Heathcote warns investment bill will scare off investors, constrain growth

Senior advocate Raymond Heathcote says the proposed Namibia Investment Promotion Bill may be unconstitutional and could discourage foreign investment when the country urgently needs economic growth and job creation.

The bill has undergone several iterations in recent years, during which stakeholders consistently warned that specific provisions could increase bureaucratic barriers and weaken investor protections.

Moreover, critics caution that the proposed legislation could erode general property rights and constrain both domestic and foreign investment.

Heathcote's legal opinion, commissioned by the Namibia Institute for Economic Policy (NIEP) and submitted to the Ministry of International Relations and Trade following requests from Namibian investors, says “the bill, if enacted, will be unconstitutional” and that it would “discourage instead of encourage foreign investment”.

Heathcote emphasises that his mandate was not to criticise the individuals involved in drafting the bill, noting that the attorney general, parliament and the president have not yet approved it.

His submission questions the bill's consultation process, describing it as a “draft first, consult later” approach that he argues is ill-suited to legislation of such constitutional and economic importance.

Investment framework

Central to the opinion is Article 99 of the Namibian Constitution, which provides that “foreign investments shall be encouraged within Namibia subject to the provisions of an Investment Code to be adopted by Parliament”.

Heathcote argues that the Constitution deliberately mandates the adoption of a foreign investment code rather than an act of parliament, and that this distinction has important legal implications.

Heathcote contends that an investment code differs fundamentally from ordinary legislation, particularly in the approval process required, which he argues was intended to ensure broader national consensus on foreign investment policy.

“Thus, the founding fathers clearly intended for the will of the people to manifest more stringently when an investment code is passed,” the opinion states.

He further argues that by attempting to enact an Investment Promotion Act instead of a code, parliament would, in his view, fail to discharge a specific constitutional duty imposed by Article 99.

He adds that this failure has persisted for more than 35 years since independence, resulting in what he describes as a “constitutional default”.

Affirmative action

The opinion also questions the bill’s reliance on Article 23 of the Constitution, which allows for affirmative action measures to redress social, educational and economic imbalances.

Heathcote states that while Article 23 measures may be enacted through legislation, they cannot, in his view, be selectively applied to foreign investors under the guise of investment regulation.

“It is wholly and constitutionally impermissible to house and apply affirmative action measures only against foreign investors in circumstances where the same measures are not also applicable to Namibian businesses,” he writes.

Heathcote further argues that the bill is inconsistent with Namibia’s obligations under international customary law and international investment agreements, which require foreign investors to be treated no less favourably than domestic investors in similar circumstances.

Ministerial discretion

Beyond constitutional issues, the opinion raises concerns about transparency and legal certainty.

Heathcote argues that the bill would grant wide-ranging discretionary powers to the trade minister through regulations, directives, guidelines and “other related subordinate measures”, many of which, he argues, may not be published in the Government Gazette.

According to the opinion, the bill refers to “this Act” numerous times, a term defined to include directives and guidelines.

Heathcote warns that, in his view, investors could face criminal penalties for contravening requirements that are not clearly accessible or ascertainable.

“This creates a permission-based regime that replaces the rule of law with administrative uncertainty,” he states, adding that, in his view, no rational foreign investor would choose to invest in an environment where rules are opaque, changeable and subject to administrative whim.

Modernisation effort

In August 2023, then trade minister Lucia Iipumbu said the bill was intended to modernise Namibia’s investment framework, which she described as outdated.

She said it also aimed to strengthen equal treatment between domestic and foreign investors.

"Regulations are a key opportunity for innovation. Government is constantly working on ensuring that business regulation is not only optimal but that it is less of a hindrance to business productivity,” Iipumbu said.

She said the government was actively looking at new applications, such as e-inspections.

Iipumbu also said it is important to foster a collective approach to strategic investment, under which the minister can sign a performance agreement, and that skills development will ideally be leveraged against the economic concessions or incentives granted to the strategic investor.