(Bloomberg) -- Namibia, among the world’s most economically unequal nations, has scrapped a clause in a bill that proposes all businesses be at least a quarter owned by “racially disadvantaged people,” President Hage Geingob said.
“The 25 percent equity stake will not translate into broad-based empowerment and is done away with,” he told lawmakers Wednesday in the capital, Windhoek. “Most Namibians especially the previously disadvantaged do not have enough resources to invest in empowerment transactions, nor are they able to obtain access to funding to participate in such transactions.”
Neighboring South Africa has similar black-economic empowerment laws. Critics have said they failed to redress inequalities and have instead benefited a small number of wealthy individuals. Zimbabwe recently said it would stop applying its ownership laws, which require companies to sell or transfer 51 percent stakes to black citizens, to most minerals.
The Namibia Chamber of Commerce and Industry wanted the focus on economic ownership in the New Equitable Economic Empowerment Framework Bill scrapped, saying it will result in capital flight. The country is the world’s largest producer of marine diamonds and fifth-biggest of uranium.
The current version of the plan has helped see Namibia lose its spot as Africa’s second-most attractive jurisdiction for mining companies to invest in, based on policies, to Botswana, the Fraser Institute’s 2016 survey of 2,700 firms worldwide shows.
“The role of government is to create a conducive business environment where owners, whether black or white, who can afford risk capital, can participate in equity transactions under NEEEF,” Geingob said, using the acronym for the empowerment bill. “Those who want to participate in public procurement will have to do more to be NEEEF compliant.”
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