DOING THINGS DIFFERENTLY 2018-03-05T10:38:25+00:00




“If you always do what you always did, you will always get what you always got”

Albert Einstein

Political and policy stability are pre-conditions for a new country to build a trust base and track record. Innovation and business unusual are keys to outperformance in public and private sectors and provide a platform for superior growth, job creation and economic diversification.

The Asian Tigers teach us how dramatic transformation and fast-tracking of economic growth, social equity and innovation is within reach of even resource-poor economies. Multi-resource countries like Namibia cannot claim the resource-curse and Dutch disease to look for excuses for mediocre performance, especially as we move into the 3rd and 4th industrial revolutions – digital and knowledge-based economies built on education and niche competitive advantages including those in the blue and green economies.

We need to build on our solid foundations but do things differently.

As President Geingob proclaims in his recent book “The Time is Now”.

Namibia has a track record now approaching three decades of peace, stability, responsible governance and overall policy predictability. We have gone some way towards reducing the inequities and skewed development of the past, in growing a successful mixed economy and in establishing a young nation state which can stand its ground in the company of much larger, more mature and better resourced nations. Our leadership has stood out in world-class examples of both political and corporate leaders, yet gaps are evident and overall productivity and competitiveness is average at best. Reconciliation, careful consideration of diverse and sometimes conflicting interests and pragmatic policy frameworks and development plans brought us to a relatively comfortable position in 2010-2015; maybe too comfortable?

While Mauritius and Botswana stuck to the secrets of their respective successes, and Rwanda, Ethiopia, Ghana, Kenya and Tanzania reformed policy environments rapidly, Namibia stayed put and even slid backwards. Complacency and inappropriate and uncoordinated policy reforms saw us being overtaken by others in competitiveness and attractiveness rankings in 2011-2013. This sideways shift turned to backsliding when well-intended but unguided policy frameworks like the New Equitable Economic Empowerment Framework (“NEEEF”) and Namibia Investment Promotion Act (“NIPA”) raised their ugly heads in 2015/16, creating a confidence crisis with a resultant freeze on investment and capital outflows through 2016 and 2017.

Compared with the consensus private and government competitiveness targets to top SADC or even Africa by 2020, Namibia slipped to a mediocre ranking of 6-9 in Africa in most categories, with an occasional top 5 in SADC. “Could do better” is the obvious report card comment given our strong start and considerable potential.

The incoming Geingob administration identified and addressed the malaise and flagging economic growth in 2015 and introduced the exciting Harambee Prosperity Plan (“HPP”) in April 2016, a fast-track plan to jump-start the economy and catch up to some of the key job-, development- and growth targets missed in NDP 4 and prior plans. Regretably enterprise (private and public) has been unable to muster a coordinated response to HPP in its first 18 months, focusing instead on remedial action to specific unguided policies.

A second opportunity has been afforded through the incorporation of HPP into NDP 5. The time is now to rise to the call of a rejuvenated government with a strengthened mandate but over-stretched resources. The time is now to accept co-ownership of national development plans and initiatives across all those who consider themselves to be part of “enterprise” in Namibia from small-, sole- and micro- to public- to large private- enterprise and listed enterprises.

From paying morally rightful tax to contributing discretionary in-kind and financial support to nation-building, by identifying projects and initiatives in NDP 5 which are aligned with respective sectoral and enterprise purposes and capabilities, enterprise needs to rise to the challenges of attuned leadership and strong corporate citizenship and take ownership for the future.

The effective leverage of enterprise resources and entrepreneurial energies is contingent upon government loosening the regulatory shackles and facilitating the urgent implementation of pro-business and pro-investment policies. At a minimum, the restrictive and highly discretionary NIPA and NEEEF policy frameworks need to be revamped to service their noble objectives and open the taps for domestic and foreign investment. Similarly, innovative and overdue public sector restructuring needs to commence forthwith with empowerment of the public enterprise ministry and application of best-practice Public Private Partnership (“PPP”) and Private Sector Participation (“PSP”) frameworks.

