/namibia/ - A New Homeland

>>8455

Recent political events:

Sam Nujoma, leader of the South West Africa People's Organization (SWAPO), was President from Namibia's independence in 1990 until 2005. In November 2004, citizens elected Minister of Lands, Resettlement and Rehabilitation Hifikepunye Pohamba to be the next President. Pohamba was inaugurated in March 2005 in conjunction with celebrations marking the country's fifteenth anniversary. International and domestic observers agreed the 2004 elections were generally free and well administered despite some irregularities. Pohamba was elected President with 76.4% of the vote. SWAPO won 55 of the 72 elected seats in the National Assembly. Six opposition parties won a total of 17 seats, including the Congress of Democrats party, which won the largest number of opposition votes; the Democratic Turnhalle Alliance; the National Unity Democratic Organization; the United Democratic Front; the Republican Party; and the Monitor Action Group.

Security

While no Namibian rebel groups are active, the Angola rebel force, Uniao Nacional para Independencia Total de Angola (UNITA) occasionally crosses the border into Namibia, and Namibian forces have been actively deployed in southern Angola to counter them (with the support of the Angolan government). Commanded by Jonas Savimbi, UNITA deploys an estimated 20 000 troops, supported by perhaps 30 000 militia.

The recent peace in Angola has led to an improvement in the security situation along the Namibia-Angola border. However, because of the potential for banditry and the continuing presence of land mines in the border area from Katwitwi (a village on the Okavango River in western Kavango Region) to Kongola Town (Caprivi Region), the U.S. Embassy in Windhoek strongly recommends that American citizens avoid leaving the main road between these two points. The Embassy also strongly recommends that American citizens avoid traveling at night, exercise caution and maintain security awareness at all times near the Namibia-Angola border.

Mining and Energy

Mining contributed approximately 7% of GDP in 2003. Diamond mining activities alone represented more than 5%. Diamond production totaled 1.5 million carats in 2002, generating over $500 million in export earnings. Other important mineral resources are uranium, copper, lead, and zinc. Anglo American's $454 million Skorpion zinc mine, which opened in 2003, is projected to produce 12,500 tons of pure zinc per month. The country also is a source of gold, silver, tin, vanadium, semiprecious gemstones, tantalite, phosphate, sulfur, and salt.

During the pre-independence period, large areas of Namibia, including offshore, were leased for oil prospecting. Natural gas was discovered in 1974 in the Kudu Field off the mouth of the Orange River. The field is thought to contain reserves of over 1.3 trillion cubic feet. A decision to develop the field or not was expected in 2005. Offshore exploration licenses have been issued. Plans have been put forward to build the country's first combined cycle power station near Oranjemund. Government officials have warned that in the absence of new domestic sources of energy, Namibia will face power shortages as early as 2007.

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>>8456

Namibian Energy Production and Consumption figures: http://earthtrends.wri.org/pdf_library/country_profiles/ene_cou_516.pdf

Special Incentives

for Manufacturers and Exporters

Incentives for Manufacturers Incentives for Exporters

The Government of the Republic of Namibia is committed to stimulate economic growth and employment and to establish Namibia as a gateway location in the Southern African region. Incentives are largely concentrated on stimulating manufacturing in Namibia and promoting exports into the region and to the rest of the world. Incentive regimes in place are designed to give Namibia-based entrepreneurs who invest in manufacturing and re-export trade a competitive edge. These tax and no-tax incentives are accessible to both existing and new manufacturers.

Manufacturing activities in all sectors, including local value-added processing of Namibia’s minerals, fish and agricultural products currently exported largely in raw form, stand to benefit from these incentives.

