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Namibia improves mining destination ranking

Home National Namibia improves mining destination ranking
Namibia improves mining destination ranking

Globally, Namibia improved on the overall Policy Perception Index (PPI) ranking as an African mining destination, gaining 18 places from 47th position in 2020 to 29th position in 2021. 

Namibia also ranked as the second most favourable jurisdiction on PPI on the African continent, which was a significant improvement from its less favourable ranking of fifth position in 2020. 

According to the 2021 Fraser Institute Survey of Mining Companies Report, where Morocco scored highest on the PPI and was ranked first in Africa, Namibia improved marginally on the PPI by 0.94 points, but cites the country as being one of three African jurisdictions to improve on this score.

In a recent statement the Chamber of Mines of Namibia highlighted and cautioned that the absolute improvement of Namibia’s score from 74.30 points in 2020 to 75.20 in 2021 is marginal and still
much lower as compared to her outstanding scores achieved in 2018 and 2019 (80.7 points and 87.22 points respectively).

This, the chamber stated, indicates there is still much to be done to improve Namibia’s policy landscape.

Meanwhile, the Fraser Institute Survey solicited more than nine responses in the 2021 survey, which they described as a positive outcome enhancing the overall validity of Namibia’s findings. Namibia’s lower PPI score in 2021 with more respondents thus corroborates with the less favourable policy environment in 2020 as was evidenced by a similarly low PPI score received by fewer respondents (less than nine).

 

Concerns 

Despite Namibia’s improvement on the overall PPI index, the individual responses highlighted in this report on Namibia’s policy environment were negative. The remarks are related to the lengthy permitting process as a hindrance for project development, and concerns around the non-deductibility of
royalties.

The latter response is not valid as this matter was successfully resolved in 2020. The quoted concern is that “non-deductibility of royalty payments prevents the sector from minimising costs and hurts the industry’s competitiveness”. 

The chamber is of the view that this statement negatively affected Namibia’s performance. 

Namibia’s PPI score, it’s ranking globally and on the African continent, would have been much better without this erroneous and baseless concern as this risk is no longer applicable, and has not been in the last two years.

Policy landscape

The chamber is of the view that this report accurately reflects the overall status quo of the current investment landscape, one which appears to be in limbo rather than improving dramatically. It remains increasingly worrisome that while pronouncements by the government favour a conducive investment environment, there is no visible corresponding action to demonstrate the finalisation of outstanding policy matters that continue to perpetuate investor uncertainty. The chamber remains committed to working with the government through MME to overcome these hurdles, and to ensure the most favourable policy outcomes are reached to benefit mining and Namibia, and to once again make Namibia the most attractive jurisdiction for investment into exploration and mining on the African continent.

 

Investment Attractiveness Index 

The Investment Attractiveness Index combines the Policy Perception Index and the Best Practices Mineral Potential Index and is an overall measure of a country’s competitiveness. The Policy Perception Index carries a weighting of 40% and the Best Practices Mineral Index carries a weighting of 60%.

Although the mineral potential index carries more weight, investors are sensitive to policy uncertainty and will prefer jurisdictions that have a stable policy environment and are conducive for mining.

 

Breakdown of Scores

Investment Attractiveness Index

Namibia’s Investment Attractiveness Index (IAI) decreased by 7.13 points, from 59.72 points in 2020 to 52.59 points in 2021. In absolute terms, Namibia’s decline on its overall investment attractiveness was due to a significant decrease in the Best Practices Mineral Potential Index.

 

Policy Perception Index

The Policy Perception Index (PPI) measures the opinions of survey respondents on all facets of the policy environment, such as taxation and regulation certainty. Namibia’s PPI improved marginally by 0.94 points from 74.30 in 2020 to 75.24 in 2021. Despite this marginal improvement, remarks regarding Namibia’s overall policy environment were negative as alluded to above and Namibia still scored far lower than her high of 87.22 points in 2019.

 

Best Practices Mineral Potential Index

Namibia’s Best Practices Mineral Potential Index fell by 12.5 points from 50 in 2020 to 37.5 in 2021. This index measures perceptions of a country’s mineral potential, assuming a world-class regulatory environment.