- Risk key
- MODERATELY LOW
- MODERATELY HIGH
Judicial corruption presents a low to moderate risk to companies in Namibia. Bribes are sometimes exchanges in return for obtaining favorable court decisions (GCR 2015-2016). A fourth of Namibian citizens perceive judges and magistrates to be involved in corruption (GCB 2015). The country’s courts are independent and generally free from government interference (HRR 2016), but its judicial process is very slow due to inadequate staffing, which has led some to question the rule of law in Namibia (BTI 2016). Judges frequently chair commissions of inquiry following public criticism of the government (BTI 2016). It is easier and less time-consuming to enforce commercial contracts in Namibia compared to other countries in Sub-Saharan Africa (DB 2017). Companies report cautious confidence in the efficiency of the legal framework to settle disputes and challenge regulations (GCR 2016-2017).
Namibia is not a signatory to the 1958 New York Convention on the Recognition and Enforcement of Foreign Arbitral Awards and it is not a member state to the International Centre for the Settlement of Investment Disputes (ICSID).
Companies face a moderate risk when dealing with the Namibian police. Two in five Namibians believe the police force is involved in corruption, however, few claim to actually have paid a bribe to the police (GCB 2015). Civilian authorities have effective control over the Namibian Police and adequate mechanisms to investigate and punish abuse and corruption exist, but there are reports of corruption and impunity in Namibia’s police (HRR 2016). Police services in Namibia cannot be relied upon to protect companies from crime (GCR 2016-2017). Half of firms pay for private security (ES 2014).
In July 2016, the head of human resources at the Namibian police was arrested over corruption charges, including nepotism charges related to unduly promoting his brother-in-law (The Namibian, July 2016).
Companies face significant risks of corruption when interacting with public services in Namibia. Companies report that irregular payments and bribes when dealing with utility services are not common (GCR 2015-2016). Likewise, a low number of companies report being expected to give bribes to obtain operating licenses or water/electrical connections (ES 2014). However, one in five firms expects to pay bribes to obtain construction permits (ES 2014). Even though surveyed Namibians report very few instances of paying bribes or giving gifts to government officials to obtain documents, permits, health services or household utilities, a quarter of citizens perceive local public officials to be involved in corruption (GCB 2015).
Namibia’s state bureaucracy is inefficient and bloated; politically motivated appointments, as well as a doubling of civil servants combined with ubiquitous corruption, is proving to be a big problem for Namibia (BTI 2016). There are reports of corruption in relation to procurement for the electricity and water supply in Namibia (ICS 2016). Companies should be prepared to deal with an inefficient public sector: Businesses consider government administrative requirements to be burdensome (GCR 2016-2017). Starting a business in Namibia involves ten different procedures and takes 66 days; more than double the time required elsewhere in the region (DB 2017). Obtaining electricity only takes a third as long as the regional average (DB 2017).
The land administration carries a moderate corruption risk for companies. Namibia’s legal system is effective in enforcing property and contractual rights, although courts do have backlogs (ICS 2016). Foreign investors should note that land reform is a growing political issue, but no expropriations have occurred to date without appropriate compensation (ICS 2016). There are reports that local chiefs are being bribed in the land reform process (The Namibian, Jan. 2017). Businesses report fairly high confidence in Namibia’s property rights regime (GCR 2016-2017). The country ranks among the worst in the world in relation to the time, cost and number of steps involved in registering property (DB 2017).
In a recent case, the mayor of Windhoek was caught attempting to sell land held by the state to family members for far less than the estimated value (BTI 2016). However, due to Namibia’s political system of patronage, the mayor of Windhoek was voted into parliament again (BTI 2016).
Companies face a moderate risk of corruption when dealing with Namibia’s tax administration. Namibian tax regulations do not represent a significant challenge for foreign companies (GCR 2016-2017), but corruption and demands for bribery payments by tax authorities are common (GCR 2015-2016). Nevertheless, a third of Namibians believe tax officials are corrupt (GCB 2015). The country performs better than the Sub-Saharan Africa average in relation to paying taxes (DB 2017).
Corruption by customs authorities does impede business in Namibia; import procedures are very burdensome and irregular payments and bribes are common (GETR 2016). Businesses rate the efficiency of clearance procedures as poor (GETR 2016). While Namibia performs better than averages in Sub-Saharan Africa in relation to import compliance procedures, export procedures regulation is enormously burdensome (DB 2017).
A NAD 3.5 billion tax evasion and money laundering scheme involving imports from China has been uncovered. The businessmen involved would declare lower values for their imports, which helped them dodge import duties and taxes (APA News, Feb. 2017).
Companies face a high risk of corruption in Namibia’s procurement sector. Bribes and irregular payments are often exchanged in return for licenses and public contracts (GCR 2015-2016). Likewise, around one in ten firms indicate that they expect to give gifts to secure government contracts (ES 2014). Companies perceive favoritism to widely affect the decision of officials when awarding contracts and believe that public funds are sometimes diverted to companies, individuals or groups due to corruption (GCR 2016-2017). In some industries where private and state-owned companies (SOEs) compete, there has been a perception that SOEs are granted favorable concessions (ICS 2016). A special concern in Namibia is the influx of Chinese businesses which frequently do not have to adhere to the same legal provisions as local companies due to alleged corruption and favoritism (BTI 2016). Poorly conceived regulations combined with a ballooning public procurement sector led to many instances of procurement fraud (IPPR 2015). The Public Procurement Act of 2015, aimed at mending these issues, entered into force in April 2017; more information can be found under the legislation section.
