Namibia Economy

26 January 2010
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MACROECONOMIC  PANEL

 

 

The socio-economic situation of Namibia is complex to analyze.

 

Although the figures show a developing country with a real GDP growth at 2.8% for 2008 and a very high nominal GDP per capita ($ 4135 in 2008), we consider that Namibia is an African state with the highest inequality of income, so the 55.8% of the population still lives on less than two dollars a day.

 

The economic growth of Namibia is closely linked to the revenues generated from the export of mining products, which account for 50% of revenues derived from trade with foreign countries.

 

The Namibia stands at sixth place among world producers of diamonds of excellent quality, the fifth largest in the world among countries exporting uranium and fourth among African exporters of mineral fuels.

In addition to diamonds and uranium, the state extracts large amounts of zinc, copper, lead, silver and gold. Nevertheless, the mining sector employs only 3% of the population.

 

Half of Namibians are dedicated to agriculture and subsistence farming, mainly maize and millet are grown and bred especially goats and sheep. Agricultural production still does not cover the national demand, which depends on imports to 50%.

 

In particular, the main products imported into the country are machinery, transportation and food products (about 50% of cereal needs of the country).

The Namibia is presented as an attractive market, being characterized by an overall political and macroeconomic stability and good infrastructure facilities associated with a virtuous economic performance.

 

In addition to exports of products from the mining industry, public services provide the largest contribution to gross product, followed by financial services, manufacturing, agricololtura and fishing, wholesale and retail.

 

The manufacturing activity, which consists mainly in the manufacture of food and beverages, especially beer, is organized on a small scale. The most important sub-sectors are fish processing and meat.

 

Other products with the exception of leather, are intended primarily for the domestic market. The government has managed, through the establishment of Export Processing Zones, to attract capital from abroad for export-oriented manufacturing industry.

 

Abundant natural resources, good infrastructure and better access to regional and overseas markets are the foundation for the development of a more diversified.

 

 

OPPORTUNITY FOR ITALIAN COMPANIES

 

 

Despite the market is dimensionally limited, there are opportunities for expansion in those goods and services not available within the country of which Italian companies possess comparative advantages.

In particular, there is scope for absorption by the market of food and agricultural production, given the country's heavy dependence on imports of agricultural machinery together with the development of processes of agrarian reform, machinery and equipment industry mining and the construction, chemicals and pharmaceuticals, medical equipment, telecommunications equipment, machinery for the textile and tanning industry.

 

To promote the expansion and diversification of the industrial sector, the Namibian government has introduced a range of incentives with the aim of attracting production plants for the domestic market which could push up the demand for specialized mechanical tool.

One area that in the coming years could see unfolding a wide range of business opportunities is that of energy production through renewable sources, a hypothesis that assumes increasing importance in the context of the development of Namibia, in order to reduce the current strong energy dependence of the country, especially from neighboring South Africa.

 

The reported intention about the energy in Namibia is to explore hypotheses for the formation of systems of exploitation of resources and alternative energy sources, especially wind power, is a field of potential commercial and industrial cooperation between our country and Namibia.

 

With its strategic geographical position,it is the gateway to the South African market.

 

It has a rich reserve of minerals and metals (copper, diamonds, steel, uranium, gold, silver, tungsten, marble and semiprecious stones) throughout the territory and an exponential growth fueled by tourism facilities.

 

The Namibian economy is the third in Africa, made stronger by the last decade of political stability.

 

To promote free enterprise, the government has embarked on a strategy for expropriation of white-owned farms for redistribution to the indigenous people living in poverty and has studied road projects to modernize facilities and energy supply.

 

Who, as Italian entrepreneur, wants to start self-employment may open a hotel or purchase a private estate,and  even in areas where wild animals live: profits will not wait.

 

Other type of works is the restaurant "Italian style", due to demand generated by foreign travelers.

 

Two professions  are requested: firstly, the tour guide, who struggle to find employment in the branches of tour operators on site.

 

Good then the prospects for geologists, thanks to mineral reserves. In addition to tourism and mining, the leading sectors of the economy and having the best business opportunities are fishing and livestock, in constant growth.