These incentives are designed for entrepreneurs whose main target market is the Southern African Customs Union (SACU). Namibia-based entrepreneurs exporting their products outside the SACU market are still entitled to benefits under the scheme. Manufacturers receive greater benefits than mere exporters of finished goods. To benefit from the scheme, an investor must register with the Ministry of Finance as a manufacturer or an exporter of manufactured goods. The Namibia Investment Centre assists investors with the registration process. Manufacturing Status registration form

The following tax general regulations are indicative of Government commitments:

Non-resident Shareholders’ Tax is only 10 percent;

Dividends accruing to Namibian companies or resident shareholders are tax exempt;

Plant, machinery and equipment can be fully written off over a period of three years;

Buildings of non-manufacturing operations can be written off, 20 percent in the first year and the balance at 4 percent over the ensuing 20 years (manufacturers operations have even more generous allowances);

Import or purchase of manufacturing machinery and equipment is exempted from value added tax (VAT);

Preferential market access to the EU, USA and other markets for manufacturers and exporters is provided.

To make manufacturing in Namibia more competitive, Government has introduced a further package of tax and non-tax incentives, applicable to both existing and new manufacturing enterprises.

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>>8457

Tax abatement

The Government has allowed an 18 per cent special tax deduction on the taxable income derived from manufacturing enterprises for a period of 10 years. This abatement is applicable to all operations approved and registered as manufacturers by the Ministry of Finance in consultation with the Ministry of Trade and Industry.

Establishment tax package for new investments

Where companies wish to establish a new manufacturing venture in Namibia, or relocate an existing operation to Namibia, a special tax package may be negotiated through the Ministry of Trade and Industry, which then makes appropriate recommendations to the Ministry of Finance. The Minister of Finance is empowered to grant, in consultation with the Minister of any line Ministry, special conditions to certain manufacturing enterprises on:

the rate of tax payable, and

the terms under which this rate shall apply.

To be considered for an establishment tax package, a full feasibility study must be presented showing that:

existing industry will not be unfairly disadvantaged, and

the enterprise will contribute positively to Namibia’s long term economic growth.

The conditions, as negotiated, will be published in the Government Gazette as soon as they have been approved by the Ministry of Finance.

Special building allowance

Building erected by manufacturing enterprises for manufacturing purposes (i.e. not including office buildings), can be written off at the rate of 20 percent in the first year and the balance at 8 percent per year over the ensuing 10 years.

Tax incentives for export promotion activities

The following expenditure, which is already fully deductive for tax purposes, will be allowed as an additional deduction from income according to the percentages prescribed below:

research on the marketing of goods in a foreign country;

advertising and soliciting of orders in a foreign country, including attendance of approved foreign trade exhibitions and outward trade missions, economy air fare, local travel and accommodation and exhibition costs;

provision of samples or technical information to prospective customers in a foreign country;

bringing prospective buyers from a foreign country to Namibia, including economy air fares and accommodation;

preparation or submission of tenders or quotations in respect of goods to be exported to a foreign country;

expenditure incurred to finalise contractual agreements;

the appointment of agents in foreign countries.

The additional deduction in prospect of the above expenses is as follows:

25 percent if the current export turnover exceeds the basic export turnover (defined as the average export turnover of the preceding three years, as supported by an audit certificate) by 10 percent or less;

50 percent if the current export turnover exceeds the basic export turnover by more than 10 percent, but less than 25 percent; or

75 percent if the current export turnover exceeds the basic export turnover by 25 percent or more.

These export promotion incentives will only be granted on approval of the programme, stating details of the envisaged export promotion venture and the expected resultant exports.

Additional deductions for production line wages and training

An additional deduction of 25 percent will be allowed for registered manufacturing enterprises in respect of wages paid to production line workers and training costs.

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>>8458

Production line wages

As an encouragement to manufacturing enterprises to utilise more labour intensive processes, an additional deduction from income of 25 percent will be allowed in respect of wages paid to Namibian workers directly involved in the manufacturing process. For example if an enterprise has an approved remuneration package of N$100,000 to such workers, N$125,000 will be allowed as a deduction from taxable income.

Training expenses

The Government believes that efficiency in the manufacturing sector can be increased dramatically through the professional training of technical personnel. An additional deduction of 25 percent from income will be allowed on approved technical training expenses. The content, duration and costs of training programmes and a list of candidates must be forwarded to and approved by the Ministry of Finance, in consultation with the Ministry of Trade and Industry and the Ministry of Labour and Human Resource Development.

