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Investment under the loupe at central bank symposium

Investment under the loupe at central bank symposium

IS Foreign Direct Investment (FDI) overriding the importance of domestic investment in Namibia? This was the question at the heart of the eighth Bank of Namibia (BoN) symposium held in Windhoek on Wednesday, whose main objective was to discuss what could be done to stimulate local economic growth.

‘FDI versus Domestic Investment in Namibia’ was the theme of the symposium, which aimed at discussing whether FDI was being promoted at the expense of local investment and whether there is deliberate policy bias towards the promotion of FDI. In his address to those attending the one-day event, BoN Deputy Governor Paul Hartmann said the choice for this year’s theme emerged from the fact that while Namibia was able to attract considerable FDI, local institutional investors were experiencing difficulties.”I want to make it quite clear that we do not expect this symposium to conclude that we should do away with FDI and replace it with domestic capital investment.But we certainly hope that this symposium will shed light on the anomaly and offer suggestions on how more locally generated savings can be channelled into local investments,” he said.Hartmann said it should be noted that FDI has both benefits and costs for developing countries.However, in defence of FDI, the Executive Director of the Namibia Investment Centre (NIC), Bernadette Artivor, said FDI was necessary in improving Namibia’s economic status, given its contribution to development.”Given the reality of economies like ours where domestic savings are limited, foreign capital becomes a crucial factor.Foreign direct investment is necessary to supplement or complement domestic investment leading to a high capital formation and economic activity and growth.”She added that the promotion of both domestic investment and FDI were both priorities for the Government, as the two played important roles in increasing the country’s revenue base, and stimulate diversification as well as create employment.Academics Professor Sylvanus Ikhide of the University of Namibia and Dr Oluyele Akinkugbe from the University of Botswana, and local economist Robin Sherbourne also gave lengthy presentations on the issue; and were in agreement that FDI was important in uplifting the economies of developing countries, as it supplements domestic savings among many other benefits.Said Ikhide: “The expectation that FDI should complement domestic investment has been partially realised.However, the translation of this result to accelerated economic growth has been slow.”According to the NIC, in 2001, investment flows into the country totalled around N$4,85 billion and created 10 900 jobs, mainly due to the establishment of Ramatex and investments by Rosh Pinah and Skorpion Zinc.However, this has significantly decreased during the years with N$202 million generated in 2004 and N$620 million last year.Namibia’s FDI has mainly been in the mining and related value-addition sectors.Namibia is said to have witnessed a ‘rapid increase’ in FDI inflows in the past 10 years when compared to other African countries.The BoN annual symposium is an event where specific themes on economic issues are discussed, and it attracts participants from both the public and private sectors.According to the BoN, the objective is to exchange ideas with a view to influencing policy developments.In his address to those attending the one-day event, BoN Deputy Governor Paul Hartmann said the choice for this year’s theme emerged from the fact that while Namibia was able to attract considerable FDI, local institutional investors were experiencing difficulties.”I want to make it quite clear that we do not expect this symposium to conclude that we should do away with FDI and replace it with domestic capital investment.But we certainly hope that this symposium will shed light on the anomaly and offer suggestions on how more locally generated savings can be channelled into local investments,” he said.Hartmann said it should be noted that FDI has both benefits and costs for developing countries.However, in defence of FDI, the Executive Director of the Namibia Investment Centre (NIC), Bernadette Artivor, said FDI was necessary in improving Namibia’s economic status, given its contribution to development.”Given the reality of economies like ours where domestic savings are limited, foreign capital becomes a crucial factor.Foreign direct investment is necessary to supplement or complement domestic investment leading to a high capital formation and economic activity and growth.”She added that the promotion of both domestic investment and FDI were both priorities for the Government, as the two played important roles in increasing the country’s revenue base, and stimulate diversification as well as create employment.Academics Professor Sylvanus Ikhide of the University of Namibia and Dr Oluyele Akinkugbe from the University of Botswana, and local economist Robin Sherbourne also gave lengthy presentations on the issue; and were in agreement that FDI was important in uplifting the economies of developing countries, as it supplements domestic savings among many other benefits.Said Ikhide: “The expectation that FDI should complement domestic investment has been partially realised.However, the translation of this result to accelerated economic growth has been slow.”According to the NIC, in 2001, investment flows into the country totalled around N$4,85 billion and created 10 900 jobs, mainly due to the establishment of Ramatex and investments by Rosh Pinah and Skorpion Zinc.However, this has significantly decreased during the years with N$202 million generated in 2004 and N$620 million last year.Namibia’s FDI has mainly been in the mining and related value-addition sectors.Namibia is said to have witnessed a ‘rapid increase’ in FDI inflows in the past 10 years when compared to other African countries.The BoN annual symposium is an event where specific themes on economic issues are discussed, and it attracts participants from both the public and private sectors.According to the BoN, the objective is to exchange ideas with a view to influencing policy developments.

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