Low domestic investment rate prospect for 2012
The domestic investment rate in Namibia this year is predicted to be going downward compared to the previous year’s investor statistics; a move that is likely to be caused by the economical uncertainties around the world, a report by Namibian Business and Investment Climate Survey (namBIC survey 2012) shows.
According to the survey, 60% of all businesses invested in one form or another during 2011, compared to 56% in 2010. However, only medium and large enterprises intend to invest slightly more than average during 2012, while all other companies intend to invest below average.
Klaus Schade, an associate researcher explained at the presentation of the survey that the low investment is due to the fact that investors do not want to rush into things before they know the stand of the domestic and global economy.
“This indicates that businesses are taking a relatively cautious approach and waiting for clearer indications as to what direction the global and domestic environment is likely to take,” Schade said.
On the other hand, Wallie Roux, an international business analyst stresses the fact that Namibia is one of the few countries that have withstood the economical uncertainties better than many; hence it is still a better option for investors, especially international ones.
“The return on investment rates in Namibia is higher than in the countries plagued by the global financial crisis. However, international investments also depend on other factors that make up the country’s risk profile such as the Foreign Investment Act or the taxation laws,” said Wallie Roux.
However, Roux feels that the country’s regulation of foreign investment might be not welcoming enough for the foreign investors and hopes that the review of the Foreign Investment Act being done by the Government will change the situation.
The namBIC survey also shows that construction is one of the areas that are likely to be more invested in. However, most of the investment in that area is not meant to start up new businesses but rather to invest more in the expansion of the existing businesses. The mining sector is also anticipated to have an above-average investment this year.
Furthermore, construction companies have been rated high in the survey in terms of employment followed by the transport and communication sector, then manufacturing.
Wallie Roux added that investment in the industrialisation of the country is likely to benefit the development of the country more due to the large multiplier effect through secondary services industries. Moreover, investment in research and development is also a necessity for innovation.
Research and development was found to be the least invested in, despite the fact that it is supposed to be the drive behind innovation and investment in the country; an element Prime Minister Nahas Angula singled out as disappointing.
“Innovation and technology is what is missing in this country in order to take off. Africa is growing, we need to do more innovation and improve technology. The other problem is that we seem to be afraid to be at the forefront of manufacturing our own products,” the Prime Minister emphasised.