Non-Tax Incentives for Manufacturers

Grants and loans for exporters

To further assist exporters in securing new markets, export promotion funding of efforts as detailed above, will be considered, up to a maximum of 50 percent of direct costs. Such export promotion activities must be pre-approved by the Investment Centre and can, on the basis of substantive quotations and/or invoices, be paid in advance, subject to full verification of expenditure within 30 days.

Industrial studies

Studies undertaken by Government, whether on its own initiative or on request of private sector enterprises, can be made available at 50 percent of their production cost to companies that wish to develop investment opportunities. Executive summaries will be made available for perusal free of charge. Requests by the private sector for commissioning of such studies will only be considered where full project proposals and pre-feasibility studies are submitted.

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>>8459

Incentives for Exporters of Manufactured Goods

Tax allowance on income derived from the export of manufactured goods

Government intends to promote Namibia as a trading centre within Southern Africa. Taxable income derived from the export of manufacture goods, with the exception of fish and meat products, whether they have been produced in Namibia or not, shall be reduced by an allowance equal to 80 percent of the amount.

Registration and Implementation

All manufacturing concerns claiming incentives must first register with the Ministry of Trade and Industry, and, in respect of Taxation Incentives, must also be registered with the Ministry of Finance. The Minster of Finance is empowered to prescribe accounting procedures and regulations for manufacturing enterprises qualifying for Taxation Incentives. To promote, control and prevent the misuse of Taxation Incentives, enterprises qualifying for such incentives will not be relieved on the duty to submit fully substantiated annual tax returns.

Taxation

The following direct and indirect taxes are levied in Namibia:

Corporation tax (applicable to Companies, Close Corporations and External Companies)

Personal income tax

Withholding tax

General sales tax

Additional sales levy

Other taxes, include. transfer tax, stamp duty, customs duty and municipal rates.

Namibia has no capital gains tax, estate duty, inheritance tax or donation tax. Partnerships are not treated as separate taxable entities and partners are taxed on their share of net partnership income.

The Income Tax and VAT are administered by the Minister of Finance via the office of the Commissioner for Inland Revenue in Windhoek, who is also responsible for the administration of Stamp and Transfer Duties.

Double Taxation Agreements have been concluded with numerous countries including France, Germany, India, Mauritius, Romania, the Russian Federation, South Africa and Sweden.

Full details of Namibia's tax regime

Export Processing Zone Regime

As a far-reaching incentive for manufacturers, the Namibian Government adopted a policy for the establishment of an Export Processing Zone (EPZ) regime to serve as a tax haven for export-oriented manufacturing enterprises in the country, in exchange for technology transfer, capital inflow, skills development and job creation. This policy decision was translated into law through the passage in Parliament of the Export Processing Zone Act (Act No. 9 of 1995). The implementation of this initiative started in 1996.

Export Processing Zone (EPZ) Incentives

Enterprises which undertake manufacturing, assembly, re-packaging and break-bulk operation and gear all or almost all of their production for export, earn foreign exchange and employ Namibians, will be eligible for EPZ status, which confers an attractive range of both tax and non-tax benefits.

Tax incentives for EPZ enterprises

Enterprises with EPZ status do not pay:

corporate tax;

import tax;

sales tax, stamp and transfer duties on goods and services required for EPZ activities.

These benefits are of unlimited duration.

Other incentives for EPZ enterprises

Because Government recognises the considerable costs of establishing new operations and training a new workforce, EPZ enterprises investing in upgrading the skills and productivity of Namibian workers will receive a grant to cover a substantial part of the direct costs of on-the-job and institutional training. The grant is paid by the Government on the basis of pre-approved training plans, once training is complete.

EPZ enterprises are allowed to hold foreign currency accounts in local banks.

They also enjoy industrial calm as no strikes or lock-out are allowed in the EPZ-regime.

Companies operating under the regime are free to locate their operations anywhere in Namibia.

Through the Offshore Development Company, EPZ enterprises also have access to factory facilities rented at economical rates.

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>>8460

Financial Environment

Namibia has a well-established banking system, which is controlled by legislation and by state agencies working through the Bank of Namibia. The new Banking Institutions Act passed into law in 1998 provides the legal framework for banking operations in Namibia and is designed to ensure international acceptability. To deepen the range of financial services in Namibia, an Offshore Banking Act as well as legislations governing the conduct of other offshore financial services are being prepared and should be passed into law in 2002.