The changing role of government in the economy, nearly three decades into independence, needs to be critically reviewed. A number of activities performed by the public sector in a newly independent state could now be joint-ventured, outsourced or fully devolved to private enterprise, with the appropriate enabling regulatory framework for efficient and cost-effective delivery. These activities could include energy generation, airport construction and operations, international air routes, port and rail operations, fuel storage, selected water projects, tourism, waterfront and fishing operations, construction, land delivery, housing and sanitation, office buildings, and education-, health- and prison infrastructure. The appropriate leveraging of enterprise capital and energies, private and public, big and small, will free the government up to do what it does best: govern and regulate and supply critical social services and infrastructure which enterprise cannot provide effectively or affordably.

Mining’s Canadian Frazer Institute Attractiveness Rankings dropped us 25 places downwards in 2011 on threats of the introduction of draconian resource rents and resource nationalism in licensing. Withdrawal of these threats on the back of strong industry lobbies reversed these unfortunate announcements and restored confidence in Namibia’s most important contributing sector to GDP and provider of more than 50% of export earnings and the lion’s share of Gross Fixed Capital Formation and Foreign Direct Investment. So much so that Namibia rose to become Fraser Institute’s top African mining destination in 2014 for the first time and 25th country globally.

In the past 5 years more than N$60bn in FDI investment found its way into predominantly six projects including Ohorongo Cement, Otjikoto Gold, Debmarine vessels, Tschudi Copper, the Dundee smelter and the Husab Uranium mine. This is far greater than the cumulative FDI over the prior 22 years since independence. A number of smaller uranium, base metals, iron ore, graphite and rare earth projects were also advanced.

Of particular significance is that these mining companies contribute so much more than GDP, forex, FDI, employment and economic linkages. They also contribute in large measure to the people and planet fabric of the Namibian nation as CDM/Namdeb and Rossing have done for many decades. Ohorongo Cement, B2Gold, DeBeers Marine Namibia and Dundee Precious Metals are indeed also national leaders in a host of environmental, social and people best-practices as evidenced by numerous awards. The Namibian mining industry boasts some of the best global practices in technological excellence and innovation and in corporate citizenship and leadership. The leadership cultures and corporate citizenship that drive this best-practice are a true testimony to the quality of Namibian leadership, skills and enterprise levels and to the Namibian environment that fosters this competitiveness, when fully aligned and attuned. It was this forward-thinking leadership that, through the Chamber of Mines, pro-actively drove a process of consultation with the sector and the mines ministry to arrive at a responsible and pro-business Mining Charter, implemented in 2014. This and the similar Financial Services Charter were actions taken by private enterprise to remedy the legacies of unequal distribution of wealth and exclusion of large parts of the Namibian population. Both were welcomed and endorsed by government and both are bearing fruit.

Just when it seemed there was mutual trust, respect and alignment, and as if to close off the investment taps, the new administration introduced an arbitrary “Additional Conditions” licensing regime in 2015. This, added to and possibly anticipating the looming and highly punitive and discretionary NEEEF and NIPA frameworks, sent shock waves through the mining industry, as had happened in 2011 with the proposed resource taxes and resource ‘nationalisation’. The influential Frazer Institute again moved Namibia successively downwar ds in rankings, in all 31 places to 62nd globally and 9th in Africa in 2016 (from 1st in 2014) in what appeared to be a race to the bottom. We were back to square one, again questioning the much-heralded policy consistency which had been our hallmark for two decades.

