Naloba rejects Nekundi’s 10% local content threshold

The Namibia Local Businesses Association (Naloba) has called on Works and Transport Minister Veikko Nekundi to withdraw the government’s 10% local-content requirement for foreign contractors working on the country’s multibillion-dollar railway upgrade, saying the threshold is far too low to meaningfully benefit Namibian businesses.

Naloba vice-president Peter Amadhila said the minimum local allocation should instead be increased to 40%, arguing that major infrastructure projects should create substantially more opportunities for Namibian enterprises.

“What is 10%? The honourable minister must be joking,” Amadhila said.

Nekundi recently told the National Assembly that bidding and contract documents for the railway upgrade require contractors to allocate at least 10% of their total contract value to Namibia-registered companies or suppliers.

He said the engineering supervision team had also been instructed to structure project operations to ensure meaningful participation by local companies and to build the capacity of Namibian small and medium enterprises and consultants.

Naloba, however, argues that the approach leaves too much of the value of major projects in the hands of foreign contractors.

“Projects should be allocated to Namibian enterprises who should get their own preferred international subcontractors or partners to undertake the works,” Amadhila said.

He said payments for such projects should be made to the Namibian companies, which would then pay their appointed international subcontractors or partners.

According to Naloba, such an arrangement would allow Namibian companies to develop the financial and technical capacity required to move beyond the small and medium enterprise category.

“No wonder many of our enterprises remain SMEs lifetime,” Amadhila said.

Rail billions

Nekundi’s announcement followed an update to parliament on the implementation of the railway rehabilitation programme, including the Kranzberg–Otjiwarongo section.

The project includes the construction of about 207 kilometres of new railway alongside the existing line between Kranzberg and Otjiwarongo, 16 bridges and the rehabilitation of two railway stations.

The programme also includes the procurement of rails for about 518 kilometres of railway covering the Kranzberg–Otjiwarongo–Tsumeb corridor and the Otavi–Grootfontein branch.

African Development Bank procurement records show that Unik Construction Engineering Namibia was awarded a N$252.1 million contract, excluding VAT, for earthworks on the first 50-kilometre section, while China Jiangxi International Economic and Technical Cooperation Co. Ltd received a N$267.6 million contract for earthworks covering kilometres 100 to 150.

If the 10% requirement is applied to the full value of those contracts, the minimum local allocation would be about N$25.2 million and N$26.8 million respectively.

Government has not disclosed how much has actually been paid to Namibian subcontractors and suppliers under the requirement.

A separate N$868.2 million contract was awarded to China Civil Engineering Construction Corporation in October 2024 for the supply of rails and turnouts for the Kranzberg–Otjiwarongo section. It remains unclear whether the 10% local allocation applies to that contract in the same way as it does to construction contracts.

The railway programme forms part of the second phase of Namibia’s transport infrastructure improvement project, jointly financed by the government and the African Development Bank. The AfDB approved a US$196.4 million loan for the programme in 2023, covering 51.8% of the financing, while the Namibian government provides the remaining 48.2%.

‘Turn the table’

Naloba said the government should change its approach to local participation by making Namibian companies the primary beneficiaries of projects and allowing them to determine which international partners or subcontractors they require.

Amadhila also criticised the government for what he described as inadequate consultation with local business organisations before announcing participation thresholds.

“Our leaders should always consult relevant stakeholders, especially organisations such as Namibia Local Businesses Association (Naloba), before sucking thumb and announcing such thresholds,” he said.

Naloba further linked the issue to the absence of a comprehensive investment framework, arguing that the delays in implementing the Investment Promotion and Facilitation Bill have left loopholes around local participation requirements.

The association urged government to fast-track the legislation, saying appropriate thresholds for foreign investment and local economic participation should be clearly defined.

Naloba said the railway projects represent Namibian workscopes and should therefore generate greater value for Namibian enterprises and the wider economy.