Companies should be aware of the practice of “fronting”; a practice where a company tries to evade the requirements of the Black Economic Empowerment Act of 2003 in order to be able to bid on public contracts (Corruption Watch, May 2012). Under current laws, this practice is hard to prosecute (The Namibian, Feb. 2016). State-owned companies (parastatals) are closed to all investors (Namibian and foreign), and foreign investors participate in joint ventures with parastatals only in certain sectors, such as mobile telecommunications; nevertheless, the process is slow (ICS 2016). There has been an uptick in the number of high-profile challenges to tender decisions (ICS 2016). The Namibian judiciary has been reviewing many tenders and has suspended a couple of awards (ICS 2016). For example, a tender award worth NAD 6 billion to upgrade Namibia’s main airport was nullified by Namibia’s Supreme Court after it found that proper procedures had not been followed in the procurement process (The Namibian, Mar. 2017). Companies in Namibia are recommended to use a specialized public procurement due diligence tool to help manage risks in the sector.
Companies should be aware that Namibia’s extractive industries offer huge opportunities for illicit enrichment, particularly through the granting of licenses for mining and fishing (BTI 2016). Corrupt police officers are said to take bribes for facilitating poaching in Namibia (Oxpeckers, Sept. 2016). Poaching is prevalent due to a lack of resources for effective enforcement against wildlife crime; bribing of border officials is also a contributing factor (NFIC 2017). Namibia is sitting on some of Sub-Saharan Africa’s largest unexploited oil resources. In general terms, Namibia has an adequate level of transparency in its mining sector, however, lacks transparent mechanisms regulating oil exploration (Polus et al. 2015).
The legal framework for curbing corruption in Namibia is strong, but enforcement is inconsistent. The Anti-Corruption Act specifies and criminalizes all relevant corruption offenses, including passive bribery, active bribery, attempted corruption, extortion, bribing a foreign public official, money laundering and abuse of public office. The Act prescribes a fine not exceeding NAD 500,000 and/or a prison term not exceeding 25 years for any of the criminalized practices. Members of Parliament are required to disclose assets. Namibian law also outlaws conflicts of interest and potential abuses of power by public officials, but enforcement mechanisms are weak. Under the Public Service Act of 1995, civil servants are not allowed to hold positions in the private sector while employed by the state, but the Public Service Commission or the prime minister can grant exceptions, creating potential conflicts of interest. The Prevention of Organised Crime Act (POCA) seeks to combat organized crime, money laundering, and people trafficking. The Act imposes reporting obligations on suspicions of unlawful activities and provides for the establishment of the Criminal Assets Recovery Fund and Criminal Assets Recovery Committee. The Financial Intelligence Act of 2012 (FIA) makes it mandatory for financial institutions and designated businesses to implement adequate policies and procedures, such as know-your-customer policies and customer due diligence. The FIA did also establish the Anti-Money Laundering Advisory Council as the policy-making body on Namibian Anti-Money Laundering (AML) matters. The Public Procurement Act of 2015 established a new, more transparent board to oversee public procurement processes. It imposes strict limits on the value of contracts state-owned entities are able to close without involving the Central Procurement Board. Furthermore, the Act also imposes a five-year ban and/or a NAD 5 million fine on firms found guilty of engaging in illegal procurement practices. Namibia has ratified the United Nations Convention against Corruption and the African Union Convention on Preventing and Combating Corruption.
Freedom of the press is guaranteed by the Constitution of Namibia. There are many private publications that are critical of the government, but private broadcasters and independent newspapers are not completely free from political interference (FitW 2016). Sometimes party leaders issue harsh criticisms against the independent press (FitW 2016). There is no explicit legal right for access to information (BTI 2016). Namibia’s press environment is considered ‘partly free’ (FotP 2017).
Neither by law nor in practice are there any notable restrictions on the activities of civil society organizations (FitW 2016). However, ministers have threatened and harassed NGOs in the past (FitW 2016). Due to Namibia’s socio-politico environment, civil society groups can be critical of the government, but they are unable to achieve change without government support (BTI 2016). But Namibia’s civil society lacks strength because of ineffective management capacity, limited staff and weak organizational capabilities (BTI 2016).
- World Bank: Doing Business 2017.
- Freedom House: Freedom of the Press 2017.
- Namibia Financial Intelligence Centre: Trends and typology Report No 1 of 2017.
- The Namibian: “Airport Tender Award Falls”, 29 March 2017.
- APA News: “Namibia: President Business Associate Arrested for Tax Evasion”, 2 February 2017.
- The Namibian: “Calls Mount to Suspend Land Reform Activities”, 17 January 2017.
- World Economic Forum: Global Competitiveness Report 2016-2017.
- World Economic Forum: The Global Enabling Trade Report 2016.
- Bertelsmann Foundation: Bertelsmann Transformation Index 2016.
- US Department of State: Human Rights Practice Report 2016.
- US Department of State: Investment Climate Statement 2016.
- Freedom House: Freedom in the World 2016.
- Oxpeckers: “A Mysterious Dead Hand Driving Namibia’s Poaching”, 15 September 2016.
- The Namibian: “Police Head of Human Resources Faces Corruption Charges”, 27 July 2016.
- The Namibian: “PM Promises Fronting Fight”, 12 February 2012.
- World Economic Forum: Global Competitiveness Report 2015-2016.
- Institute for Public Policy Research (IPPR): Special Briefing Report No. 9, 2015.
- Transparency International: Global Corruption Barometer 2015.
- World Bank: Enterprise Survey Namibia 2014.
- Corruption Watch: “Fronting is Criminal Conduct”, 7 May 2012.
- All Africa: ‘Ex-NBC staffers admit TV license corruption’, 14 September 2012.
- Polus et al. “On a Slippery Slope: Corruption and the Extractive Industries in Namibia”, 2012.