 

 

 

INDUSTRY

 

There are: mining (diamonds, zinc, tin, silver, tungsten, uranium, copper, lead), food (meat, fish, dairy products), Karakul wool, livestock (cattle, goats, sheep Karakul), fish, millet, sorghum, peanuts, manufacturing industry, which consists principally in the manufacture of food and beverages, especially beer, fish processing industries and meat.

 

 

MINING RESOURCES

 

 

Namibia is the fifth largest producer of uranium and owns diamond resources of excellent quality, and fall to sixth place among world producers (after Botswana, Russia, Canada, South Africa and Angola).

 

Additional minerals include zinc, lead, copper, silver and gold.

 

 

 

SECTORS IN EXPANSION

 

Expanding sectors appear to be: the public sector with the growth of services, the electricity sector that has enormous potential to become the driving force of economic development and tourism through the beautiful desert landscapes and major national parks.

 

The  eco-tourism is  particularly developed.

 

 

 

INVESTMENT LAW

The Government of Namibia has been deeply involved in the attraction of foreign investment aimed at promoting economic development, job creation and growth of the private sector.

 

The government has as its goal the expansion and diversification of the manufacturing base and the development of small and medium enterprises, by creating an economic environment conducive to private investment.

 

To this end, in recent years has made considerable efforts to remove entry barriers and simplify regulatory requirements and administrative (licenses, permits, registration procedures).

 

In 1998 it introduced for the first time its Customs and Excise Act .

 

In this there is foreign direct investment law of 1990 which guarantees foreign investors the same treatment than domestic ones, a fair compensation for expropriation, the right to repatriation of profits and free access to foreign currency.

 

They provided several tax incentives for investment in manufacturing activities and exports. In some areas, such as fisheries, there has been a gradual process of nationalization of existing investments, as foreign companies with licenses to fish in the country are forced to enter into partnerships with local businesses, selected by the government in order to obtain renewal of licenses.

 

The Ministry of Trade and Industry is responsible for formulating and implementing trade policies and industrial.

 

 

 

THE TAX SYSTEM

 

The direct and indirect taxes present in Namibia are:

 

• Corporation tax (applicable to companies, Close Corporations and external companies)

• The tax on personal income with a maximum rate of 35%,

• Withholding of employment, tax that rises on the remuneration earned for services rendered in Namibia

• transfer tax, stamp duty, customs duties and municipal rates.

 

The Namibia has no capital gains tax and inheritance tax.

 

The income tax and VAT are administered by the Minister of Finance through the Office of the Commissioner for Inland Revenue in Windhoek, which is also responsible for managing the stamp.

 

 

 

TRADE AGREEMENTS

Among the major trade agreements, we find the Southern African Custom Union (SACU), which represents the oldest customs union in the world with the aim of maintaining the free exchange of goods among member countries.

 

It is also a member of the World Intellectual Property Organization (WIPO).

 

 

 

EXEMPTIONS

They are exempt from VAT: education, medical care, accommodation and means d public transport.

 

 

 

CUSTOMS DUTIES

Namibia is part of the Customs Union SACU (Southern African Custom Union), so in this area (which includes Botswana, Lesotho, South Africa and Swaziland) there are no customs barriers, while imports from the rest of the world charge a fee and excise policy.

 

The customs revenue flow into a common fund controlled by South Africa which redistributes it to the various EU countries in a pattern of distribution agreed.

 

Since the Uruguay Round in 1994, the SACU countries, including of course Namibia, have reformed and simplified its tariff structure, achieving a substantial reduction in drawback.

 

However, despite these reforms, for many importers tariff structure remains complex.

 

The rate of duty which falls principally within eight levels ranging from 0 to 30%, although for some products, like most articles of clothing may be higher.

 

 

 

 

PROPERTY

 

The Directorate of Internal Trade of the Ministry of Trade and Industry oversees industrial property and is responsible for the registration of companies, brands and patents of the projects.

 

Property and related rights are of great importance in Namibia.

 

Private property is recognized and  of considerable importance are the property and agricultural lands.

 

Because of  the existence of the Agricultural Land Reform of 1995 and the Communal Land Reform of 2002, there is a right of first refusal by the state about  the acquisition of lands owned by the big white farmers (who represent about the 5% population).

The farmlands so acquired are then redistributed to blacks cultivators for cultivation or stock farm (mostly cattles).

 

From independence until today, the Government of Namibia has  bought ,subdivided and redistributed about 135 farms.

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