Dr Michael Humavindu
This week, we witness the temporary withdrawal of the draft Namibia Investment Promotion and Facilitation Bill (NIPA) by the minister of Industrialisation and Trade (MIT) in the National Assembly. The withdrawal was prompted by a series of articles notably in The Namibian, Republikein and Namibian Sun dailies, which castigated the draft Bill for the perceived ‘Super minister’ powers it accords. The ministry is to do further consultation before re-tabling the Bill. This article is an attempt to decode the draft Bill in lieu of modern investment legislation central themes. It further aims to dispel the unfortunate misdiagnosis on the intentions and orientation of the Bill that the media managed to successfully posit thereby creating confusion and unjustifiable fear-inducing analyses among its readership. The article therefore first provides a short overview of key themes that modern investment policy and legislation covers. Thereafter it decodes these themes in terms of the draft NIPA before it concludes. It attempts to dispel the unfortunate false notion so created as it decodes the NIPA’s provisions.
Modern Investment Policy and Legislation:
Modern investment policy legislation is characterised by certain key themes that become pervasive across many of the world’s national settings. These pertain to ensuring the equal treatment of both domestic and foreign investors, as many older investment agendas were fixated on foreign investors only. In addition, as much of the world subscribes to the Sustainable Development Goals (SDGs) and is fixated with the Climate Change Agenda ensuring that the investment so attracted is sustainable and becomes imperative. Thus in modern investment policy and legislation, it is increasingly becoming common that investment is coaxed towards the definition of sustainable investment and largely becomes the policy and law object thereof. The issue of private-public partnerships (PPP), as defined as a transaction whereby a private entity provides public infrastructure or services for use by the public (in lieu of performance-linked payments) is also imperative to align such to sustainable development. There is no point thus to facilitate investment through PPP, which will degrade the Namibian environment or cause further social inequality or upheaval. Finally, Official Development Assistance (ODA) flows are increasingly being driven towards investments and fostering of business opportunities as opposed to the normal plain vanilla solidarity aid to the Global South. This has massive implications in how such ODA shape investments flow into the Global South as well.
This leads us to a key feature that is becoming central in national investment legislation. Sector reservations or defining a ‘negative lists, restricted lists, encouraged lists etc’ to delineate which sectors are reserved for nationals or the state or for strategic investments may be classified as economic nationalism in certain quarters. However, it is actually meant to create a pathway towards self-reliance through developing entrepreneurship, fostering backward and forward linkages in the economy as well as guarding against Public Interest. Many jurisdictions around the world explicitly mention which economic sectors are reserved for which category in their law and policy. Many countries also advance the national security argument in relation to risks that may arise over loss of control of domestic inputs such as critical goods and infrastructure and technology to foreign hands. Resultantly many countries have actually adopted ex-ante Foreign Direct Investment screening regimes to identify, calculate and prevent security-related risks and implications.
Furthermore existing and entrenched global asymmetries drives certain key themes that are becoming pervasive across national investment policy and legislation. The developing world, inclusive of Namibia, is faced with increasing global asymmetries manifesting through for example unequal access to global financing, concentration of wealth and technology in developed economies, concentration of fiscal stimulus and investments in the developed world, unequal access to vaccines and vaccination levels, increasing digital divide and disparities in climate responsibilities and responses. These threaten the attainment of the SDG Goal 10-‘reducing inequality within and among countries’. A key measure to overcome such increasing global asymmetries is obviously to ensure increasing both public and private investments on green and sustainable investments and to enable green industrialisation through access to technology, investment and infrastructure. This is where the interface of national domestic investment law become imperative with activities pertaining to PPPs, and economic sectors reserved for the state, strategic investments, innovation or joint ventures seeking to leverage mainly on public procurement opportunities and reformed ODA flows. Crucially dictates from a national investment policy over such matters are vital to ensure effective permeability into the law but also to ensure alignment to national development goals.