As a member of the Rand Common Monetary Area (CMA), however, Namibia continues to be subjected to CMA foreign exchange regulations as are South Africa, Lesotho and Swaziland.

Commercial Banks

Commercial banks in Namibia operate through a nationwide network of branches and offer a comprehensive range of banking services, including current account and overdraft facilities, term deposits, discounting of bills, foreign exchange and a variety of loan products. General banking facilities such as hire purchase and leasing packages are also available and most of the commercial banks are capable of providing specialised merchant banking facilities. Branches of banks can be found in most towns in Namibia with agencies in the smaller centres. International services are available through interbank arrangements while electronic banking and teller services are available in all major centres.

Namibia has five major commercial banks:

Bank Windhoek Limited

City Savings and Investment Bank

Commercial Bank of Namibia

First National Bank of Namibia Ltd

Standard Bank of Namibia

Foreign Exchange Control

Foreign currency transactions in Namibia have to conform to operating Exchange Control requirements. In an effort to demonstrate the Government's commitment towards the free flow of currency, people and goods, recent changes have been effected to the rules governing foreign exchange transactions to allow dividends, profits and disinvestment proceeds to be transferred by an authorised dealer without Bank of Namibia involvement. Transfers in excess of the established limits under Exchange Control Rules require authorised dealers to lodge an application on behalf of their client with the Bank of Namibia giving full details of the purpose for the remittance.Â

Remittance of Dividends

The remittance of dividends to non-resident shareholders is allowed without Bank of Namibia approval, except in the case of a company availing itself of local loans.

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>>8461

Repatriation of Capital

The local sale or redemption proceeds on non-resident owned assets in Namibia may be regarded as freely remittable or be used freely by non-residents for investment purposes within the CMA.

Export Processing Zone (EPZ) Enterprises

EPZ enterprises operate outside the normal foreign exchange regime in Namibia. To address their foreign exchange and operational requirements, two types of banking accounts have been tailor-made to the needs of enterprises operating in the Namibia EPZ. These are:

EPZ Customer Foreign Currency Account

To facilitate the foreign currency disbursements of EPZ enterprises. This account is kept in foreign currency in a local bank.

EPZ Non-resident Account

This is a Namibia dollar account funded with foreign currency and used for the normal operational requirements / expenditure of EPZ enterprises. Balances on this account are freely convertible.

Other Benefits of Liberalisation

Freedom of movement for capital transactions of non-residents.

Free repatriation of income/dividends earned on such investments.

Institutional investors, i.e., pension funds, insurance companies and unit trusts may engage in asset swap transactions.

Corporations may invest directly abroad.

Virtually all quantitative limits on current account transactions in line with Article VIII of the IMF have been abolished.

Namibian Stock Exchange (NSX)

The NSX is Africa’s second exchange in terms of market capitalisation, with total market capitalisation of N$286 billion, with 41 companies listed by the end of November 1999. The market capitalisation of Namibian companies had reached a new record at N$3.8 billion, with 14 companies listed by end-November that year.

The NSX is also among the continent’s most technically advanced bourses. A shared trading platform with the Johannesburg Stock Exchange (JSE) points a road forward for Southern African markets. Since November 1998, the NSX has used the Chicago-designed Johannesburg Equity Trading (JET) system, operated by the JSE. The NSX also uses the JSE’s Broker Deal Accounting (BDA) system, which enables surveillance and detailed client protection.

The NSX is working with South Africa's STRATE project to move to paperless trading through a central securities depository as part of moves to integrate clearing and settlement through the region. A World Economic Forum summit in July 1999 praised this sharing of resources as an example of possible Southern African integration.

In February 1999, the stock exchanges of the Southern African Development Community (SADC) agreed to work towards a goal of linked or shared trading systems, with the ultimate aim that all securities markets in the region should be accessible from one desktop trader work station. In addition, three Government bonds with a total value of more than N$1.8 billion and two parastatal bonds are listed. The NSX is working with the (central) Bank of Namibia to make bond trading more effective. For further information visit the NSX website: http://www.nsx.com.na.

