NEEEF – Towards a Credible Alternative

Several weeks ago  President Mr Hage  Geingob publicly expressed his frustration with the many Namibians, both white and black who are critics of the NEEEF (New Equitable Economic Empowerment Framework) which would see a significant portion of white owned capital transferred to previously disadvantaged groups which include black people as well as women and the handicapped. His principle frustration was what he alleged to be the lack of credible alternatives  that were being offered by the critics of the NEEEF. The NEEEF has been in the form of draft legislation since 2015 and there have been numerous consultations and countless meetings to advance the proposal to the National Assembly and making it the law of the land. It is widely expected to become law by the end of the year. 

The three or four years have passed between the 2015 draft legislation and the current consultations and this lack of definitive solutions has only served to increase the discomfort of the largely white and foreign owned businesses. Letters to the editor abound about how closed corporations, which have been used as vehicles by Namibians to avoid land and property transfer taxes, will now be subject to NEEEF and white people will be forced to sell their homes. This of course completely overlooks the fact that even the 2015 draft law proposes a minimum size of enterprise subject to NEEEF which is yet to be determined and the government of Namibia is unlikely to want to expropriate people’s homes.

But that of course is the problem. The lack of any clarity as to who and what will be covered under the final version of the NEEEF leaves the foreign and local white private sector simply unwilling to invest in Namibia  until they see final draft legislation which they know will become law. Lately there are media reports that the most controversial part of the legislation which is the obligation to sell a minimum of 25% of a business to a local previously disadvantaged individual will be dropped and an unspecified amount will be in the legislation. The wording that is proposed for the revised NEEEF legislation is yet to be made public and there is a concern from the private sector that they will still be forced to divest, there is equal concern from those who see the current distribution of wealth in Namibia as utterly unsustainable that the lack of clarity and the fear of further economic destabilization will lead to a political fudge, like Mr Schlettwein’s 1% tax increase on the rich which he has so disingenuously rebranded as the ‘Solidarity Tax’, that will achieve almost nothing.

The irony of the NEEEF is that some of its most strident critics are not white Namibians but those previously disadvantaged groups who know that the legislation will only benefit a few Namibians who have enough resources to invest in white owned businesses or who are politically connected and able to obtain access to the funding that will be needed to purchase equity in white businesses. This group does not include the vast majority of the previously disadvantaged who will remain, as ever, disadvantaged.

The absence of clarity on what NEEEF will eventually be, is harming Namibia and in particular the young people who are not finding jobs because the owners of capital are waiting for the government to finally pronounce on the matter before investing in the country

Without wishing to contradict His Excellency there are many alternatives to what is proposed which will either be a Zimbabwe style transfer from the white to the party elite or alternatively it will be nothing more than a vacuous fudge like what became of Mr Schlettwein’s so-called Solidarity Tax. The best alternative that would remove the fear of wholesale expropriation is to follow a model already widely in use in Europe and that is to help those who actually produce the wealth of the nation to become part owners of the corporations in which they work. France,  the only country in the world,  has a mandatory employee share ownership scheme for all firms above 50 employees. In total it is estimated that employee share ownership in France was worth some Euro 65 billion in 2015. Elsewhere in Europe,  like the UK and Germany employee share ownership is voluntary but is still widely used and there exist numerous tax incentives to push firms in this direction. This is a prudent and tried and tested  approach to assuring that African workers will benefit. It will also increase morale,  productivity and long term investment in these companies.

By moving away from the current NEEEF model which favors only the black rich and politically connected Namibians the government can achieve two important objectives. The first is to give certainty to white owned capital that transfers of white and foreign white to African ownership run smoothly in a tried and tested manner without fear of immediate expropriation, a move which would will only serve to increase Namibia’s monstrously high rates of unemployment. With an estimated 60,000 job losses last year the government can ill afford to continue on the current path on NEEF. But the second outcome is that unlike what is proposed under variants of the current NEEEF, a worker share ownership program would be genuinely equitable where those who produce the nation’s wealth would share in the benefits rather than politically connected who have done nothing to attain the sort of wealth that would come to them under the current variants of the NEEEF proposals.

It needs to be recalled because it seems largely forgotten by many, including some SWAPO members,  that SWAPO is at least nominally still a socialist party and not a party of tenderpreneurs, fishmongers and land speculators and so a NEEEF based on sharing the nation’s wealth with Namibia’s workers who work in the mines and factories rather than those who sit on their backs,  may well prove to be a far more rational prudent and, dare I suggest, politically popular approach than following a path that has been so unsuccessfully pursued by other African countries such as Zimbabwe, DRC and Uganda  and has only lead to economic ruin. So Mr Geingob, there is a good,  prudent and proven  alternative to NEEEF and I urge reconsideration before we either produce a disaster or an empty political fudge that does not solve the problem that it was intended to address.

These are the views of Professor Roman Grynberg and not necessarily that of UNAM where he is employed.