It is very clear that the design of national investment law and policy has evolved around the central themes of equality of treatment of both foreign and domestic investors, aligning the law and policy to sustainability and country developmental goals whilst ensuring that risks pertaining to national security, entrepreneurship development and public interests are managed through sector reservations. For developing countries such as Namibia, increasing global asymmetries requires a much more nuanced and focused approach to a national investment policy inclusive of sector reservations and an applicable rules regime thereof. More so, it is paramount for Namibia, which is unduly classified as an upper middle income country although it has the second highest income inequality levels in the world. Keep in mind that as a middle income country, the twin threats of a Middle-Income Trap and Premature Deindustrialisation stares us right in the face-as we have no or little competent capacities built to compete on the basis of innovation, technological change and the production of knowledge-intensive goods and services. The design of one’s national investment policy and law therefore should be a critical tool to help ameliorate these structural developmental limitations and act as a bulwark against the twin threats.
Developments in Aspects of Administration, Approval, Implementation and Post Investment Interactions
Developments in aspects that cover administrative procedures and implementation are meant to ensure the elimination of a national process that is unnecessarily bureaucratic, onerous and antiquated. To this end, this area was largely across the world driven by Ease of Doing Business Indicators of the World Bank. Other countries looked at rather appreciating the World Economic Forum’s Global Competitiveness Reports. However, of late the Ease of Doing Business Indicators have suffered some reputational damage and is most likely to feature less as a barometer of global competitiveness.
Be as it may, experiences over the years are pointing to some trends. There is more recognition of delineating the approval process from the investment and development phases (inclusive of acquiring necessary concessions and incentives where applicable). So using technological transformation to facilitate the investment proposal and approval process, whilst ensuring less turnaround time from the investment decision making and development phases is becoming more pronounced in countries strategies.
This also looks at, as a policy measure, the availability of an integrated agency system that foster application programming interface technology, which then coordinates investment approval functions between relevant government agencies. At times countries move beyond this and firm it up through an Ease of Doing Business Act to provide more teeth to this aspect of what is sometimes called a One-Stop-Shop. This is quite pertinent as the issue of ease of doing business interfaces across various strata of policy regimes.
The Namibia Intellectual Property Regime (IP) is also bound by the Paris Convention for the Protection of Industrial Property, which has implications on filling priority between and amongst states and even on the treatment of filling dates. It also provides an opportunity in terms of attracting international innovators and technological investors who may rather wish to register IP across multi-jurisdictions simultaneously. Similar arguments can be made in terms of seamless integration on innovation through the National Commission on Research, Science and Technology) and on bio trade with the envisaged Research and Development Centre under the Access to Biological and Genetic Resources and Associated Traditional Knowledge Act, 2017 (Act No. 2 of 2017) and associated Regulations as published in August 2021. Ensuring policy coherence and cooperation around the implementation interface around these vital investor registration outlets and platforms will be a constant activity beyond the enactment of the NIPA Bill. An emerging trend around this attempt to digitalise and interconnect governmental agency system is the realisation by many countries to buffer this with a national cyber security legislative framework.
Finally, it is also key to imbue flexibility in the institutional framework governing the legislation, especially of the promotional agency to ensure a dynamic approach towards its evolution. Utilising the accompanying regulations to continuously ensure the updating and revamping of the promotional agency is a valuable outlet to utilise.
The draft NIPA is actually a modern based piece of legislation that rather err on the side of caution and gradualisms as opposed to straightjacket provisions. Nowhere in the Bill is the minister empowered to approve all economic sector and business activities as wrongly alluded to by the media. Moreover, a more accommodative stance is to be pursued through Regulations in terms of organisational flexibility of the investment promotion agency, application procedures and differentiation of requirements to be met between local and foreign investors when they wish to invest in reserved sectors. The Bill actually lends itself to evidence-based policymaking dictates as opposed to kneejerk policy reactions. The media articles took the minister’s determination powers over Reserved Economic Sectors and Business Activities and abrogated it across all investments wrongly. Although the resultant outcome is regrettable, perhaps it also shows the deficiencies in our nation’s economic journalism competencies. Economic journalism is not a good tool when wielded blindly. Yours truly is willing to offer any free course for any interested local scribe surely. We need to reset and ensure the passing of the bill as soon as we all attune ourselves to the true orientation, intentions, and content of the Bill.
*Dr Michael Humavindu is the Deputy Executive Director: Ministry of Industrialisation and Trade