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Opinion - Lack of FDI hinders economic transformation

2021-11-15  Staff Reporter

Opinion - Lack of FDI hinders economic transformation
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Foreign direct investment (FDI) is an investment from one country into a business or organisation in another country with the purpose of establishing a long-term interest. Foreign direct investment takes place when an investor launches foreign business operations or acquires foreign assets, including initiating ownership or controlling interest in a foreign company. The share of the foreign ownership has to be at least 10% of the value of the company. 

Foreign direct investment has many benefits to a host country, such as creating new jobs and more prospects as investors build new companies in foreign countries. This can lead to an increase in revenue and more purchasing power to locals, which in return leads to an overall increase in targeted economies. The development of human capital resources is a big advantage of FDI. The skills gained by the workforce through exercise increase the overall education and human capital within a country. Countries with FDI are profiting by developing their human resources while preserving ownership. Foreign direct investment will help Namibia to diversify the economy, which depends on natural resources, such as mineral resources and marine resources.

Foreign direct investment will increase Namibia’s income. With more jobs and higher wages, the national revenue normally rises, which encourages economic growth. Big companies usually offers higher salary levels than what you would normally find in the host country, which can lead to a rise in revenue. 

Namibia has a much bigger chance for economic transformation, because of natural resources but the reality is different. Despite the billions of dollars injected into the economy from wealthy nations, most of the Namibians are still in poverty. Namibia does not need to copy from China or European countries to transform the economy. We need to develop our own pragmatic approach, because the key objective of this approach is employment creation, which is the key to poverty eradication. China witnessed six hundred million people being lifted from the international poverty line. This is not because of aid; it’s about the job they created for themselves (self-employment). 

Namibia has a golden opportunity to attract investors; therefore, our leaders need to move from vision to action, because we have to move from dreams to reality. There is a high number of unemployed youth who are desperate for job opportunities. It is the leaders’ responsibility to create as many jobs as possible, and this can be done with the help of FDI

There is a rise in labour cost in China; about 85 million jobs will move out of China to either India, Asia or Africa. I have faith that Namibia will get a good share of such FDI, so we need to get ready, but it will not happen automatically. There are things that need to be done, such as improving our logistics and infrastructure. Namibia needs to do a lot in terms of anchoring economic reforms.

There is a high number of university graduates who are in quest of job opportunities in the cities, this can leads to huge urbanisation. Digitalisation and leapfrogging are the major trends that can drive opportunities in Namibia by doing things differently. The demographic dynamic of Namibia is long-term mega trend; by 2030, 39% of Namibians will be living in towns and cities. There will be a rise in criminal activities if there are no enough jobs being created, and this is the trend that is likely to continue.


2021-11-15  Staff Reporter

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