How to Trade

Investors approach a stockbroker who is qualified to give advice and can place orders to buy or sell shares or bonds on the NSX computer screen.

Trading hours are Monday-Friday from 09:00-16:00 except for winter time (first Sunday in April to first Sunday in September) when it is 08:00-15:00.

There is five minutes variation at open and close. The NSX is closed on Namibian and South African public holidays. The NSX and the stockbrokers each have N$10 million insurance policies to protect investors and a Guarantee Fund.

The charges for dealing vary by the deal amount from 1.1% on deals up to N$10,000 to 0.35% on the portion of the deal amount above N$5 million, with much lower rates on bonds. Brokerage rates include a transaction levy of 10% of brokerage paid to the NSX.Â

Foreign Investment on the NSX

There are no capital gains or marketable securities taxes or stamp duty on deals. The only special tax for foreigners is Non-Resident Shareholders Tax at 10% of dividends. There are no restrictions on foreign investment on the NSX. Foreign exchange regulations are related to those in South Africa through the Common Monetary Area treaties and the Namibia Dollar is linked 1:1 with the Rand.

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>>8462

Macroeconomic Overview

Economic Structure and Performance

Namibia is blessed with rich natural resources, a well-developed physical infrastructure and political stability. The country enjoys a relatively high GDP per capita of US$1,810 (1998), four times as high as the average for sub-Saharan Africa, which classifies Namibia as a middle-income country.

The Namibian economy heavily relies on the primary and the tertiary sectors. Agriculture, especially large-scale commercial livestock farming, fishing and mining are the backbones of the economy, while services account for a major share of GDP. The manufacturing sector is steadily growing and is mainly based on fish, food and meat processing activities.

Economic performance in Namibia is dictated largely by external factors like the weather, oceanic conditions and international commodity prices. In particular, world market prices for diamonds and uranium, of which Namibia is the fifth and sixth largest global producer by value, respectively, have a determining impact on the whole economy.

Average real economic growth amounted to 3.7% per year. Real national income per capita expanded on average by 1.6%Â over the first 1- years of independence, from N$4,520 in 1990 to N44,884 in 1999. Current evidence points at prospects for strong and positive economic performance. In particular, growth is expected in fishing and mining output, tourism and manufacturing. The attractive EPZ zero-tax regime has already attracted significant investments in manufacturing and re-export operations.Â

Prices and Inflation

Over the last ten years, the inflation rate averaged 10%. The last five years of the 1990s saw a reduction with an average of 8.3% per year, with a record low of 6.2% in 1998. Due to external pressure, especially rising oil prices, inflation is expected to rise slightly.

Monetary and Fiscal Growth

Monetary and exchange rate policy in Namibia is influenced by Namibia’s membership of the Common Monetary Area. Under the agreement, the Namibia dollar is pegged on par to the South African Rand and capital flows freely between Namibia and other CMA countries.

South Africa is Namibia’s major trading partner, accounting for at least 85% of imports and 25% of exports. Other main destinations for exports are the UK, Spain, Japan and Germany. The one-to-one parity between the South African Rand and the Namibia Dollar eliminates exchange rate uncertainty and promotes trade and investment flows between the two countries. In addition, membership in the CMA allows Namibia to override exchange controls with less financial implications, than would otherwise be the case.

Namibia has embarked upon a continuous programme of exchange control relaxation. This momentum started with the abolition of the financial rand system in the CMA in 1995 and recently culminated in the accession of Namibia to Article VIII of the IMF’s Articles of Agreement. International investors can invest in Namibia with the confidence that they are not affected by any exchange control measures. Repatriation of capital and dividends occurs freely. Membership in these arrangements further deepens Namibia’s financial integration into the world financial markets.

Balance of Payments

Namibia’s balance of payments had been yielding surpluses for most years of the 1990s, with strong current account surpluses outweighing net capital outflows. It was only in 1991 and 1992 that the balance of payments registered overall deficits, mainly due to large capital outflows apparently caused by political uncertainties at the time of independence.

