The Namibian government has scrapped the plan that mandates white-owned businesses to sell 25 percent staked to blacks in the country. This is part of its aim for a broad-based economic empowerment framework.
“The 25 percent equity stake will not translate into broad-based empowerment and is done away with,” President Hage Geingob confirmed during the state of the nation address on Wednesday.
Geingob noted that a clause in its National Equitable Economic Empowerment Framework (NEEEF) draft bill has been tossed aside and a revised bill will be proposed in Parliament before the year runs out.
The NEEEF draft bill is the government’s intervention in dealing with structural inequality including income disparities and lack of participation by the black majority in the economy. NEEEF seeks to ensure the sharing of Namibian resources in an equitable and sustainable basis by its citizens.
According to the Southern nation’s president, blacks in the country have been disadvantaged as they do not have enough resources to invest in enabling opportunities, nor have they been able gain access to funds that would aid their empowerment.
“We must strive towards inclusive broad-based empowerment focusing on the plight of farm workers, domestic workers, women, the youth and all disenfranchised Namibians,” Geingob said. “Employee share schemes are one of the most effective forms of broad-based empowerment. I encourage such an approach.”
In recent years, there has been the clamor for black economic empowerment in African countries, and a search to widen black ownership. At the forefront of this fight is South Africa’s launch of a racially selective programme to redress the inequalities of Apartheid by giving certain previously disadvantaged groups (Blacks, Coloreds, Indians, and Chinese) of South African citizens economic privileges previously not available to them under White rule.
Black Economic Empowerment (BEE) is a form of Affirmative Action by the South African government, though race is the overriding factor. It also includes measures such as employment preference, skills development, ownership, management, socioeconomic development, and preferential procurement.
BEE requires that companies increase black ownership by selling shares to groups who were excluded before 1994 under white-minority apartheid rule. BEE is intended to transform Africa’s most industrialized economy to be representative of the demographics, specifically race demographics of the country.
Following the thread set by South Africa, Namibia also looks to widen ownership in the economy, as it is the government’s belief that creating a conducive business environment where owners, whether black or white, who can afford risk capital, can participate in equity transactions under NEEEF.
However, the clause in the NEEEF draft bill that will have white businesses sell a mandatory 25% shares to black has caused fear among, and been criticised by most white-owned businesses in the country, despite President Hage Geingob’s persistent attempts to have white people understand it and share their wealth.
Despite their support of plans to empower previously disadvantaged blacks, lobby groups have also expressed reservations about the provision.
Speaking on the matter in an interview with The Namibian, Law Reform and Development Commission Chairperson Yvonne Dausab noted that Namibian laws are there to create a mutually beneficial relationship between an investor and the public.
“We do everything to ensure that we accommodate our investors,” she noted, “but we must also make sure that we don’t prejudice our people. There has to be a balance.”