‘Much to be done on investment landscape’
Nam improves marginally on mining index
Despite Namibia's improvement on the overall Policy Perception Index of the Fraser Institute, the nine individual responses on the country's policy environment in the survey were negative.
Jo-Maré DuddyAlthough Namibia has climbed 18 positions on the Policy Perception Index (PPI) of the latest Fraser Institute Survey of Mining Companies Report, the country remains one of three African jurisdictions that needs to improve of this score.
The Fraser Institute’s 2021 report, released last week, ranked Namibia 29th out 84 jurisdictions worldwide on its PPI. In the previous report, Namibia was ranked 47th out of 77.
On the African continent, Namibia was ranked as the second most favourable jurisdiction on the PPI, up from 5th in 2020. Morocco clinched the top spot.
The PPI measures the opinions of survey respondents on all facets of the policy environment, such as taxation and regulation certainty
As far as Namibia’s PPI is concerned, the country improved by only 0.94 points, from 74.30 to 75.24 out of a possible 100. This is still far less than the 87.22 it scored in 2019 and 80.71 in 2018.
Commenting on the Fraser Institute’s report, the chief executive officer of the Chamber of Mines of Namibia, Veston Malango, highlighted and cautioned that the “absolute improvement of Namibia’s score ... is marginal”.
This indicates that there is still much to be done to improve Namibia’s policy landscape,” Malango said.
NEGATIVE
Despite Namibia’s improvement on the overall PPI index, the nine individual responses on Namibia’s policy environment in the survey were negative.
Malango said the chamber is of the view that the Fraser Institute’s report accurately reflects the overall status quo of the current investment landscape, “one which appears to be in limbo rather than improving dramatically”. He continued: “It remains increasingly worrisome that while pronouncements by the government favour a conducive investment environment, there is no visible corresponding action to demonstrate the finalisation of outstanding policy matters that continue to perpetuate investor uncertainty.”
One of the responses featured prominently in the report is that of the vice-president of an exploration company who stated: “Lengthy permitting process prevents projects from being developed.”
Another is of a company president, saying: “Non-deductibility of royalty payments prevents the sector from minimising costs and hurts the industry’s competitiveness.”
Malango said the latter response is not valid as this matter was successfully resolved in 2020.
“The Chamber is of the view that this statement negatively affected Namibia’s performance.”
“Namibia’s PPI score, and it’s ranking globally and on the African continent, would have been much better without this erroneous and baseless concern as this risk is no longer applicable, and has not been in the last two years,” he elaborated.
RANKINGS
In addition to the PPI, the Fraser Institute’s rankings also include an Investment Attractiveness Index (IAI) and a Best Practices Mineral Index (BPMI).
The IAI combines the PPI and the BPMI and is an overall measure of a country’s competitiveness. The PPI carries a weighting of 40% and the BPMI carries a weighting of 60%.
“Although the mineral potential index carries more weight, investors are sensitive to policy uncertainty and will prefer jurisdictions that have a stable policy environment and are conducive for mining,” Malango explained.
Namibia’s (IAI) decreased by 7.13 points, from 59.72 points in 2020 to 52.59 points in 2021.
“In absolute terms, Namibia’s decline on its overall investment attractiveness was due to a significant decrease in the BPMI,” Malango said.
Namibia’s BPMI fell by 12.5 points from 50 in 2020 to 37.5 in 2021. This index measures perceptions of a country’s mineral potential, assuming a world class regulatory environment.
Malango said the chamber remains committed to working with the government through the ministry of mines and energy “to overcome these hurdles, and to ensure the most favourable policy outcomes are reached to benefit mining and Namibia, and to once again make Namibia the most attractive jurisdiction for investment into exploration and mining on the African continent”.