All is not lost however. As happened in 2011, the reversal of the new discretionary and punitive licensing conditions and full implementation of the Mining Charter under NEEEF and a pro-business and pro-investment Investment Act, could see the sharp declines in perceived attractiveness reversed over the next 2-3 years for Namibia to resume its rightful position as a leader on the continent. The time is now to effect these changes as the global commodity down-turn of the past five years begins its upward trajectory in 2018. The hope is high that the new Geingob administration

will act decisively on these major elements of policy uncertainty holding back much-needed investment. After all, President Geingob dismissed the 25% intended forced ownership shift in a book co-authored by Greg Mills and others, “Making Africa Work” in late 2016, stating “Already we know that it is not going to happen. We are not here to work against one group. We need to hold hands. We don’t want to send the wrong signals to investors. Rather we need to play fair.”

We certainly have been sending the wrong signals to investors, and have not been playing fair in the mining sector over the past three years. A licensing regime, well-intended to spread resource licences to previously disadvantaged Namibians has, by line ministry admission, back-fired and has blocked the exploration pipeline, so greatly reducing the probability of new discoveries. It has not been fair to anyone, least of all the nation. These admissions and President Geingob’s expressed sentiments need to translate into urgent remedial action in solving the current impasse created by the uncertainties and discretion around Additional Conditions, NEEEF and NIPA. Only then will the centre hold.

The Harambee Prosperity Plan (2016-2019) and the over-arching National Development Plan 5 (2017-2022) are both solid and coherent calls to action. Both provide paths out of mediocrity and stagnant growth. Harambee provided numerous touch-points for enterprise to engage with government in fast-tracking lagging sectors, projects and critical social and infrastructure backlogs. Private enterprise’s response was lack-luster and uncoordinated. The mining sector and isolated other large corporates were exceptions. Public Enterprise’s response was almost non-existent, their own performance challenges and/or unclear mandates and poor leadership and governance structures were major impediments to most of their intended contributions to nation building.

To be fair to enterprise the policy environment had some way to go for private sector participation to be leveraged effectively into key infrastructure elements and state assets. The omnipresent uncertainties around NEEEF and NIPA and the unfinished business on the Public Enterprises Governance Act, the Public Private Partnership Act (“PPP”) and the energy policies and legislation, made it difficult to move in these areas.

Nevertheless, private enterprise did move pro-actively in priority areas like land and housing delivery, SME funding and facilitation, education and some infrastructural elements.

The Harambee pillars provided good foundations for the Namibian house and the strong themes of solid institutions, good governance and accountability are good portents of doing things differently.

The fifth National Development Plan carried through these same pillars and themes and constitute a credible template on which to engage enterprise across all walks of life, Namibian and foreign. Detailed, frank and practical engagement with enterprise on project level will ensure that Namibians shed the reputation of being good planners but poor implementers. At the Implementation Plan level, there are significant cracks, reminding us that public servants are not always good at picking commercial projects. Some of the tourism and industrial projects appear unrealistic and even figments of someone’s imagination, potential white elephants or commercial ventures destined to fail, to add to a long list.

Infrastructure, and notably energy projects, represent well over half of the required N$160bn investment in NDP 5. A “PPP” Infrastructure Committee has provided an infrastructure funding plan to government in early 2017 which suggested that N$30-60bn could be mobilized from non-government sources, given the right policy frameworks referenced above to create the minimum conditions for investor expectations. This was before the Sovereign ratings downgrades and would need to be reviewed, but the principle remains that up to 70% of energy projects and 50% of other infrastructure projects could be funded outside traditional government sources if the right policy framework is implemented.

Amongst the many priorities of government in “Africa can Work”, Greg Mills et al, President Geingob narrows his top three down to “instituting a governance architecture”; “providing reasonably priced housing”; and “fixing the education system, including vocational training”.

It is the acceptance that government cannot continue to spread itself across the economy and that it should focus on institutional efficiency to deliver strategic guidance, governance, aligned policy and critical social infrastructure. This will facilitate enterprise’s effective and efficient delivery of commercial infrastructure and services. Better integration of private and public enterprise activities through innovative PSP and PPP frameworks will greatly improve current efficiency and productivity as measured by service delivery, ROE, ROA, taxes, returns to shareholders, liquidity, government subsidies and general contributions to the economy.

