NEEEF: Equity or a white lie?
Government is relentless in its push for the New Equitable Economic Empowerment Framework (NEEEF).
Not even the warnings by various global rating agencies, such as Fitch, have changed government’s position on NEEEF, whose highlight is the call that – blatantly put – white businesses set up after the adoption of this policy would be required to avail 25 percent equities to people from the previously racially disadvantaged.
Essentially, NEEEF wants more blacks in the mainstream economy and this would be done by making sure the whites – inherent beneficiaries of the apartheid regime, largely by design – share their wealth with fellow citizens.
The status quo cannot remain, government argues. Pressed on the subject the other day in America where he was addressing a public lecture, President Hage Geingob pulled no punches on the subject.
“In Namibia we have experienced sustained economic growth but no job creation,” he told an active University of Columbia audience.
“This scenario will not help transform the lives of our people. Only if we are able to create jobs can we be able to transform our economies and the lives of our people simultaneously.”
“We therefore cannot continue to entertain situations in which those with wealth are only interested in protecting what they have acquired. One cannot enjoy life while your brother or sister is starving,” he said.
NEEEF has stirred pandemonium among the country’s white business community.
Some whites even believe there is a clandestine attempt to push them out of business altogether.
Fitch, in a damning verdict that saw them downgrade the Namibian economy from stable to negative, recently, said NEEEF would scare away investors who are not willing to give equities to blacks – or just anyone.
Presidential economic advisor Dr John Steytler thinks Fitch are overzealous in their analysis of NEEEF.
“Consultations are still underway. The NEEEF document at hand is a draft so it cannot be used to draw conclusions at that level,” he told New Era not long ago.
Many issues remain unclear in NEEEF, such as the approach of acquiring the 25 percent in white businesses. Purchase, barter? These are the questions.
The white community is so worried it would not even have names revealed when commenting on NEEEF.
Quinton van Rooyen, the owner of the extremely successful Trustco Group Holdings, refused to comment on the subject, and so did many of his wealthy peers.
Several schools of thought have surfaced though – from the whites themselves.
The white business community believes one cannot multiply wealth by dividing it. The white business community, the private sector, the Namibian Employers’ Federation (NEF) and the Namibian Agricultural Union (NAU) have all made it very clear to government that they believe NEEEF is a huge error of judgement on the part of government.
They believe the Bill is unworkable, in several respects unconstitutional and will have negative effects on the economy.
The NEF says: “If this were to mean legal action, so be it, but we will only decide once there is something concrete to challenge.”
The Bill’s call that any private sector enterprise established after the enactment of the Bill “may commence business only when such enterprise has secured 25 percent ownership by a racially disadvantaged person or persons, or such higher percentage as may be determined by the Minister”, is a great source of concern.
It also stipulates that despite any other legislation to the contrary, no private enterprise owned and controlled by a white person may allot, issue or register the transfer of any portion of its ownership to anyone other than a “previously disadvantaged or to a domestic or foreign enterprise” owned by a white.
All white business owners New Era Weekend spoke to, as well as NEF, are of the opinion there will probably be a slowdown in development, and or expansion, by local investors, who will be unable or unwilling to find a suitable partner.
They also fear a slowdown in foreign investment where potential investors will be unwilling to place some shareholding in local hands without suitable guarantees. This is the argument Fitch tried to advance too.
Tim Parkhouse, secretary general of the NEF, says the Bill will undoubtedly lead to increased unemployment. “The poor will remain poor and their lot in life will remain unchanged, while the wealthy will become wealthier,” he states.
The NEF has already appealed to government to withdraw the Bill and encourages government to commence in-depth research and consultations with the private sector, especially business owners, economists, foreign missions, donor agencies and workers and to mutually draft an alternative which can work to the benefit of all, and meaningfully reduce poverty in Namibia.
The NEF and white business persons say business does not happen by accident. It is built slowly by the sweat, tears, acumen and risked capital of the entrepreneur.
It is a known fact that more than 50 percent of all start-up businesses fail within 24 months – those that survive, do so due to the tenacity and expertise of the owner.
They maintain that to defeat poverty, Namibia must grow the economy.