A current account surplus on Namibia's balance of payment of around 2% of GDP was maintained during that decade. This was mainly due to the strong performance of primary exports.

Investments

Real Gross Fixed Capital Formation grew at an average of 6.5% per year during the 1990s. Most of the investment, however, was directed to the primary sector.

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>>8463

Namibian Energy Production and Consumption figures: http://earthtrends.wri.org/pdf_library/country_profiles/ene_cou_516.pdf

Site for the Namibia Economist:

http://www.economist.com.na/

USAID Datasheet on Private Enterprise Development: http://www.usaid.gov/policy/budget/cbj2006/afr/pdf/nm673-001.pdf

Geological Survery of Namibia:

http://www.gsn.gov.na/

NGO/ Int’l Presence: USAID works actively with other donors in key development areas to ensure complementarity and avoid redundancies. With the dramatic increase in HIV/AIDS funding in FY 2004 and FY 2005, the U.S. funded program more than doubled in size, making the U.S. Government the largest and one of the most visible bilateral donors in Namibia. United Nations agencies also play an important role in catalyzing a coordinated response to the HIV/AIDS epidemic, supported by the European Union (EU), Germany, Finland, Sweden, the Netherlands, and France. In November 2004, a grant from the Global Fund for HIV/AIDS, TB and Malaria was approved, which will provide significant resources for Namibia's HIV/AIDS program.

USAID coordinates with a UNDP-administered Global Environmental Facility project to link protected areas with USAID-supported conservancies. USAID's Living in a Finite Environment activity and the World Bank's Integrated Community-Based Ecosystem Management project were designed to complement each other and to leverage resources. Germany, Sweden, and Finland also are active in the environment sector. The EU has a large rural development project that includes elements of community-based natural resources management support.

The Netherlands, Sweden, Finland, and Germany are key players in the democracy and governance sector. UNDP, the United Nations Industrial Development Organization, Germany, and Luxembourg are engaged in small and medium enterprise development programs, while the EU and Germany support trade and investment development. The EU, Germany, Sweden, France, Finland Luxembourg, Norway, the United Kingdom, Spain, and the UNDP participate in a sector assistance program in education.

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>>8464

ARTICLES

Southern Africa prone to terrorism’

ï‚· Southern Times Writer, Windhoek

Southern African countries are vulnerable to terror groups, as many nations lack adequate resources and legislation to tackle the problem, says a new report. The Institute for Security Studies paper, “Organised Crime and Terrorism: Observations from Southern Africa”, argues that the region could be advantageous to transnational terror groups “if it can be used as a source, transit zone or market for high value narcotics” and money laundering.

The author, Charles Goredema, said the region also had widespread poverty, “which is always going to be a breeding ground” for ideologies that advance by violent means. In countries like South Africa, where “there’s poverty, the resources that are not equally distributed feed into an ideology that says, ‘if the resources are much more equitably distributed (through force) the circumstances of the poorest would change positively’.” The region has been blessed and cursed with natural resources, such as diamonds and oil, which have fuelled conflicts like Angola’s now ended 27- year civil war, and were also a lure for terror groups. When added to the burgeoning transnational trade in narcotics, it made a potentially explosive combination.

“Narcotics are known to have been supplied for consumption to some of the perpetrators of terrorism in the subregion . . . They are (also) important for their economic value, like precious extractive resources (such as diamonds),” the report argued. These resources could provide “a relatively anonymous source of revenue, to be used to fund terrorist or related activities”. There was no doubt of the significance of Southern Africa as a source of cannabis for European countries, for example. “It is believed that proceeds eventually follow the reverse path from abroad into Southern Africa in a money laundering cycle,” the paper noted. Arecent study revealed the nature and, to some extent, the scale of money laundering activities to which the entire region was exposed. “Transnational terrorism is . . . bound to find outgoing and incoming money laundering potentially valuable. In this regard, the channels for laundering funds between countries in (Southern Africa) deserve attention. There is evidence of the growth of these channels between Tanzania and Malawi, as well as South Africa and Zimbabwe. Added to this is the spectre of offshore financial centres, as established in Botswana and Mauritius, which bristle with opportunities to infiltrate illicit proceeds,” the report commented. Dysfunctional systems for sharing intelligence within and between many states in the region only aggravated the situation.

