The recently released 2021 Fraser Institute Survey of Mining Companies Report shows Namibia improved only marginally on the Policy Perception Index (PPI) by 0.94 points and cites the country as one of three African jurisdictions to improve on this score.
Globally, Namibia improved on the overall PPI ranking, 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 is a significant improvement from its less favourable ranking of the fifth position in 2020.
Morocco had the highest PPI score and ranked 1st position in Africa. “It must be 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 indicates there is still much to be done to improve Namibia’s policy landscape,” commented Veston Malango, CEO of the Chamber of Mines of Namibia.
The survey solicited more than nine responses in the 2021 survey, a positive outcome that enhances 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 9).
Concerns raised
Despite Namibia’s improvement on the overall PPI index, the individual responses highlighted in the report on Namibia’s policy environment were negative.
The remarks are related to the lengthy permitting process as a hindrance to 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, and its 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and on the African continent would have been much better without this erroneous and baseless concern, as this risk is no longer applicable and has not been in the last two years,” Malango stated. In a statement, Malango noted the latest report accurately reflects the overall status quo of the current investment landscape, one which he said appears to be in limbo rather than improving drastically.
Said Malango: “It remains increasingly worrisome that while pronouncements by the government favour a conducive investment environment, there are no visible corresponding actions to demonstrate the finalisation of outstanding policy matters that continue to perpetuate investor uncertainty. The Chamber remains committed to working with the government through the Ministry of Mines and Energy to overcome these hurdles, ensure the most favourable policy outcomes are reached to benefit mining and Namibia and once again make Namibia the most attractive jurisdiction for investment into exploration and mining on the African continent”.
Investment attractiveness index
Meanwhile, 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 in its overall investment attractiveness was attributed to a significant decrease in the 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.