports rather than compete with them. “We have a regional perspective and look to serve the regional area,” he says.

Namibia stands out for its forward-looking attitude towards regional integration. The Walvis Bay Corridor is designed to serve the whole of southern Africa and it is on this platform that the country hopes to attract investment.

Crucial links

Since independence, Namibia has focused on regional integration, realising that access to markets across southern Africa is central to economic development. This is particularly true because of the small size of Namibia’s own market. Enhanced economic links, especially with South Africa are “absolutely crucial” says Mr Gaoseb.

Through its membership of the Southern African Development Community, the Common Market for Eastern and Southern Africa and the Southern African Customs Union (SACU), Namibia has the potential to reach more than 350 million people. (SACU allows customs and duty free trade between South Africa, Botswana, Swaziland and Lesotho.)

When it gained independence, Namibia decided to keep its economy attached to South Africa by fixing its exchange rate to the South African rand. Tom Alweendo, governor of the Bank of Namibia, says: “Given that we import 85% of our imports from South Africa and want to maintain stability in the local economy, pegging the exchange rate has made it a lot easier.

“As we start talking about having more and more harmonised economies in the region, this will be a major building block. The South African economy has also provided us with an anchor for low inflation and other targets.”

Political and economic stability, good infrastructure providing access to the wider region and a progressive attitude towards trade integration put Namibia in a strong position to attract investment.

The next step is to “focus, focus, focus on what you could do best, and build on that”, writes Jan Kruger, manager corporate services, Walvis Bay Export Process Zone Management Company, in his study of foreign investment and Namibia.

Attracting investment involves targeting and approaching the right people. The NIC has sent investment missions to countries including India, China, Indonesia, South Korea and Malaysia to promote sectors such as textiles, fisheries, agriculture and tourism.

Proactive approach

Namibia’s government has taken a proactive role in seeking investors. “There is a willingness to get together around a table, parastatals and ministers, to talk and make a deal. Ministerial access is very good,” says NIB Namibia’s Mr Minney.

Like most African countries, Namibia needs to, and is, diversifying away from a reliance on natural resources to develop secondary sectors such as manufacturing and tourism.

So far, the NIC has concentrated on attracting value-added investment into the mining sector to build up critical mass. The ODC’s Mr Namundjebo points to the Skorpion Zinc Mine and Refinery, an Anglo-American investment worth $454m, as a good example of how the country has attracted value-added investment. “The refinery part of the project, not the mine part, has EPZ status as it has provided value-added jobs,” he says. A training plant has been built for refinery staff and key personnel will be trained in Europe.

Although the project is providing some skills transfer, the old problems associated with a natural resource-based export economy are apparent. For example, world-class granite is exported through Walvis Bay to Italy for processing into fine Italian tiles, which are then imported back into Namibia and sold at prices that most Namibians will never be able to pay. “The problem is that the Italians don’t want to transfer their knowledge and skills here,” says the Namibian Ports Authority’s Mr Mouton.

Skills gap

With 30% unemployment and a poorly educated population, the need to develop skills is a pressing issue in Namibia. It is the one area where Namdeb’s Ms Zaamwani identifies a weakness in the country’s business environment.

However, Namdeb’s training programmes are met with huge enthusiasm among staff, particularly young employees, she says. There are also generous training incentives offered by the NIC, although NIB’s Mr Minney admits that provisions such as making skills transfer a condition for work permits would add to the transfer of knowledge.

Ms Zaamwani identifies a need for business and education to work together to ensure that courses fulfil employers’ needs. “It is necessary that more students take maths and science and focus on technical subjects,” she says. “The output of vocational training has not, so far, matched up to industry demands; more partnering is needed between business and education.”

Dr Tjama Tjivulka, dean of the Polytechnic of Namibia, is enthusiastic about the courses that the institution offers, most of which include a mandatory semester in industry to gain hands-on experience.

However, tertiary education is not necessarily the main problem. Although investment in education is a major plank of government policy and the quality has improved, Dr Tjivulka says years of under-investment during apartheid led to an unbalanced education system, with disparities in the standards of urban and rural schools.

The country will need to close this education gap if the population at large is to benefit from increasing levels of foreign investment that are expected in the region.