“Furthermore, delinquent governmental systems and structures, as well as dysfunctional economies that worsen poverty levels, exert an unbearable pressure on financial regulatory structures, such as central banks,” the author pointed out. The report concluded that the need for regional security in Southern Africa was as great as ever, “given the size of the region and the strategic position it occupies geographically and in terms of resources”. The region was, thus, “equally attractive to legitimate entrepreneurs and terrorist groups and money launderers”. But the reality was that security in Southern Africa has been characterised by inadequate policing and legislation, “and understaffed and under-resourced law enforcement agencies”. Although a number of countries in the region had established counter-terror units, the study warned that “they are not yet all structured to collect, analyse and be able to share intelligence on terrorism, so that pre-emptive or preventive measures can be taken”.

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>>8465

Political Outlook:

Since its independence in 1990, Namibia has been run by the ruling SWAPO (South West Africa People’s Organization), which in turn was lead by President Sam Nujoma until March 2005. His successor and close political ally, Hifekepunye Pohamba, was elected with 76.4% of the popular vote, while SWAPO won 55 out of the 72 seats in the Parliament. The remaining seats were split between the six opposition parties, divided along ethnic lines, none of whom received more than 10% of the vote. These results were another step in the further consolidation of power both within the SWAPO, as Pohambo and Nujoma’s main challenger for leadership of the party, Hidipo Hamutenya, was marginalized after being removed from the SWAPO election list, and indeed within the country where the ruling party is ethnically identified with the Ovambo people, who comprise over 50% of the country’s population. While single-party supremacy is effective in guaranteeing stability at least in the first few years of a fledgling democracy, as time goes by it increasingly becomes unhealthy for the political growth of a recently autonomous country, as has been the case in Zimbabwe and is increasingly the case in South Africa, where opposition movements are being increasingly marginalized. Historically, this phenomenon leads to political quagmires, corruption, and the increased definition of the state as the party, and vice versa, as well as dulling any effective built-in checks against the executive branch. Indeed, prior to the November 2004 election, state television and radio coverage was disproportionately, if not solely pro-SWAPO. If the status quo is maintained and competition from smaller political parties remains insignificant, the dominance of the SWAPO will reach unacceptable levels and will become a catalyst for grassroots protests and socio-political upheaval as the situation becomes increasingly intolerable. This unrest will be exacerbated by the role of ethnicity in Namibian politics, as any political clash is certain to extend to the countryside and create tensions between communities, possibly resulting in violence through the creation of ethnically-defined armed opposition groups. With the Ovambo population accounting for over 50% of the citizenry and virtually the whole government, and no other group exceeding 10% of the population, the propensity for friction is high, particularly if the country’s next election in 2010 does not create more room for wider plurality in representation. If the 6 other parties were to form a coalition, they would present a formidable opponent to the SWAPO but would also create a dangerous capacity for civil war, as in the case of Angola, with the country split almost evenly down the middle. Although at present there is no major civil unrest in the country, there are socio-economic indicators that, if not improved, could give rise to widespread dissatisfaction with Pohambo and his cronies. These include the level of unemployment, which has been holding steady at 30%, with economic growth only increasing in tiny increments. The life expectancy is only 44 years, a statistic which the 21.3% adult AIDS rate contributes heavily to. If these factors are not dealt with soon, and if SWAPO’s stranglehold on the Namibian legislature and executive branches is not relaxed, there is a very real threat of serious civil unrest and consequent government crackdowns. Namibia may well follow in the footsteps of its neighbor Angola by creating a situation where the stifling of opposition parties leads to armed insurrection in an effort to oust the SWAPO, or in those of Zimbabwe where SWAPO keeps consolidating its power until it rules Namibia the way Zanu (PF) does Zim.

Thanks for the information. If one is looking to start a company base in Africa, Namibia is one of the best options alongside Botswana and Mauritius, at least from my own research. The fact that Stratfor considers Namibia to be at risk for massive upheaval and instability is interesting…