NDP 5 identifies five game changers “that will move Namibia from a reactive, input-based economy towards a proactive, high-performing economy, namely:

1. Increased investment in infrastructure development.
2. Increased productivity in agriculture, especially for smallholder farmers.
3. Investment in technical skills development.
4. Improved value addition in natural resources.
5. Achievement of industrial development through local procurement.

While the first three are supported, with some caveats and involvement of enterprise interests, as over-arching game changers contributing to a “high-performing economy”, the last two may not contribute in the same manner and could in fact detract from competitiveness if not applied carefully.

Unrealistic reliance on limited unexploited mineral beneficiation opportunities creates false expectations while the small local market does not provide a sustainable business case for competitive industrial development through import substitution and local procurement.

Additional game-changers could be:

6. Parachuting in competitive export enterprises:

The targeting of competitive industries with secure access to international markets as by far a more attainable near-term strategy to take manufacturing and enterprise to a new level. Success will hinge on the timely implementation of key policy reforms and significant improvements in “Ease of Doing Business” and welcoming facilitation of the right types of investors.

7. Leveraging Enterprise Capacity and Commitment:

A key and over-arching game-changer for NDP 5 would be the successful leveraging of private and public enterprise capital and other resources to achieve the lofty goals and targets of the Plan. Enterprise development and fostering of an entrepreneurial culture is a core component of this enterprise mobilization.

8. Structural Transformation:

Structural transformation “through value-added industrialisation” as described in the Plan should extend far beyond industrial diversification and focus on the transition to a knowledge-based economy.

Twenty-eight years into independence Namibia needs to consider the future role of the state in the economy. Having played a critical and catalytic developmental role in an infant and juvenile economy, consideration should be and is being given to a less hands-on state role, given the current development stage of the country. The re-ordering of commercial public enterprises in particular needs to form an important core of the structural transformation plan.

9. The “Green” and “Blue” Economies:

As a core of our Industrialisation Strategy we need to build on our competitive advantages in the “green” and “blue” economies. Namibia’s environmental sustainability focus and conservancy-based and niche eco-tourism has positioned us as a global leader in this field. Our “oceans and skies” economy with 1500km of coastline, extensive Exclusive Economic Zone resources at our disposal and ever-increasing access to “open-sky” regional air transport and servicing opportunities, calls for a coherent and integrated blue economy policy framework.

Remembering that leadership is not a rank but a choice exercised by anyone in the organisation, we need to devolve decision making closer to the information and empower those most informed on individual issues to make decisions, without losing overall accountability.

Good leadership and governance through effective institutions and responsible corporate citizenship is vital to the “business unusual” model and renewed positive growth trajectories envisaged in development plans. Success will depend on significant governance reforms already started in the Harambee Plan and detailed in NDP 5.

Common morality and ethical leadership cultures will ensure sustainability and success in government and private sector. King and Namcode principles need to be embedded t hroughout private and public commercial enterprises and the King Codes’ mantra that ‘an organisation’s ability to create value for itself depends on its ability to create value for others and on its regard for the needs, interests and expectations of its stakeholders’ must become universal to al l enterprises.

Namibia boasts a number of these leadership role models as political and business leaders. We need to cherish, replicate and spread this leadership culture throughout and unleash the leadership potential of the new generation of leaders throughout government, NGOs and enterprise to take us into the 4th industrial revolution. Leadership at all levels of organisations should show attuned,caring and empathetic leadership with an understanding of how we got here, but a forward looking template based only on common morality and ubuntu principles-our interconnectedness. They should take lessons and wisdom from the past but need to be courageous and decisive in stamping out behaviours and practices which are self-seeking or favour particular constituencies or groups.

Such leadership will ensure that we do things differently.

Steve Galloway